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Digital transformation: Importance, benefits and EU policy

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Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment.

The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalise public services, while ensuring the respect of basic rights and values.

MEPs are preparing to vote on a report on shaping the digital future of Europe, calling on the Europea Commission to further tackle challenges posed by the digital transition, especially to take advantage of the opportunities of the digital single market and to improve the use of artificial intelligence. What is digital transformation? 

  • Digital transformation is the integration of digital technologies by companies and the impact of the technologies on society.  
  • Digital platforms, the Internet of Things, cloud computing and artificial intelligence are among the technologies affecting ... 
  • ... sectors from transport to energy, agri-food, telecommunications, financial services, factory production and health care, and transforming people's lives. 
  • Technologies could help to optimise production, reduce emissions and waste, boost companies' competitive advantages and bring new services and products to consumers. 

Funding of the EU's digital priorities

Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.

The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.

While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.

Digital Europe programme

MEPs are set to vote in April on the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty. It will invest €7.5 billion in five areas: supercomputing (€2.2 billion), artificial intelligence (€2 billion), cybersecurity (€1.6 billion), advanced digital skills (€577 million), and ensuring a wide use of digital technologies across the economy and society (€1 billion).

Online safety and platform economy

Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.

The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.

Read more on why and how the EU wants to regulate the platform economy.

Among measures to ensure safety online, the Parliament is voting on new rules to prevent the dissemination of terrorist content online in April. MEPs are also considering rules on a new European cybersecurity centre.

Artificial intelligence and data strategy

Artificial intelligence (AI) could benefit people by imroving health care, making cars safer and  enabling tailored services. It can improve production processes and bring a competitive advantage to European businesses, including in sectors where EU companies already enjoy strong positions, such as the green and circular economy, machinery, farming and tourism.

To ensure Europe makes the most of AI's potential, MEPs have accentuated the need for human-centric AI legislation, aimed at establishing a framework that will be trustworthy, can implement ethical standards, support jobs, help build competitive “AI made in Europe” and influence global standards. The Commission presented its proposal for AI regulation on 21 April 2021.

Read more on how MEPs want to regulate artificial intelligence.

The success of AI development in Europe ilargely depends on a successful European data strategy. Parliament has stressed the potential of industrial and public data for EU companies and researchers and called for European data spaces, big data infrastructure and legislation that will contribute to trustworthiness.

More on what Parliament wants for the European data strategy.

Digital skills and education

The Covid-19 pandemic has demonstrated how important digital skills are for work and interactions, but has also accentuated the digital skills gap and the need to increase digital education. The Parliament wants the European skills agenda to ensure people and businesses can take full advantage of technological advancements.

42% of EU citizens lack basic digital skill

Other interesting articles to check out

More on Europe's digital policies 

Digital economy

Digital transformation: Importance, benefits and EU policy

EU Reporter Correspondent

Published

on

Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment. The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalize public services, while ensuring the respect of basic rights and values, Society .

MEPs are preparing to vote on a report on shaping the digital future of Europe, calling on the Europea Commission to further tackle challenges posed by the digital transition, especially to take advantage of the opportunities of the digital single market and to improve the use of artificial intelligence. What is digital transformation? 

  • Digital transformation is the integration of digital technologies by companies and the impact of the technologies on society.  
  • Digital platforms, the Internet of Things, cloud computing and artificial intelligence are among the technologies affecting ... 
  • ... sectors from transport to energy, agri-food, telecommunications, financial services, factory production and health care, and transforming people's lives. 
  • Technologies could help to optimise production, reduce emissions and waste, boost companies' competitive advantages and bring new services and products to consumers. 

Funding of the EU's digital priorities

Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.

The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.

While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.

Digital Europe programme

In April 2021, Parliament adopted the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty. It will invest €7.6bn in five areas: supercomputing (€2.2bn), arfitifical intelligence (€2.1bn), cybersecurity (€1.6bn), advanced digital skills (€0.6bn), and ensuring a wide use of digital technologies across the economy and society (€1.1bn).

Online safety and platform economy

Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.

The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.

Read more on why and how the EU wants to regulate the platform economy.

Among measures to ensure safety online, the Parliament adopted new rules to prevent the dissemination of terrorist content online in April 2021. MEPs are also considering rules on a new European cybersecurity centre.

Artificial intelligence and data strategy

Artificial intelligence (AI) could benefit people by imroving health care, making cars safer and  enabling tailored services. It can improve production processes and bring a competitive advantage to European businesses, including in sectors where EU companies already enjoy strong positions, such as the green and circular economy, machinery, farming and tourism.

