Competition in a data-driven world: how to ensure sustainable growth? – Pl 03 2018
6 June 2018 | 9:30-10:30 | GARDEN HALL |
Consolidated programme 2018 overview
Until 1 April 2018. 1-2 lines to describe the focus of the session.
Data-driven growth, data analytics, data for good, data for sustainable growth, big data, AI, platforms, cross-border data flows, free flow of data, open data, digital economy
Data is the oxygen of the digital economy. It has enabled new business models and is fundamentally changing economic dynamics. According to McKinsey for example, the impact of international data flows on economic growth is with $2.8 trillion now larger than traditional flows in traded goods. If favourable policy and legislative conditions are put in place and investments in ICT are encouraged, the value of the European data economy may increase to €739 billion by 2020, representing 4% of the overall EU GDP. In this session we will discuss the value of data and how organizations across Europe are trying to capture it. We will discuss the role of cross-border data transfers and the impact of the data economy on small as well as large businesses. We will also look at what is being done to improve the data economy and what policies and regulations still need to be changed to ensure sustainable growth in a data-driven world.
 McKinsey: Digital Globalization, the new era of global flows, 2016
 European Commission: Building a European data economy
The session will start with one or two concrete cases on how businesses are using data. These short presentations of 10 minutes will be followed by a panel discussion.
Links to relevant websites, declarations, books, documents. Please note we cannot offer web space, so only links to external resources are possible. Example for an external link: Website of EuroDIG
- Melle Tiel Groenestege, VEON
Organising Team (Org Team)
- Maarit Palovirta – ISOC (SME)
- Adam Peake – Icann
- Joelma Almeida – FCT
- Martina Ferracane – ECIPE
- Kristina Olausson - ETNO
- Amali de Silva
- Thomas Grob – Deutsche Telekom
- Dominique Lazanski – GSMA
- Mr. Levan Kobakhidze – Chief Digital Officer, Beeline Georgia
Levan Kobakhidze is Entrepreneur, Strategist and Business Developer with over 6 years of executive experience in digital industry. Passionate about Fintech, Ecommerce and Online P2P Marketplaces. At VEON Georgia, Levan is responsible for the VEON platform and for developing digital channels for the operator Beeline. Before joining VEON Georgia Levan was VP of Business Development at Way in the US.
At the age of 24, Levan has been a CEO of two successful internet companies eMoney and Smartex (PayPal and Groupon like business models) driving growth, business strategy and product. As a Chief Commercial Officer of JSC Smartex (First e-startup incubator in Georgia) he led strategic partnerships and commercial acceleration of +12 e-startups, while working directly with excellent cross-functional Liberty Bank/Smartex Teams.
Levan holds an MBA from Hult International Business School.
- Mr. Pearse O’Donohue – Director for Future Networks DG CONNECT, European Commission
Pearse O'Donohue is Acting Director for the Future Networks Directorate of DG CONNECT at the European Commission, dealing with policy development and research supporting the Digital Single Market as regards 5G networks, IoT, cloud and data flows and conceptualising new and innovative approaches towards service platforms and next generation Internet. As Head of the Cloud and Software Unit in DG CONNECT, he is also responsible for the strategic development and implementation of policy on cloud computing and software.
Until October 2014, Pearse was Deputy Head of Cabinet of Vice-President Neelie Kroes, previous European Commissioner for the Digital Agenda. He was responsible for advising the Vice-President on the development and implementation of policy on electronic communications, networks and services, as well as broadband, spectrum and other related policies such as Internet governance.
Prior to that, Pearse was Head of the Radio Spectrum Policy Unit in the European Commission, DG CONNECT.
Prior to joining the European Commission, Pearse held posts in the Irish Department of Foreign Affairs, the Permanent Representation of Ireland to the EU in Brussels, and as Assistant Director of the Brussels office of the Irish Business & Employers' Confederation.
- Mr. Jean Gonié – Group Director Public Policy, VEON
Jean started his career in the mid-1990s as a freelance journalist in French weekly (L’Express) and daily (Le Parisien, Ouest France) newspapers. Jean Gonié is also French Foreign Trade Affairs Advisor since 2012 and a former member of the Board of Directors of the French Chamber of Commerce of the Pacific Northwest.
Jean is graduated from the Paris Institute of Political Studies (Sciences Po Paris) and holds a Master’s Degree of Law (Master 2, Université Paris II Panthéon-Assas) and Degree in History (Université Paris I Panthéon-Sorbonne).
- Ms. Martina F. Ferracane - Research Associate at ECIPE & Cyber Fellow at Columbia University
Martina is passionate about policy-making and technological innovation. She is writing her PhD in Law and Economics on the topic of cross-border data flows at Hamburg University and she is a Fellow at Columbia University, the California International Law Center and the European University Institute. She is a Research Associate at the think-tank European Centre for International Political Economy (ECIPE) in Brussels, where she writes about digital trade issues and data flows.
