The correlation between digitalization, economic growth and social progress is already demonstrated by academic research in Europe, America and Asia. These three vectors also form a virtuous circle, a positive relationship that feeds on each other, in terms of innovation and productivity. Digitalization is, in fact, the accelerating and differentiating element that guarantees the competitiveness and solvency of all traditional sectors.
Generative Artificial Intelligence -AI- has been the latest example of innovation among cloud technologies, such as blockchain or even the blockchain itself. machine learning, concepts that already sound almost old to us. They are all technologies that occur in and thanks to the cloud, which is its environment and its necessary ecosystem. There can be no AI outside of the cloud. And surely Generative AI, a much more capable technology than a single product like the ChatGPT chatbot, will not be the last or the most disruptive of technologies. cloud.
The emergence of AI promises a technological revolution of a magnitude similar to that of the discovery of fire among prehistoric people, or electricity in the last industrial revolution. The cloud has changed the way we take data – like the Internet of Things -, store it – creating the big data-we process them -the cloud computing-, and we obtain value from them -for example, with data analytics- for an infinite number of uses -such as virtual reality, the connected car, e-commerce or remote surgery-, which we have only just begun.
The value of data is not measured in Gigs – by weight – but by the knowledge that one is able to extract from it to make better decisions, multiplying efficiency. Without gaining intelligence from the data, these are mere numbers that take up space and are distracting. AI has made machines help us obtain that knowledge from the data, predicting the next element in a chain. And Generative AI also generates new content that did not exist, in any format – text, image, audio, video… -, although always based on previous data and following instructions.
AI and the rest of cloud technologies, those we have and those we will have, are technological, economic, ecological and social opportunities without comparison in history. However, hasty or inadequate regulation in Europe can slow the growth of these technologies, and in some cases even prevent them from being born properly. Regulation can accelerate or limit our ability to have global digital champions in this second Internet era, which Europe did not achieve in the first stage of the Internet and a main reason why they do not exist big techs Europeans.
An inefficient European regulation that represents a competitive disadvantage for innovation to be born and grow in the old continent would lead to lost profits, and would mean a self-limitation to the technological and economic progress that supports the European lifestyle, based on the centrality of the person, the individual rights and the principles of responsibility and solidarity. That is to say, without technology there is no modern economy, and without economy social rights are not financed, because sustainability is not only an ecological issue: our societies require competitiveness to sustain themselves. Breaking this dynamic and giving up competitiveness is not only giving up the virtuous circle explained by the academy, but also entering a vicious circle of protectionism and autarky, which leads to economies such as the feudal one, the Franco one of the 40s, or the Soviet one.
Furthermore, inefficient regulation that slows down the innovation of cloud technologies such as AI in Europe, in fact expels that investment to other regions, increasingly reinforcing the leadership of the United States and China, and relegating Europe to an arbitrage role. . It would be as if the Spanish soccer team had given up playing in Euro 2024 and would have preferred to stay as a lineman to point out offsides in other countries. Ultimately, it would be the beginning of isolationism, only hoping that the rest of the world wants to follow our rules due to a supposed moral authority, less and less supported by its results.
The cloud and implicit technologies are the solution to the main problem that the European Union has: competitiveness. Other regions of the world have more serious problems, such as inequality, or physical or legal insecurity, or political freedom. Europe is in a better position to face a problem that could be merely technical, but our survival is at stake: sustainability, in its broadest sense, for a problem of competitiveness.
When the cloud as an ecosystem offers access to all the innovation in the world, and at a Price equally accessible to any type of organization, the desired competitiveness is more within reach than ever in history. The giant step that the creation of the European Union represented, without barriers to the movement of people, goods and services between Member States, has also been partly granted to the entire world with the digital economy that we call globalization, so the EU It is no longer a definitive competitive advantage that allows us to live off of income.
The growth of cloud technologies has led to increased attention from Brussels and regulators in Europe. First was the Electronic Commerce Directive establishing responsibilities for each type of actor and activity, our founding standard; then came the obsession with privacy and the General Data Protection Regulation; Privacy is necessary but cannot be the objective of our economy and, while it was standardized almost globally, other countries sought to innovate within that framework instead of thinking about the next regulation as a goal.
More recently, the EU has approved many other regulations – such as the DSA, the DMA or the AI Law – that we still have to digest to discover if they add or subtract competitiveness. Meanwhile, the rest of the regions in the world look expectantly at our experiment, and at our daring, to regulate technologies that we do not have, great services that we do not provide, and the size of companies that we have not been able to generate, despite public aid. . And the strategy is not about regulation, as Europe intends: it is about creating powerful, solid companies, technological leaders of the future.