To ensure Europe makes the most of AI's potential, MEPs have accentuated the need for human-centric AI legislation, aimed at establishing a framework that will be trustworthy, can implement ethical standards, support jobs, help build competitive “AI made in Europe” and influence global standards. The Commission presented its proposal for AI regulation on 21 April 2021.

Read more on how MEPs want to regulate artificial intelligence.

The success of AI development in Europe ilargely depends on a successful European data strategy. Parliament has stressed the potential of industrial and public data for EU companies and researchers and called for European data spaces, big data infrastructure and legislation that will contribute to trustworthiness.

More on what Parliament wants for the European data strategy.

Digital skills and education

The Covid-19 pandemic has demonstrated how important digital skills are for work and interactions, but has also accentuated the digital skills gap and the need to increase digital education. The Parliament wants the European skills agenda to ensure people and businesses can take full advantage of technological advancements.

42% of EU citizens lack basic digital skil

Fair taxation of the digital economy

Most tax rules were established well before the digital economy existed. To reduce tax avoidance and make taxes fairer, MEPs are calling for a global minimum tax rate and new taxation rights that would allow more taxes to be paid where value is created and not where tax rates are lowest.

Other interesting articles to check out

More on Europe's digital policies 

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Computer technology

Vega: Launch of the first world-class supercomputer in the EU

EU Reporter Correspondent

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The European Commission, together with the European High-Performance Computing Joint Undertaking and the government of Slovenia has inaugurated the operation of the Vega Supercomputer at a high-level ceremony in Maribor, Slovenia. This marks the launch of a first EU supercomputer procured jointly with EU and member state funds, with a joint investment of €17.2 million.

A Europe Fit for the Digital Age Executive Vice President Margrethe Vestager said:“We are celebrating today the launch of the Vega supercomputer – the first of several. Supercomputing will open new doors for European SMEs to compete in tomorrow's high tech economy. Even more importantly, by supporting artificial intelligence to identify the molecules for breakthrough drug treatments, by tracking infections for COVID and other diseases, European supercomputing can help save lives.”

Executive Vice President Vestager participated in the launch ceremony on 20 April together with the Prime Minister of Slovenia, Janez Janša. The new Vega supercomputer is capable of 6.9 Petaflops of computer power and will support the development of applications in many domains, such as machine learning, artificial intelligence, and high-performance data analytics. It will help European researchers and industry to make significant advances in bio-engineering, weather forecasting, the fight against climate change, personalised medicine, as well as in the discovery of new materials and drugs that will benefit EU citizens. The EuroHPC Joint Undertaking pools European and national resources to procure and deploy world-class supercomputers and technologies.

In addition to Vega in Slovenia, EuroHPC supercomputers have been acquired and are being installed in the following centres: Sofia Tech Park in Bulgaria, IT4Innovations National Supercomputing Center in Czechia, CINECA in Italy, LuxProvide in Luxembourg, Minho Advanced Computing Center in Portugal, and CSC – IT Center for Science in Finland. Moreover, a Commission proposal for a new Regulation for the EuroHPC Joint Undertaking, presented in September 2020, aims to enable a further investment of €8 billion in the next generation of supercomputers, including emerging technologies such as quantum computers. More information will be available in this press release by the EuroHPC Joint Undertaking.

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Austria

Commission approves €146.5 million Austrian support in favour of companies joining research and innovation project in microelectronics

EU Reporter Correspondent

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The European Commission has approved, under EU state aid rules, €146.5 million in Austrian support in favour of three companies joining the existing Important Project of Common European Interest (‘IPCEI') in microelectronics approved by the Commission in 2018. The public funding is expected to unlock an additional €530m of private investments, i.e. more than three and a half times the public support.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “To deliver on the digital and green transition, we will need highly innovative and sustainable microchips and sensors for many products in our economy, ranging from mobile phones to aircraft. The Important Project of Common European Interest in microelectronics that we approved in 2018 has been supporting the development of important cutting-edge technologies in this field. The IPCEI's integration is very important for its success – we have approved additional support by Austria to three projects because they meet the high bar of adding significant value to the existing IPCEI, with important collaborations with the existing participants.”