She is also especially interested in digital entrepreneurship and was recently selected in Forbes 30 Under 30 list for Science and Healthcare for her work with Oral3D, a start-up she co-founded in the area of 3D printing and dentistry. Martina also founded and manages FabLab Western Sicily, a non-profit organisation which is bringing digital fabrication to Sicilian schools. Previously, she worked at the European Commission and at the United Nations. To know more about her work, visit the website www.martinaferracane.com
- Ms. Piret Urb – Counsellor at the Division of International Organizations, Ministry of Foreign Affairs Estonia
- Ms. Maarit Palovirta – Senior Manager Regional Affairs Europe, Internet Society
Maarit Palovirta is the Senior Manager, Regional Affairs Europe. She joined the Internet Society in November 2013 where she focuses on promoting Internet Development and access in Europe through stakeholder engagement, advocacy and initiatives.
Maarit is a senior business development and public affairs professional with a great track record in government advocacy. She has extensive experience in strategy and public policy issues with multiple stakeholders in the EU and CIS countries. She worked with CISCO as a Business Development Manager, Public Sector EMEA. She also has worked with well-known Public Affairs consultancies (as eg. Interel)
She obtained a MA in Advanced European Studies with Economics, College of Europe (Poland). She also holds a BA (Hons) European Studies, from the London School of Economics & King's College, London, UK.
Maarit is Finnish and, beyond her mother tongue, she is fluent in English and French. She has very good understanding of Swedish and German, and is a beginner in Russian.
She is based in Brussels (BE).
- Teona Turashvili – Head of E-governance Direction, Institute for Development of Freedom of Information (IDFI)
Teona Turashvili is the Head of E-governance Direction at the Institute for Development of Freedom of Information (IDFI). Over the past six years she has been working on the issues of access to open data, public administration reforms, e-governance and internet related issues. She has been coordinating the development and maintenance of the newly established Georgia’s Open Data Platform (www.datalab.ge), created by IDFI. Also, since 2013 Teona is a contributor author to the Freedom of the Net (FOTN) program, implemented by Freedom House. She has been assessing Georgia’s state of internet freedom annually.
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- Ana Maria Corrêa
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- Data is giving rise to a new economy. The impact of international data flows on economic growth has been larger than that of traditionally traded goods. Favourable policy and regulation can enable the data economy to increase even more, both in Europe and elsewhere. Competition in the data driven world is global. Currently, there are 2.5 billion digital customers around the world. Almost 2 billion customers transact through mobile devices.
- The free flow of data is essential to the value of data. Europe has to secure a degree of transparency, openness and fairness. In order to do that, it has created an observatory. There are competition rules that can come into force in extreme cases. Business needs to co-operate and help institutions to tackle abuses. The European Union has been accused of protectionism, but there are rules in place, such as the General Data Protection Regulation (GDPR), which aim to protect the citizens, even if they have some barriers.
- Developing and developed countries have been restricting the flow of data and imposing increasing restrictions to the movement of data in four different ways:
- Bans to transfer data across borders;
- Local processing requirements;
- Local storage;
- Conditional flows. come, accountability and transparency
- Digitalisation is threatening and transforming jobs. Extensive investments should be made in education so that everyone can benefit from the digital economy. Redistribution is also an essential aspect in the transition to the digital economy, ensuring that people who are going to be left behind are supported. Sustainable growth depends on a level playing field in terms of data usage. The understanding of the data value chain, the way that data is collected, stored and analysed by lawmakers, is necessary to achieve sustainable economic goals.
Find an independent report of the session from the Geneva Internet Platform Digital Watch Observatory at https://dig.watch/resources/competition-data-driven-world-how-ensure-sustainable-growth
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>> MAARIT PALOVIRTA: Thank you, Sandra. We are running a bit late. So I just wanted to make sure that we have the full hour. I would like to invite our speakers directly to the stage here. We have today a very competent panel. So we have Pearse O'Donohue, Martina Ferracane, Piret Urb, Jean Gonie and Levan Kobakhidze. Please if the speakers could come to the stage.
So as Sandra mentioned we are going to today talk about competition in a data driven world and how to ensure sustainable growth. This session is really all about data and data as a source of economic growth and discussing how data, what kind of role data plays in the Digital Economy today. And as we all know this is a big topic. So we all hear about data every day. There is personal data, nonpersonal data, Big Data, machine generated data, open data. So it is it can get very complex in terms of policy making as well. And we tried to focus this session as we only have one hour on really the economic aspects of data and especially on the value of data.
So where does the value of data come from? What are the different ways to monetize data for different stakeholders and what kind of policy framework do we need in order to create a competitive market in the area of data.
And the final aspect I would like to highlight is that we are here today in Tbilisi in Georgia. So in the EU and in Brussels there has been a lot of talk about data in the last year due to quite a hectic Embassy follow policy agenda. And it is important that we touch on the cross border aspects today. How do we make sure that data moves between the European Union and other countries in the other neighborhood. I would like to give us a little example on how the private sector is using data and provide some use cases from the ISP. So Internet Service Provider view.
>> LEVAN KOBAKHIDZE: Thank you. Good morning, everyone. I'm a chief digital officer of B line Georgia and this is part of the VEON group in 12 countries and serving more than 230 million customers. I am going to talk about the competition in a data driven world and how to sustain how to drive the sustainable growth.
So I'm going to start with this. So this is what happens in an Internet in a minute. So this is the latest report. And as you can see from the slides numbers are so enormous that it be shown in only a 60 second timescale. And according to the latest McKinsey report there are more than 250 billion two and a half billion digital customers globally that are under 25. So and the fact, what characterizes this group is that they are always on. And also they have completely different usage behavioral patterns as compared to traditional annual customers. There is also the trend, the mobile only access which is coming, and it is basically just to give you an example over half of the users are visiting their accounts of Facebook via mobile devices. And also this trend contributes to the 2019 projection where almost 2 billion users will transact by their mobile devices.
