Digital Summit, Dortmund, Germany, 29 October 2019
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Ladies and gentlemen
Thank you very much for inviting me to join you today. It’s very inspiring to be here – in this most digital city – and to see how Europe is ready to grasp the opportunities that digitisation brings.
The opportunities of digitisation
It brings opportunities for consumers, to live freer and healthier and more fulfilling lives. And it also brings opportunities for European business to find new markets, meet new needs, create new successes.
The rising tide of digitisation has reached many industries where Europe leads the world – like advanced manufacturing and transport, clean energy and finance. And with that know how, we’re well placed to take the lead in enablingthe transition of these industries into the digital age.
That’s not to say that Europe is facing an open goal, of course. Europe’s businesses will have to deal with tough competition from companies in countries like the US and China.
But Europe, too, is dynamic and innovative. And like a knight who sees the dragon, but forgets the sword in her own hand, we risk making the wrong decisions if we forget about our strengths – drawing back in fear, when we ought to stand our ground. Because the secret to success for Europe is not to be more like America or China, but to play to our own strengths.
It depends on building technology with a purpose. Because in Europe, our approach to digitisation is not about finding ways to get round the rules, to escape paying tax or deny workers their rights. It’s about finding solutions to people’s real needs – improving healthcare, fixing transport, fighting pollution and climate change.
Our success will also be tied to our commitment to competition. Because it’s competition that drives innovation, and creates room for all kinds of innovators – large and small – to bring their ideas to the market.
That’s why our policies on research and development are designed to support innovation by businesses of all sizes, in all parts of the economy. It’s also why we have state aid rules on important projects of common European interest. Those rules allow governments to come together and support integrated research projects, to produce advanced technology that can benefit many different industries.
A framework of rules for digital platforms
Because, even though digitisation affects different industries in different ways, there are some developments which are common across the digital world. And one of those common features is the one that you’ve chosen as the theme for today’s discussion – the importance of platforms.
Because a digital economy is – necessarily – a platform economy. Digitisation gives us access to billions of possible connections. But we need platforms to help us find the ones that we need – to provide the maps that we use to navigate our digital world.
That gives platforms enormous power. And the challenge is even greater when you realise that often, those platforms face very little competition.
In digital markets, it’s often the case that – as it says in the Bible – “to they that have, shall be given”. Being big can give a company such a huge head start that it can be hard for smaller rivals to compete. And once a platform reaches a critical mass, the market can quickly tip in favour of that business, leaving no room for anyone else.
So we need to enforce the competition rules firmly, to stop digital platforms using their power to deny their rivals a chance to compete.
And we need to act quickly. Because, once a market has tipped, it becomes very hard to bring competition back to the market – it’s not enough for companies to just stop their illegal behaviour. It’s rather like an ecosystem that’s so thoroughly polluted that, even if the polluter closed today, the ecosystem would never recover on its own.
So when we do find that a market has tipped before we can step in, it’s not enough for us to just tell a company to stop polluting. Our responsibility is to help the ecosystem to recover, by making sure that company takes positive steps to clean up.
Controlling the regulatory power of platforms
But the power of platforms doesn’t just affect competition between those platforms. Their decisions can also influence dozens of other markets, where businesses rely on platforms to connect with their customers.
Those platforms can start to act, in effect, like market regulators. Their choices about how they rank different businesses can determine who has a chance to compete. And when they decide to remove a product – or a business – from the platform, they can seriously affect the success of that business.
So when platforms do act as regulators, they ought to set the rules in a way that keeps markets open for competition. But experience shows that instead, some platforms use that power to harm competition, by helping their own services.
For instance, Google’s search engine was an important platform for comparison shopping services – because many consumers reached those services through a Google search for a product. So the way Google presented the results of those searches had a crucial effect on who succeeded, and who didn’t. And when Google showed results from Google Shopping at the top of the first page, and demoted its rivals far down the list, it made it hard for those rivals to compete.
Understanding the role of data in competition
We’re also looking at whether Amazon has used its control of a platform to benefit its own services. Millions of sellers use Amazon to connect with their customers. But Amazon also sells on the platform – competing with those sellers. And we’re investigating whether the company used data which it collected, as the operator of the platform, to deny other sellers a chance to compete on equal terms.
This is just an investigation, and I don’t know at this stage whether we’ll find, in the end that Amazon has done anything wrong. But it’s a reminder of an important point – that platforms, with their central position in our markets, can have access to data that others just can’t match. And in this digital age, data can be hugely important for companies to compete.
Having more data can help businesses to understand their customers’ needs better. It can allow them to develop the best artificial intelligence. But most importantly, perhaps, data can help them to target advertising to exactly the right audience for a product – or a political message.
So it’s no surprise that the leaders in digital advertising are platforms that have built their business models around data. In the US, some six out of every ten digital advertising dollars are spent with just two platform companies – Google and Facebook.
And the more you look at how those companies operate, the more you see that large parts of their business have one crucial thing in common – their hunger for data. So we need to understand what these mountains of data mean for competition in our markets.
But competition is only one part of the puzzle. Our digital future shouldn’t just meet our needs as consumers – it should also respect our values as citizens. So alongside the competition rules, we also need regulations to make sure that platforms stick to those values. And that digitisation serves consumers, as well as European businesses of all sizes and consumers.
Ursula von der Leyen has already made very clear that one of the top priorities of the next Commission will be to put the right policies in place, so that Europe is fit for the digital age. And I’m deeply honoured that she’s asked me to coordinate that work, as Executive Vice-President.
Digitisation is a complex thing, which affects many different parts of our lives. And so our response to it will also need to have many aspects. We’ll need a new European approach to artificial intelligence, so that AI supports human judgment, instead of replacing it. We’ll need to put a framework in place so that digital businesses pay their fair share of tax. We’ll need rules, including a new Digital Services Act, which can make sure that platforms serve people, not the other way round. That means upgrading our liability and safety rules, as well as making sure that platform workers have the protection they need. And we’ll have to give European businesses the support they need to turn innovative ideas into world-beating products – including a new SME strategy, to help startups and smaller businesses grasp the potential of digitisation.
Because we’ve come to a moment when we have to make the decisions that will shape our future for years, even decades, to come.
Technology can create new challenges for our values, like freedom and fairness and democracy. But it won’t be technology that decides the future of those values. It will be us, as a society, with the choices we make, and the frameworks of rules we create for the digital future.
A new world is being designed. And we, as citizens, need to be there in the studio when those designs are drawn up. So that we can make sure that the digital future will be a place where we want to live.