In December 2018, the Commission approved, under EU state aid rules, an IPCEI to support research and innovation in the field of microelectronics (the ‘2018 IPCEI Microelectronics'). The project was jointly set-up and notified by France, Germany, Italy and the United Kingdom. The approved public support amounted to €1.75 billion. The 2018 IPCEI Microelectronics, which aims at developing innovative microelectronics technologies and components for automotive, Internet of Things (IoT) and other key applications (such as space, avionics, and security) and their first industrial deployment, originally involved 27 companies and two research organisations.

In December 2020, Austria notified to the Commission its plans to join the 2018 IPCEI Microelectronics, by providing €146.5m of public support to three companies (Infineon Austria, AT&S Austria and NXP Semiconductors Austria) that will carry out additional research and innovation falling within the scope and contributing to the objectives of the existing IPCEI. The companies will focus in particular on the areas of security, energy efficiency, and integration of packaging technologies for microelectronics.

The joining of an already established and ongoing IPCEI by an additional member state and projects is an exceptional circumstance. It requires a complex assessment by the Commission, to verify that the new individual projects are properly integrated in the existing roadmap and structure of the IPCEI, for example by means of establishing sufficient and valuable collaborations with the initial participants, and are genuinely adding significant value to the IPCEI in order to reach its objectives.

The Commission takes note of and welcomes the increasingly transparent, open and inclusive practice that member states have now established in designing IPCEIs to ensure that all interested member states join from the start, so that these important European projects generate even more benefits to the entire EU without unduly distorting competition.

The Commission's assessment

The Commission assessed Austria's plans under EU state aid rules, more specifically its Communication on Important Projects of Common European Interest (IPCEI). Where private initiatives supporting breakthrough innovation fail to materialise because of the significant risks such projects entail, the IPCEI state aid Communication enables member states to jointly fill the gap to overcome these market failures, while ensuring that the EU economy at large benefits and limiting potential distortions to competition.

The projects that Infineon Austria, AT&S Austria and NXP Semiconductors Austria will carry out aim at delivering additional technological innovations in energy efficient power semiconductors, on advanced security and interconnections, as well as on organic packaging technology aspects.

In this respect, the Commission found that the projects will add significant value to the 2018 IPCEI Microelectronics and will contribute to and enhance the integration of existing IPCEI. In particular:

  • They will significantly contribute to the achievement of common objective pursued by the existing IPCEI in supporting a strategic value chain, in particular through the development innovative microelectronics, technologies and components for automotive, IoT and other key applications (such as space, avionics, and security), by aiming at technology solutions that were not (sufficiently) addressed.
  • They will add significant value to the existing IPCEI by bringing important contributions to its objectives, integration, collaborations, scope, and research and development content.
  • They are highly ambitious, aiming at developing technologies and processes that go beyond current technology.
  • The companies will establish significant and valuable additional collaborative research with the existing direct partners and support the development and objectives of the relevant technology fields.
  • The projects involve significant technological and financial risks, and public support is therefore necessary to provide incentives to companies to carry out the investment.
  • The aid to each of the three companies is limited to what is necessary, proportionate and does not unduly distort competition.
  • Additional important positive spill-over effects will be generated throughout Europe.

On this basis, the Commission concluded that the Austrian plans to join the 2018 IPCEI Microelectronics are in line with EU State aid rules.

Background

In June 2014 the Commission adopted a Communication on important projects of common European interest (IPCEI), setting out criteria under which Member States can support transnational projects of strategic significance for the EU under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU). This framework aims to encourage Member States to support projects that make a clear contribution to the EU strategic objectives.

The IPCEI Communication complements other State aid rules such as the General Block Exemption Regulation and the Research, Development and Innovation Framework, which allows supporting innovative projects with generous conditions.

Since 2014, the IPCEI Communication has been applied in the field of infrastructure as well as for integrated projects in the area of research and innovation, for microelectronics (in December 2018) and for the battery value chain (in December 2019 and in January 2021).

The IPCEI Communication is currently being reviewed to ensure it fully contributes to the Commission's green and digital objectives, following an evaluation or ‘Fitness Check' completed in October 2020. On 23 February 2021, the Commission launched a public consultation inviting all interested parties to comment on the draft revised IPCEI Communication. In this context, the Commission is proposing, among others, to further enhance the open character of IPCEIs (by, for example, providing that all Member States must be given a genuine opportunity to participate in an emerging project).

Stakeholders can respond to the consultation for eight weeks, until 20 April 2021.

The non-confidential version of the decision will be made available under the case number SA.56606 in the State Aid Register on the competition website once any confidentiality issues have been resolved.

New publications of state aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.

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