So we all see what's the kind of Internet impact which obviously also is impacting the telecom industry. The telecom industry has a pretty tough time. 75% of all telecom operators are expressing their concerns that over the top layers, what's up and all the other applications are garnering revenues out of there. They are mostly declining voice revenues and transferring the message activities from traditional SMS to online messaging.
So basically how we tackle that. We as a telecom operator, we are trying to have a couple of major directions in order to sustain and drive the growth and use this data, right? Because telecom has plenty of data available, structured and unstructured and the key fact is to get deeper in to this and analyze and use it effectively.
So our strategy considers four major directions. The first is enriching customer profiles that analyzing customers not just with the SMS and minutes and megabytes but also understanding what's their behavioral patterns based on their data usage. This is a pattern analysis and this has nothing to do with the personal analysis. And based on that we to basically give them what they want and when they want it. So that's our key objective when it comes to the offering, right? We even as a group created a our own personal Internet platform which we call VEON which is kind of a rival for what's up and Vibers. And we launched it in Georgia reaching more than half a million downloads already. And that's what we use as a separate channel to interact with customers also.
The second is basically more customer touch points. So the new technologies like IoT and chat bots and also self service terminals and all other channels like mobile labs and online channels give us more ways to interact with customers and give them information and be pretty smart about serving them and also getting them what they want, right? And the next is using enriching, just simple Telco bundles with not just Telco products but also free apps and also the third party offers.
So we reached almost 20 different exclusive offers which is from the various industries like entertaining, food and other industries. And we got some exclusive discounts and offers from them. And we are trying to enrich that and create the bundle which is more enhanced. And this is one of the strategies, how we differentiate ourselves against competitors.
And last one is remarketing. So we were the first ones who deployed in Georgia the customers subscriber onboarding channel which is a pure online channel and customers can start a process via online channel. And let's say if they are stuck in the middle, our objective is to go back to them and basically give them the tailor made offer in order to push them and help them to complete the whole process.
So I'm going to present only three use cases, specific use cases just to help you understand what is exactly that we are doing with this data. So this is the time based offer and customer onboarding. So let's start with the first. So this slide is very packed but I will explain in easier words. So we obviously know when the launch time is. This is kind of public information. Everyone knows about this. And we also know where when is the heavy consumption time of our digital channels, like mobile labs. By simply using generally available data we can basically be smart and basically have the happy hours lunchtime sent as an offer inside our channel during the lunchtime and also let's say when customers are out of the data send them directly on that specific time, the new package of bundles, like new package of data for purchase. And obviously we are using our self care app which is our own and also our own personal Internet platform to have all this displayed in a very smartly manner. So we are only using our own channels in order to be proactive about our activities.
Next is the enriched Telco bundle. We look at data analyzed as an aggregated segment and we understand what percentage of our users are just using their SIM cards for calling. Some of this are heavy data users and some of them use it more extensively for video and music streaming. And by this general attributes we are trying to be very smart about offering. Somebody who is not interested let's say with data and is only using the SIM cards just for calling but are not going to have a tailor made voice bundles for sorry, the data bundles for them, right? So that's exactly how we are careful about giving people what they want and be smart about the pricing in order to give customers exactly the price that they want to pay and for what they want to pay for.
And the next is and the last use case is customer onboarding and remarketing. As I said we have an online channel. We have some tariff plans that are available only through digital channels. And once customers start the onboarding process and let's say remotely, he was not able to finish the whole process and we are going back to them and help them and offer the same preselected tariff plan with a discount or just ask if they had any problems during this onboarding process. This is also the the objective is to serve customers in a better way.
And basically I want to talk a little bit about the technologies that we adapt on also. You know that the ITU which has the separate session today is a huge topic. And we are also trying to adapt on the IoT devices, but also the next key direction is natural language processing and machine learning. So we are happy that we have a couple of venders locally that also started to analyze Georgian language which we all know that it is pretty tough and they have this unique natural language processing and that helps us to basically use this. Very effectively in our online channels, talking about the chat bots and the call centers. And basically have this used effectively in order to serve our customers. These chat bots are already capable to not just answer to the questions but also offer the top up or purchasing some of the products that Telco offers. So this is the kind of full flow that automatic machines can offer customers.
Well, that's pretty much it. This is what I wanted to talk about from the business perspective. And now my colleagues will probably continue with the panel discussion. Thank you very much.
>> MAARIT PALOVIRTA: Thank you, Levan. Thank you. So we hear that data has enabled you to basically launch new services, to better tailor your offerings to customers. And also even enter in to the world of Artificial Intelligence. Do we have any questions or immediate comments to Levan regarding his presentation at this stage? Okay. If there is nothing at this stage, you will have a chance to ask questions later. I would like to introduce you to my co moderator Teona Turashvili. She will be roaming in the audience. And you can give your questions to them. In the end we will have Anna Maria Correa who is taking notes. And we will leave five to ten minutes in the end to review and come up with some conclusion statements. I would like to go back to the panel, and Pearse, perhaps you would like to start from the point of view of the European Commission and to talk about the data opportunity and the biggest challenges as well as it comes to the data economy. Please.
