Online Businesses and Digital Startups in the European Union: Young, Dynamic, and Globally-minded.
The Internet and digital technologies are shaping our world by the day – it is no longer surprising that they reach every walk of life and cross every line of business.
However, the law is unable to keep pace with the rapid rate of technological development. According to data from the European Commission (EC), only 15 percent of Europeans shop online because of current regulations. Additionally, small online businesses wishing to trade in other European Union countries face extra costs of around 9,000 euros in order to adapt to national laws. The reason is simple: there is currently no Digital Single Market (DSM) in the EU.
“We have 28 different regulations and it is practically impossible to understand how those different regulations work for consumers’ protection and what kind of obligations they bring to businesses,” said Andrus Ansip, the Vice-President for the DSM on the European Commission. “Now we would like to propose fully harmonised regulations for dealing with digital space and some tangible tools for online sales.”
This encouraging statement opened the intense discussions at the biggest ICT and entrepreneurship event in the Baltic region, the #Switch! conference.
Public and private sector representatives from 15 different countries gathered in Vilnius on Oct. 8-9 to discuss the future of the DSM, cyber safety, and digital entrepreneurship in Europe. The free-of-charge conference attracted both experienced digital professionals and the young generation interested in online businesses and digital startups. The most important and relevant issues of our digital everyday life were tackled through three separate tracks of the conference – those for professionals, for youth, and a startup hackathon.
“I do think that in Europe we have great brains, great startups, great businesses, and small and medium enterprises. I see there has been a huge amount of investment also,” explained Erini Zafeiratou, the Director of Public Policy in Brussels, who is responsible for European public policy at Amazon. “I think there is a great potential and we can still do more: we just need to be able to grow the startups in the European Union, in partnership with the United States and other regions of the world.”
According to statistics and data from Global Startup Map, currently there are more than 400 startups in Lithuania, Latvia, and Estonia, but less than 25 percent of those focus on E-Commerce and digital services. The total number of startups in Europe, according to the same service, exceeds 14,500.
Google’s Regional Business Director for Central and Eastern Europe, Artur Waliszewski, is certain that it would not be difficult to create a DSM in Europe. However, the main challenge would be uniting the most interested stakeholders in reaching this goal.
He compared the creation of the DSM with unifying European countries with a single language, which he feels would be incredibly challenging. However, unlike languages, technologies are meant to bring different countries together, and their evolution is proof of this.
“But who benefits the most from having a DSM?” speculated Waliszewski. “It is not a big problem for companies like Google or Facebook or Microsoft, because they are big enough to handle complicated markets – they have enough money and people. It is a problem for startups from countries like Lithuania to adjust their business models, their structures, and capacity to reality.
“It’s the same with countries – big, influential, and powerful countries can manage it, but for smaller countries, it is still very hard.
“The most important thing is that young people, smaller companies, and smaller countries come together and stick to the principle that market should be open, available, and unified, because it’s in their interest.
“They are the ones who will benefit the most.”
Another question tackled during the discussion was public opinion – how easy will it be to switch on not only the Digital Single Market, but also the digital mindset of Europeans? Chris Sherwood, the Head of Public Policy at the Allegro Group, called this “the biggest challenge.” He strongly believes that youth will be its main driver, even referring to this demographic as “Generation D” – from digital and data-enabled.
“We need to be ready to think about digital first, when we think about our education system, government investments, and policies, which are often protectionist and anti-American instead of being globally-minded and digitally-minded,” Sherwood explained.
“On my way to Vilnius, I visited four countries and in each I met digital entrepreneurs. I see the cultural differences between these countries, but when you meet people who are in digital entrepreneurship space, all of them are young, dynamic, and globally-minded.
“None of them think about their country’s national market, or even the European market. They think globally and that’s what we need to do as well.”
All of the digital professionals present at #Switch! agreed that Europe still has a long way to go in unifying services such as E-health and E-government, mostly because these kinds of services are still in development and in the process of gaining people’s trust. Conference attendees expressed that government should exist as an open platform; a nation’s residents and visitors alike should be able to easily obtain an E-prescription from a doctor.
The next topic? According to Dejan Cvetkovic, the Chief Technology Officer of Microsoft in Central and East Europe, “The main issue here is trust in new technologies. There is no trust because we operate under older laws and regulations.
“It is the private sector that needs to encourage administrations to open up, to work with us and unleash the potential of the newest technologies,” he explained. “We, as the private sector, need to promote this trust, encourage the public, and prove to them that new technologies are here to benefit citizens, businesses, and the employees of Europe.”
Although there is a five-year strategy regarding implementation of the DSM in Europe, Andrus Ansip urged changes to be made as quickly as possible.
According to data from the EC, spending caused by the differences in national regulations exceeds 415 billion euros annually.
“We are in a terrible hurry because we don’t have these 415 billion euros per year to waste,” Ansip stated. “That’s why we would like to legislate at least two proposals during this year. We have to do things quicker.”