In general, European regulations are acceptable to large actors – mostly non-EU – because their size and global economies of scale allow them to pay the revolutionary-regulatory tax of a fee of inefficiency. Small European companies, however, are suffocated by rules of the game that prevent competitiveness due to the number and complexity of obligations and regulatory burdens that are imposed.
For Europe it is vital – in its most clinical sense – to react. Digitalization must begin to be understood as synonymous with social progress, with sustainability for public rights that depend on the economy, such as universal, public and free education and healthcare, or unemployment, sickness or maternity benefits, or pensions, or social services for dependents: everyone! There is no need to choose between technological innovation or rights, there will be no rights without digitalization. Without competitiveness, one could only decide how to manage chronic poverty, which is the most unsupportive option and the one that generates the most inequality for an elite that can always rebuild its life in another part of the world.
Furthermore, the cloud is the most ecological option, it means making a commitment to our planet so as not to mortgage the future of the next generations. McKinsey studies confirm that artificial intelligence and other cloud technologies can play a critical role in decarbonization, and significantly accelerate and catalyze the green transition. The case behind data is clear: it runs faster and more efficiently through the cloud, has generated cost efficiencies and operational savings, perfects economies of scale and optimizes the use of resources, especially natural resources such as energy, water or hardware construction materials.
It must also be taken into account that some of the main cloud providers in the world have made environmental commitments such as already achieving net zero carbon emissions, while what is foreseen in the Paris Agreements is projected for the year 2050; or power all its activities with green energy –Amazon is the main buyer of renewable energy in Spain and the world-; or help repair leaks and losses in the system to provide more water to the communities where data centers are installed than what they use for cooling – and in Spain more water is wasted from the network due to leaks and breaks than what we people consume.
All of this is key to the decarbonization of our society and economy, and the solution for all types of organizations to achieve it – from Public Administrations and large corporations to SMEs, NGOs and startups – in their digital activity transportable to the cloud, to which It would be very difficult for them to do it on their own. And, finally, it provides the traceability we need to add data to sustainability objectives and measure the real impact achieved.
All these economic and ecological challenges, of competitiveness and efficiency, are at stake due to the vision of technology and the use of regulation made by this new European Parliament and the new European Commission. Norms have an obvious influence on social behavior and the market, and could be said to be the greatest lobby in the habits of citizens: they determine the limits by establishing what is obligatory and what is prohibited, and they condition the perception of what is good or harmful with what is promoted – with subsidies, public offering, free… – and what is discouraged – through taxes, administrative burdens , etc.-. We are alarmingly managing to demonize some technologies such as AI, instead of exciting our young people in their proper use and materializing entrepreneurial projects to tackle the great challenges that humanity faces with this technology.
Europe stakes the future of its competitiveness and the sustainability of our way of life on regulation, as a great promoter or detractor of innovation. An AI Law based on the real risk of each use case and not on the technology it uses, following global standards, that does not isolate Europe, and that does not generate more fragmentation by country or locality on our continent, is critical for our becoming. In the same way as a Market Law that guarantees fair competition, where there is no discrimination for any reason, including country of origin or size, and without intervening where there is no demonstrated market problem –no move without prove-; or a regulation that does not seek to subsidize a European industry – such as telecommunications – by imposing the obligation to finance it on those who do achieve competitiveness – such as audiovisual platforms.
The European Commission has established its technological transformation objectives in the Digital Decade, aiming for 75% of EU companies to use the cloud and AI by 2030, which could add 228 billion euros to the Spanish economy, according to the Public First consultancy. The same thing happens with generative AI, which for Spain, according to the forecasts of reports such as those from McKinsey, could generate around 50 billion euros per year. In the hands of regulation is the ability to energize a virtuous or vicious circle, a pro-innovation or protectionist vision, a digital or defensive bet.
Fire changed prehistory, electricity determined modern life, and cloud technologies such as AI are the great opportunity for a future that we in Europe want at the service of people. Technology can be, as it has always been, the best tool we have in the workshop to achieve this, and thus demonstrate it to the world, once again being the lighthouse that one day began globalization with the first circumnavigation, and that today defends human dignity. above any other interest. But the digital challenge will be achieved with creative talent and business drive, never with utopian and inefficient regulation.
Signed: Andrés Pedreño Muñoz, Professor of Applied Economics