>> PEARSE O'DONOHUE: Okay. Thank you. Hello. Yes. Thank you very much. Good morning and thank you. Yes, I think my preliminary intervention would be a compliment to what we just heard about the importance and use of data by Telcos. Because a lot of what the European Union is doing now with regards to the data economy is seeking to promote the development and uptake of new technologies and data technologies by the whole economy. So sometimes I say to the people in the Brussels bubble it is about everyone except the Telcos there. It is not an ICT issue anymore. And that's been the focus of our data economy work over the last two years because of the importance of data to the economy. Because it is a key element of the new technologies and because it is improving that data economy really allows to drive down cost for SMEs. But a starting premise that we have had and this is in relation to one of the key measures that Maarit was alluding to earlier we talk about the value of data if we don't have a free flow of data. And our primary target has been to ensure that the European single market, that economy of 28 Member States plus the European Economic Area countries is a single data space. There are still restrictions. There are still localization requirements of differing degrees and the legal proposal which is at a final stage of negotiation, we hope to have agreement very soon, would seek to remove to ban Member States from imposing data localization requirements except in the very extreme cases of national security. That is a precondition. But we have been doing a lot of work and I can go through them at great length, but to hit on what are the most important issues for this discussion is that we have to also and coming back now towards the first presentation, we have to ensure a certain degree of transparency, openness or even fairness in the relationship between platforms, particularly when they are in a market dominate position and businesses who use those platforms and who generate data which is sometimes captured by the platform which really is data that is critical for the business case of the individual companies that are buying and selling services or seeking to access their customers. That data is, in fact, in some cases of greater value than the initial service it has been said.
And while we are very reluctant to regulating in this area what we do want to do is to ensure that there is a level playing field. We do have our competition rules that can come in to force in extreme cases. But what we are trying to do is we are trying to create a situation in which it is recognized that businesses need to cooperate so that we will only tackle the most extreme cases where there are abuses or where it is clearly not the benefit of the economy if somebody is capturing and retaining. We are taking the value of somebody else's data.
So we are building that on three pillars. It is not regulation but our platforms to business initiative seeks to improve transparency and also to improve dispute resolution and to create an observatory so that we and Member States can intervene more quickly if there are serious abuses. We must remember that Governments and local authorities hold huge amounts of valuable data. And so we have an old piece of legislation called the Public Service Information Directive which we just proposed to update and modernize. And what we want to achieve is that high value datasets will become much more accessible to businesses and SMEs for them to generate new business models, for them to exploit and create even more value out of that data. Some of which will then feed straight back in to the provision of more targeted and efficient public services. And that's something when we talk about the economic value of data, we must continue to also think about the public value, the value to the public of data. And particularly when as a taxpayer the citizen has paid for the service or paid for the data once as it were. We must also ensure that there is a situation where that data is not then captured by one company and used or resold at very high cost, none of which then accrues back to the taxpayer.
So this is something which we are addressing in our public sector information directive. We have also given guidelines on what we think would be a level playing field for access between businesses. That's business to business access. Again something which is best treated by contract. But where we do have the full opposition if there are serious inequalities, abuses where we can use competition law but much prefer not to be in that situation. We much prefer that in recognizing the pent up value so we should stimulate and encourage businesses on commercial terms to nevertheless release that data in order for it to be reused in order for greater value to be created in the wider economy.
So those are some of the issues. And I haven't dealt with all of them but we are trying to face up to in the European Union. Maarit did mention international data flows. We are just testing our new enthusiasm for this issue in some recent international trade agreements. And the European Union hopes that we can come to a decision very quickly where data flows automatically become part of any standard free trade agreement because of what we see as the mutual benefit, but there are issues. There are problems. There are concerns in some elements, in some areas of the world about the security of that data. There are also concerns about whether trading partners might use certain rules to restrict their own data market. And, of course, we have to face up to the fact that the European Union has been accused of protectionism in introducing the GDPR and that's a discussion which we can confront head on because we are very clear about why we have the GDPR, but others would also say that the rules we have on personal data protection which we stand for and which we are very proud of nevertheless create barriers. And so we have a more complex system for adequacy agreements when it comes to personal data. I know that has to be part of the discussion. That is not something that can happen as quickly as what we hoped it would happen with regard to free flow of data within the European Union. I will stop there for a moment.
>> MAARIT PALOVIRTA: Thank you. I am sure you have lots of questions to Pearse. I suggest we do the first round and then take the questions. Martina Ferracane, would you like to go next?
>> MARTINA FERRACANE: Good morning, everyone. Yes. I wanted to pick up on what Pearse was talking about in relation to restriction to do that flows. When it comes to challenges on the Digital Economy I think one of the main restrictions is this increasing fragmentation of the Internet in a way that it is led by the fact that countries are imposing more and more restrictions and movement of data. When we talk about restrictions on data flows, there are different types of restrictions and different ways of calling these restrictions. In the WTO the data localization is a different issue. There is a lot of also lack of understanding. And I would argue to simplify the discussion that there are four types of restrictions mainly. The most restrictive ones are bans to transfer data across border. So banning movement to data you can't transfer a copy of data abroad. These restrictions are applied on Higgs data.
