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Europe’s commitment to the data economy

data economy
Julen Ugalde

Julen Ugalde

Head of European Projects at the Bilbao office

Europe is in the midst of a major commitment to the organisation and exploitation of data. Data is defined as information that is continuously generated in any sector and can include, for example, a patient’s medical history and the medication they are taking, traffic or road accident statistics, air quality metrics or CO2 emissions, energy generation and consumption figures, or information relevant to a factory, such as production, quality levels, costs, and failure rates. But why should we care about these data now? In recent years we are experiencing a radical increase in the amount of information we can collect and store, as electronic devices become increasingly ubiquitous and capable of incorporating a growing number of sensors. As digitisation permeates all areas of society, the volume of data we generate continues to grow. It is estimated that in 2018 this had already reached 33 zettabytes, i.e., 33 followed by 21 zeros, and that by 2025 this figure will have increased fivefold.

This gives rise to several important challenges. To begin with, where do we store them: on hard drives, in local databases, centrally in the cloud, or do we need to think of a new solution? And how do we deal with the implications related to data ownership (who owns your electricity consumption information?), security (how do I ensure that critical production data from my factory does not end up in someone else’s hands?), data quality (is this temperature measurement I recorded five years ago correct?), or accessibility (how do I ensure I can access my data when I need it?). Another big challenge is interoperability: data can be stored on different platforms and in a variety of formats, and this can pose problems when it comes to accessing or sharing information.

And finally, there is the big challenge: data exploitation. In other words, what do we do with all this information? What we want is for it to be useful, to provide us with valuable knowledge, and to help us make the right decisions. Or, going further, that it allows us to define new paradigms and business models and that it helps us to transform society. If anything is already changing, it is that we are increasingly aware of the enormous value of data in all areas of our society.

A European strategy for data

The EU is seeking to position itself in this global market, with the ambition to turn Europe into a data-driven society, which is perceived to have enormous potential to drive innovation, economic growth, and citizens’ well-being. The figures speak for themselves: the value of the EU data economy is estimated at €829 billion, which would mean, among other things, work for almost 11 million data experts by 2025, a number double that recorded in 2018.

For all these reasons, as part of the “A Europe fit for the digital age” priority, the European Commission launched the European Data Strategy in February 2020, with the aim of creating a single market for data that allows for the exchange of data in a fair way and with clear rules regarding its access and use. Common data spaces at European level seek to respond to all these challenges.

Based on a set of design principles, they aim to provide universal access on fair and non-discriminatory terms (FRAND principles), and with tools to control, exchange and use data. A data governance structure and mechanisms must also be established, complying with existing legislation on data protection (GDPR), privacy and electronic communications, among other issues, which implies great challenges at the legislative and regulatory level. Data spaces must be interoperable and easily interconnectable with other data spaces to ensure greater efficiency in their management and use, trying to promote common standards. And, of course, the security and privacy of data stored, processed, and shared is a fundamental principle.

The European Data Strategy initially defined a set of sectors as priorities:

  • manufacturing industry, with the aim of improving its competitiveness and performance;
  • European Green Deal, to support its actions;
  • mobility, including intelligent transport;
  • health systems;
  • finance, for a sustainable and integrated financial framework;
  • energy, seeking to facilitate innovative solutions and contributing to decarbonisation;
  • the agricultural sector, to boost the sustainability and competitiveness of agricultural holdings;
  • Public administrations, with the aim of improving transparency and promoting the digitalisation of public services;
  • skills, to bring the education system into line with labour needs.

Data spaces for media, cultural heritage, smart communities, and language have been added to this initial list.

Building the data spaces

The Internet of Things, advanced data analysis tools, artificial intelligence and machine learning make it possible to cover some of the objectives described above, including the data collection and processing phases, as well as tools to ensure the privacy and security of information. However, the current technology and legal framework are not sufficient to move towards a true data economy and meet the objectives of the European strategy.

What do we need to build a data space? In ICT systems we usually speak of a layered architecture, where each layer has a purpose and covers a functionality and communicates with those above and below it. This abstracts the user – i.e., the applications that will access the data space – from all the complexity underneath.

In the case of data spaces, the lower layer is the entire technological infrastructure that hosts the data, including servers, storage devices and all the communication elements. Until recently, the most viable solution in most cases has been the cloud, which involves storing and processing data on remote servers usually managed by external providers. This model allows computing and storage resources to be allocated on demand, making it very flexible, scalable, and cost-efficient.

