Emerging Technologies

How Europe can harness digitalization to become a leader in business AI

Europe is lagging behind by not fully implementing digitalization and accelerating digital innovation.

Europe is lagging behind by not fully implementing digitalization and accelerating digital innovation. Image: Getty Images/iStockphoto.

Christian Klein
CEO and Member of the Executive Board, SAP SE
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Horizon Scan: Nita Farahany

  • Europe is lagging behind by not fully implementing digitalization and accelerating digital innovation.
  • Completing the Digital Single Market is crucial if the EU is to boost its competitiveness.
  • By pooling resources Europe can enhance its competitiveness as well as shape the ethical and responsible use of AI.

As the European Parliament elections draw closer, Europe’s future is – once more in the continent’s history – uncertain. While Europe’s peace order is being challenged, the continent’s economic dynamic significantly trails other leading world regions. The lack of a clear long-term growth perspective, particularly in key European nations such as Germany, diminishes Europe’s ability to shape a stable, secure, and sustainable future for its citizens.

For years, Europeans have well understood that digitalization is a crucial element of their future competitiveness. The EU has also positioned itself as a global champion of technology regulation. Indeed, the Digital Market Act, the Digital Services Act and the AI Act could become global reference points. However, Europe has lagged behind in disciplines fundamentally important for our economic and political future: implementing digitalization in all its facets and unleashing digital innovation.

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How can Europe leverage the potential of digital technologies?

Going forward, Europe must change gears. Firstly, this means becoming diligent about Europe’s “digitalization homework”.

All member states, especially the large ones, must accelerate towards the Digital Decade targets set for 2030 in key areas such as digital skills, infrastructure, and public services. So far, progress differs significantly between member states and varies from target to target. For instance, only 45% of European companies currently use the cloud, although the cloud is the digital basis for modern companies to grow, innovate and stay competitive.

At the EU level, meanwhile, European leaders need to complete the Digital Single Market. This is the precondition for digital business models to scale – that is, to thrive and grow exponentially on our continent. A good starting point for the next Commission would be to ensure a consistent and harmonized implementation of the AI Act across member states. Moreover, to avoid overlaps and contradictions that impose unnecessary regulatory burdens, the AI Act should be consolidated with existing legislation in the areas of data protection, data security, and consumer protection (e.g. GDPR).

Completing this “digitalization homework” will increase European competitiveness – and it will also help Europe get a head start into the new era of digital innovation that has just begun. Generative AI (Gen AI) is the biggest economic opportunity since the invention of the internet. So far, consumer applications driven by US companies have captured the imagination of the public. The main economic value of Gen AI, however, clearly lies in its application to the business world.

Europe, with its strong industrial base and wealth of operations data, has a very promising opportunity to be at the forefront of this business AI revolution and to make it the basis of our continent’s future competitiveness.

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How is the World Economic Forum creating guardrails for Artificial Intelligence?

Beyond ensuring an innovation-friendly regulatory environment, the EU’s next leaders can help plant seeds for powerful business AI “made in Europe”. More concretely, the EU could set up a research and innovation project that brings together key European technology companies, leading industrial players, and Europe’s most promising AI start-ups.

The project could leverage high-quality European industrial data and the EU supercomputing facilities currently in ramp-up. The objective would be to build Gen AI models that comply with European standards and to fine-tune existing Gen AI models on European languages, focusing on business scenarios essential for key European industries such as manufacturing and the public sector.

Advancing Europe’s position as a leader in business AI

By pooling resources and advancing a shared vision for AI development, we can position Europe as a global AI leader and move from regulation to enabling innovation. This strategic investment will not only drive economic growth, but also shape the ethical and responsible use of AI in our society.

To be sure, digitalization is not a “silver bullet” – but I believe Europe still underestimates digitalization’s role as a catalyst for larger economic and social progress.

The current situation is reminiscent of the 1980s – another period in history when Europe needed new economic momentum. Back then, the EU’s fitting response was to lay the foundations of the European single market, which propelled the free movement of goods, people, services, and capital. However, Europe also missed an additional opportunity at the time – the opportunity to lead the internet revolution that started at the geographic heart of the continent, at CERN in Switzerland.

Four decades later, the completion of the Digital Decade and the Digital Single Market is clearly the way to go. But Europe should also fully embrace the greatest technological opportunity of our time and make Europe a leader in business AI.

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Related topics:
Emerging TechnologiesFourth Industrial Revolution
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