Another type of restriction are local processing requirements, which means that the main processing of data is to be done in the country in which the data is taken from. And you see these kind of restrictions, for example, in Russia with the privacy law. And in these cases a copy of the data can leave the country. So there is still a way for the company to transfer a copy of the data to the local only to keep a copy of the data locally. And in this case usually this regulation in Europe are for accounting data. The companies are required to give a copy of the accounting locally, metadata and need to be kept locally for access by local authorities.
And then you have conditional flows. So the case of the GDPR which data can go abroad but only certain conditions are fulfilled. Consent of data subject. And we see this the number of measures like those that are applied globally are rising incredibly fast. We see over a hundred of these measures being implemented. And the big question here is why are these measures being implemented and why do we see a rise of implementation. One reason is definitely privacy. Also I will argue that a lot of measures which are imposed under the policy objective of privacy are not ensuring privacy for the data subject. Another reason is national security. A lot of measures are justified under the national security objective. Another can be cybersecurity. For example, a critical infrastructure needs to be protected. So we need to keep data locally so that we are more resilient in the case of a cyber attack. We need to keep data locally and companies have to use local data centers. And we can tax these companies. And also we see more broadly a general reasoning of economic development, especially in Developing Countries in the arguing if we keep data locally then it is easy for other companies to make use of this data to grow in our country. Do these measures really achieve these policy objectives that countries are talking about? And this is what I think the discussion should be about, on whether keeping data locally makes the country more secure and whether it makes data more private.
In the case of GDPR I think that by asking an extra consent for sending data outside Europe you are not really ensuring the privacy of the data subject. Or in the case of Russia by keeping data locally are not making the country more secure. Or especially for the developing economies just processing data in local data centers does not make companies to use this data to create in the country. Transparency and open dialogue on why we want the other data to be kept locally will overcome this problem.
>> MAARIT PALOVIRTA: Thank you. I think that's a nice bridge to our next speaker. So are these kind of restrictions and barriers really beneficial for countries? Estonia is a bit of a legend in Europe in terms of high level of digitalization and innovation. So Piret, how does Estonia deal with data?
>> PIRET URB: Hi. Good morning. I will offer you a few ideas from the point of view of the state as my last 15 years I have been working for the state actually. So yeah, just to pick up the last point from next to me, that Estonia is not keeping all the data of the state locally anymore. So there are some other means also taken onboard already, but from the point of view of the state what I would like to emphasize how to related to the data and related to data economy, the important point is how to keep data safe, how to take advantage of data. As the title of our panel is also consisting world competitions. So how to ensure that the state would be competitive enough so the most important element there is education actually. So this is something what Estonia and Estonian politicians have been doing for a long, long time.
I think quite before many other countries they understood that in order to take advantage of this data economy there have to be enough people who are competent and keep data safe, how to handle the data, how to manage the data of the state. So there has to be an educational system which supports that actually. So in most of the countries we have experience that education systems are a bit old. That it is a field which is very conservative usually which is difficult to modernize and it is difficult to change but this is this is something a number, No. 1 whatever state should think about actually.
And the second point what I would like to bring out is a trust. How to create the trust between the state and the people. So the people are not going to use the data or people are not going to keep their own data if there is no trust between the Government and people. Our Government has done a lot in this point of view. For example, all the names and the phone numbers and e mail addresses of all civil servants are available on websites of the state institutions. And not only this contact information but also the salaries actually.
So the state is really transparent which is a point how to create the trust between the citizens and the state. So that both sides could really take advantage of the data. And the data that the state owes about people, about every person is also visible to the person through this electronic I.D. card, whatever Estonia has. So you still have control on your data. And you can access it with your I.D. card from anywhere any time. And you see what the state has actually. So you are important that you still are the owner of your own data and you can also feel your privacy protected. So there has been created a lot of trust. Related to the transparency it is also that the companies can see that as the state is very transparent, they also trust the data to the state.
So as there are the tax declarations, as everything is done online, so the economic sector can be sure that there is no corruption. Because you never need to go to the official in a certain state institution and talk to or bribe someone or the things like that. It is everything. Everything is online which ensures the same rules and the equal treatment for everyone.
And that's the data is kept safe. So this is how it helps with the economy. And the last point what I could make as our time is very, very limited here, is just to introduce you the last innovation by the state which is e residence actually. We have a person in the panel who is an e resident of Estonia which doesn't mean that the e residents, the citizens of Estonia but they get access to many state services. And they can create EU registration company in Estonia and take I.D. card which is an electronic. So they can use their digital signature and things like that. So this is like a last, you know, innovation by the state actually. So this is all available on the website. If someone is more interested in our or ask the details from a practical point of view from the person next to me who is an e resident of Estonia. So thank you very much. And I'm looking forward to all the questions. So thanks.
>> MAARIT PALOVIRTA: Thank you. So indeed Martina is an e resident of Estonia and she is paying taxes in Estonia although she lives in Brussels. Ahh, Germany. It is a way for Governments to be innovative and attract investments and those pressures, tax Euros. So our final speaker today is Jean Gonie.
>> JEAN GONIE: Does that work? So thanks for this invitation. Now it does work. So what is good when you are the last speaker is that you think you really need to make it very, very short, short initially but note very short given the time and the fact you would like to have questions with the audience. I will not make a wrap up but I will not say what has been said already because I wanted to discuss and address data flow but I will make it very short. Maybe we should have started with this but just would like to bring the definition because our session today is also about sustainable goals. How can we ensure this. And sustainable, assume sustainability. It is a very interesting word. Definition of this word is using a resource. So this resource is not permanently damaged. This is the idea of the topic today. The question is how can we ensure that as a resource that data is not damaged or misused. And we had good examples of this before. So the most tricky question is how can we ensure that data grows profit to the maximum players, to the maximum stakeholders all over the world. Of course, and I will not reiterate that, data flow is one of the effects, especially from the open commission. I think they are correct. That can prevent competition. Because we got limitation on data flow and data localization is indeed preventing competition in today's world. The question is and we discussed this already, is why do we think that this is indeed not good for competition and for the economic goals. Of course, some countries want to limit this because of security reasons and this is one of the reasons that the commission can accept. But the most interesting is that in those countries the restriction has been put in place to promote domestic innovation. So it is a kind of competition on data goals at the domestic level. But what is also interesting is not only, of course, at the comment level but also at the company's level. And today data analytics clearly are changing the competition framework. Today a leading company can use its effect to launch a new business model. And this has also been the case, but today is the network effective on digital platform creates a winner takes all dynamic that is not easy to compete with. This is where data has really an important value. So this is a very complex and evolving issue. Evolving is certainly the most important word today if you want to ensure these goals and I am about to finish. That's a short one.
But what I wanted to say at this moment is that we can, of course, many things can be done. We can imagine and hope sustainable goals. If we can be in a position to establish a level playing field, this word is not a catchup word and this type of field can be achieved in law makers, understand that the functioning of data value chain is really important. Most of the time this is a misunderstanding from the law makers about the data value chain. So basically that's the understanding of the way that data is collected, stored and analyzed. So if there is this understanding of this value chain from data collections to I think this would really change quite a lot and help a lot these sustainable goals. And, of course, to help this we need to be in a position to put in place a constant dialogue between all stakeholders representative of the state, companies and NGOs and other stakeholders. So that's very good because that is what EuroDIG is precisely for. Next year as well in Netherlands but this is again very important to be in a constant discussion all together on this topic. Thank you.
>> MAARIT PALOVIRTA: Thank you, Jean. Very interesting. So from the private sector perspective we hear the data value chain. Nice concept. So starting to see how we can create markets and different markets around data. I would now like to open the discussion to the audience. We need debate in the room. We want to also have your questions and inputs and views. Teona, do you have any questions from the audience at this stage?
>> TEONA TURASHVILI: Not yet.
>> MAARIT PALOVIRTA: Do we have any questions to the panel? Please we have a mic here.
>> Hello. Thank you for the interesting panel. My name is Darilo. And the question is, first of all, to Ms. Piret and then to Ms. Martina. Here is the question. I know about the process of Estonia incorporating its own state crypto currency. What would be the special benefits for e residents? That's the question to Martina actually. I am really interested what are the advantages here because it is all about data. I'm really interested in how can that create growth in your cases. Thank you.
>> MAARIT PALOVIRTA: You would like to comment first and then Martina.
>> PIRET URB: Thank you very much. It is a good question. Related to crypto currency, Estonia has been quite creative in the last 10 years. Estonia had to pick this up immediately and we have to try all the economic advantages to see if there is something useful for us and how to how to make it work for our economy, how to boost the economy through that and how to how to be more competitive as a country in the world. Because and how to ensure the growth. So all these modern things, this is how the state system, that if there is something if it is worth it to try to we just go for it. And as I mentioned earlier that we we have now quite a good bunch of people who have studied ICT, data, how to manage it, how to keep it safe, all these things. This is just how it is. But related to e residents this is again related to the economy, that if there are other people who, for example, who want to create a company in any other country, than their own country why not would it be Estonia, for example. But it is again useful, useful for our state and yeah, just for the background, that it is not the most easy to get e residents. It is still that you have to apply. There are certain conditions and all that. But it is an opportunity for you. And we are also interested in this knowledge and experience, what these people are bringing to Estonia. So thanks. Maybe Martina, you can say something from a practical point of view or what are the advantages. You have gone through that.
>> MARTINA FERRACANE: I actually wasn't aware that Estonia has their own crypto currency.
>> PIRET URB: Yes.
>> MARTINA FERRACANE: What I knew Estonia is running services on the block chain. When it comes to crypto currency I don't yet see the right benefit to consumers and to people of the services. And I see yet as of today still just a sort of speculation, source of speculation. But I do see a lot of services being created on the block chain. Also with the with use of crypto currencies which can bring advantages to consumers. For example, you have some cases in the U.S. of companies that are paying their employees by using crypto currencies. If the employees are actually from a different country than the country they are working. For example, in the U.S. they have Mexican people are working and by using block chain technology they don't pay the conversion. There is some applications that might be beneficial to people, but the problem there is if you go in the financial markets like the problems in terms of also the sustainability and risks, obviously in crypto currency for mainstream economy are significant. So yeah, but I think on the other side looking at block chain as a source of assuring also that there is transparency on transfer of rights in general, like also on contracts can be much better applications than crypto currency per se.
>> MAARIT PALOVIRTA: Thanks. Okay. Thank you, Martina and Piret. Do we have any other questions? Please.
>> My name is Yogi. I am from DNG. And I would like to ask specifically the commission but the panelists as well. Very recently a new concept has been coming up and that is taxation on data. So what do you think about that specifically commissioning? Please.
>> MAARIT PALOVIRTA: Yes, please.
>> I assume you asked the question the way you want to phrase it. Taxation on data it is not something that I am familiar with it. Are you talking about a digital tax that the commission was proposing?
>> No, I am not saying that the commission is proposing something, but as a lot of societies and Governments just realized that a lot of money can be made about data and that consumers are paying services with their data. It has been asked as a new concept, no matter or no idea how it is going to be implemented. But there has been coming up the concept that taxation could help us in regimentation of data flows or I just don't know. Taxation on data that was a concept.
>> PEARSE O'DONOHUE: Okay. The fact is that we have done our analysis which has brought us down a different path. We do have significant large companies which are multi national in nature who are generating significant turnover and profit through their businesses in different countries without necessarily being taxable or paying tax in the country in which that economic activity takes place. So we have actually proposed giving quite a high threshold. There should be the possibility for taxation in relation to that activity. On the data itself on the other hand, we would see it as being hugely a huge disincentive to the development of the data economy. And what's more it would mean that the companies which are used to being taxed on the basis of the service they provide their turnovers, their revenues, would find themselves in double taxation. We are in a situation in which our whole policy focus on encouraging the take up and development of data technologies. And I go back to the very first point. Because of the benefit of all sectors of the economy in the modernization and digitization of economy and society.
>> MAARIT PALOVIRTA: Thank you. Martina wanted to comment as well.
>> MARTINA FERRACANE: There is a lot of discussion going on for like 15 years in WTO on taxation on data because WTO was agreed I think about a decade ago that there is a moratorium on taxing data flow. There is an agreement that that is not, not be a tax on data. Now this moratorium is renewed every two years. So now the last renewal was in Argentina in the last ministerial meeting in December last year and a lot of discussion about whether to renew this agreement, not to tax data because many developing economies have seen this as have seen the possible taxation of data as a way of gaining profits. And they see something coming from the West, is a proposal coming from the West to make sure that companies and western companies can provide their services to the Developing Countries without restrictions. On the other hand what end what you have is western companies that are arguing that this moratorium should become should not be renewed every two years, but we should basically agree globally that we are never going to tax data. And there is a lot of countries that are against it in the developing world.
Now I think the reason why they are also talking about it now with really printing, for example, some goods can be moved from one country to another. You can transfer a model of a product through the computer and you download it and you create a good. But what I think is important there is to make sure that the discussion about the data is that goes end to end with the discussion on services. I think that data should be seen as a part of a service. And therefore you should not see data per se as being taxable but rather being taxable if it becomes a service and when it becomes a service. For 3D printing moving a 3D file is called an SCL file between a country and another one does not mean that this file is going to become a good necessarily because it still has to be 3D printed successfully. We have to make sure we don't tax data because it is moved. I think it could be detrimental to the economy in general.
>> MAARIT PALOVIRTA: Thank you. Did that answer your question? Thanks very much. Further questions? Do we have more questions from the audience? We still have time for one or two questions before you go for your coffee break. So this is your chance.
Okay. So I have one question actually. So we have heard when we talk about in Europe about the data opportunity and there is all these pieces of research that this will bring hundreds of billions of Euros of economic growth and jobs alongside through the to Europe and to European citizens as well. So this is a question to all the panelists. So do you do you believe that Europe can and Europe, EU and wider Europe can deliver on this promise of data in the next five years, yes or no? And whatever your answer, what would be the key one one key thing that we should solve in order to do that? Pearse, would you like to start?
>> PEARSE O'DONOHUE: I'm used to getting the last word. Genuinely you would expect me to say it. So how realistic but honestly we do believe which is why we have invested so much in the policy. Which is why the data economy package is an important part of the overall single market strategy. It is because we can, we must achieve these objectives of a data based economy where there is a free flow. Where, of course, those who generate data are able to and allowed to generate proper returns where that has a critical business significance that they are allowed to protect that data. But that in the commercial frame we can where possible generate access to data so that it can be reused, so it can generate new business models. Large companies are very bad at exploiting the full value of their own data. And small dynamic startups are very good at doing that. So it is a win win situation. We are already at the start of it. We have evidence from our own startup incubators that those SMEs that have access to open data are more successful and it is empirical. So I think that we can do it, but I also know and the commission is convinced that we must do it.
>> MAARIT PALOVIRTA: So we need to have all the stakeholders involved at all levels. So what about from the larger company perspective, Jean?
>> JEAN GONIE: Thanks. And I would agree with what has been said. It is not an easy thing to say. What is more important is that jobs that will be created from this data. And SMEs have a role to play. We are supporting a lot of SMEs all over the world, especially in Italy. So in Italy we have a startup incubator with Weis University both in Milan and Roma. Lots of jobs have been created since this opened and this is a good sign of explaining how data and startup can effectively bring goals and create jobs and this can be a virtual circle. I am pretty positive about this.
>> MAARIT PALOVIRTA: We have two yeses. Martina.
>> MARTINA FERRACANE: Personally I think that we are a bit overselling this digital single market thing in Europe. I think it definitely is a good thing to do and to look for a digital single market but also I think that our package of digital single market is not ambitious enough to make sure that Europe becomes a leader in the Digital Economy. And also I think that when it comes to creation of jobs we have to be very careful to say that more keeping data locally or exploiting better data, exploiting data, creating better jobs. Digitalization is destroying jobs and transforming jobs. If we are not investing in education and make sure we are prepared to make the most, to move people from jobs which become obsolete in the Digital Economy, to jobs that are going to be created and transformed in a digital world we are not going to see benefits going being distributed in the old economy. I think it is very important to focus on policies to create a single market but how everyone can benefit from a Digital Economy and create an environment for startups by supporting accelerator programs and make sure that people in general can benefit. And redistribution is going to be also a big part of it. You cannot prepare everyone to live in the Digital Economy. You have to make sure that those people who are going to be left behind are supported in this transition.
>> MAARIT PALOVIRTA: So we need a wholistic approach. And we need some flexibility in the structures of our societies and economies. Piret, you have the last word.
>> PIRET URB: Thank you very much. For this question I could only bring out the point that the data, we are in the situation already now that the data itself cannot do anything and cannot give enough. So it has to be combined with AI actually. And this is where we are heading. The Artificial Intelligence has to be put together with the data and through this combination it has to be put like for the advantage of the countries and for the people actually. So I would also like to be an optimist here but I would say that it depends also how much the business sector is able to push the Government, actually the state because usually the business sector is more innovative, more open minded in this point of view and taking function faster. So that the Government's regulations are taking a bit more time but at the same time there is no time if Europe wants to be competitive among the other very competitive continents and regions in the world.
So I would say that data together with AI is the key that could create the jobs actually and, of course, to create the jobs through the education systems need to be modernized and as fast as possible.
>> MAARIT PALOVIRTA: So we are looking at more of a business driven approach. We had two yeses and two yeses, which I think is a very promising result. We have five minutes left now. I would like Anna Maria to I don't know if you can post them on the wall. So she has been taking notes and some conclusions in the sessions. And in the tradition of EuroDIG we should have a Consensus over the messages from this session. Would you like to present your conclusions?
>> Yes. Sure. So thank you. I tried to summarize this brilliant panel in five bullet points. Tell me if you agree or not or if you have any comments to make. So data is giving rise to international data flows and economic growth has been larger than traditionally traded goods. Favorable policy and regulation can enable data. Economy to increase even more in Europe and elsewhere. Competition in the data driven world is global. Currently there are 2.5 billion digital customers around the world. Almost 2 billion customers will transact through mobile devices. So private companies has been using data to sustain and drive economic growth. The free flow of data is essential to the avail of data. Europe has to secure a degree of transparency, openness and fairness. In order to do that it has created an observatory. There are competition rules that can come in to force in extreme cases. Business needs to cooperate to help institutions to tackle abuses. For furthermore, data flows have become part of any standard free trade agreement. The European market has been accused of protectivism but the rule such as the GDPR aim to protect the citizens even if it offers barriers.
Developing and Developed Countries have been offering restrictions to the flow of data in imposing increasing restriction to the movement of data in four different ways; transfer data across borders, local processing requirements, national security and cybersecurity barriers and taxation and sustainable growth depends on a fair playing field in terms of usage of the Euro. So I don't know if you would like to
>> JEAN GONIE: I do have one additional remark. Thank you. So I think the last bullet, you made it very close. So that's fine. One bullet and this affects what has been said. Just wanted to say that preferred user word level playing field instead of fair playing field. And then I think that's an important point that you made. It is worth adding the data value chain approach that I don't see here that I mentioned to you that it is important that rule makers and others, value chain which is, you know, from data collection storage and synthesis of data. That is what data is about.
>> Sure I will do that.
>> PEARSE O'DONOHUE: I would ask you to change one word. In the third bullet point where you say that there are barriers to the full data including national security, that's related to what I said. I would say other than national security because the commission is always recognized that for genuine national security reasons there may need to be barriers. So one word or the couple of words that I ask you to change. And then honestly if I took it as very positive criticism of the DSM but what Martina and Piret said at the end, the yeses, if needing to work on digital transformation because other jobs will be lost, the need for digital skills and, of course, the role of Artificial Intelligence. I think those are very important things that we heard at the end.
>> MAARIT PALOVIRTA: Very good. Thank you. Let's see if our audience is with this and the rest of our speakers. Any objections, any final comments? Melle. We can't hear you. It is better to do it with the mic.
>> MELLE TIEL GROENESTEGE: Sorry. In the third bullet point it says that data flows have become part of any standard free trade agreement. Maybe Martina can add to that. Third bullet point it says free flow of data have become part of free trade agreements. I don't think that's the case yet.
>> MAARIT PALOVIRTA: So it will maybe happen in the future. So it hasn't yet happened as such. So yes. Just minor point. Final comments?
>> MARTINA FERRACANE: For me, I can tell you also on the side, the four types of restrictions are like you have bans and local storage and conditional flow. But I can tell you more.
>> MAARIT PALOVIRTA: I don't see any more hands. So I would like to thank our panelists. Thank you very much. And we have a coffee break now. So you can have your second coffee of the morning. And I believe the next session will start on the hour at 11. And it will be those parallel sessions. So you will find them on your agenda. Thank you very much.
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