In recent years, however, other options are becoming more popular, such as edge, which involves processing data on devices closer to where they are generated, significantly improving the speed and efficiency of data transmission. A combination of both can also be used, where part of the processing is done on edge devices and part on remote servers in the cloud, known as fog computing or cloud-to-edge computing. The choice of infrastructure type will be one of the critical points in the construction of data spaces and should respond to the specific needs of each.

From here on, the rest of the layers are software. In this simplified architecture presented, common elements should be defined for data exchange, with specific components that help to meet the requirements . There will be software blocks that focus on governance, covering aspects of data ownership, access policies, stakeholder responsibilities and oversight. Other components will focus on interoperability, trying to make different data models, formats, and communication protocols transparent to users. Trust in data exchange must also be considered, with components to ensure privacy and security. To maximise the value of the data, there will be components to find data (e.g., through metadata) and put them on a data marketplace to be exchanged and sold.

At a higher layer, components will be developed for specific services in each data space or to implement business models to be defined in the future. Finally, there will be an access point for users of the data spaces.

Where do we stand?

Beyond the European Data Strategy, there are other regulations underway that aim to boost it. Among others, Brussels is proposing a Data Governance Act, with a view to facilitating the exchange between sectors and European countries. Along the same lines, the Data Act was launched in 2022, which aims to eliminate barriers to access, maintaining incentives for creators and guaranteeing them balanced control.

Collaboration between European companies, universities and technology centres would guarantee the technological developments necessary for the implementation of data spaces. Preparatory actions for most of the defined sectorial data spaces are being funded under the Digital Europe programme. These usually include a mapping of the existing data ecosystems for that sector and the most common formats and standards. An example is the PrepDSpace4Mobility project for the Mobility data space.

In the latest Digital Europe calls for proposals, topics have been published to fund projects working on the development of the middleware components mentioned above, and defining cases that enable optimal use of each sectoral data space.

Other funding programmes will help in the construction of the data spaces.  Of note is the Multi-Country Project in European Common Data Infrastructure and Services Project, funded by the EU budget and several Member States, and implemented as an Important Project of Common European Interest (IPCEI) to provide a common federated cloud-to-edge infrastructure and services, and a European Digital Infrastructure Consortium (EDIC) for the implementation of the data spaces. In parallel, within Cluster 4 of Horizon Europe’s Pillar II (Digital, Industry and Space), many of the topics of Destination 4 (World-leading Data and Information Technologies) cover aspects related to the implementation of common data spaces.

For some time now, there have also been initiatives that are building parts of data spaces. One of the most popular, Gaia-X, aims to develop a secure, federated data infrastructure, trying to compete with cloud services dominated by US companies (Amazon AWS, Microsoft Azure and Google Cloud accounted for 66% of the global market in 2022). Gaia-X was initially promoted by the French and German governments, but already has nodes in virtually the entire EU.

Another important initiative, also promoted by Germany and very focused on data exchange in industrial environments, is the IDS-RAM reference model. The sectorial data spaces to be developed in response to the European Data Strategy will not necessarily be based on Gaia-X for infrastructure, IDS-RAM for data exchange, or any other current alternative, but will certainly build on these previous experiences. For example, International Data Spaces (IDSA), which is leading the development of IDS-RAM, is involved in several projects funded by Digital Europe in the Data Spaces calls.

The future of common data spaces

In the coming years, the European common data spaces will take shape and define use cases that should be useful. It is still too early to tell whether the objectives of the European Data Strategy will be met or whether we will fall by the wayside. Of course, this effort is not without its critics.

On the one hand, there is a risk that, to seek structures compatible with different standards, data formats and use cases, we will end up generating new standards that will only add to the list. On the other hand, sectorial data spaces are being developed independently, and we run the risk of continually reinventing the wheel. To alleviate this problem, a Data Space Support Centre has been established to ensure coordination between the different sectoral data spaces and to ensure interoperability and a common set of standards.

Another aspect that raises questions is the control of data. It is intended that the owner will retain full control, but how this will be implemented is unclear: will it be a digital rights management mechanism, like those that failed in the protection of audiovisual works?

Resistance to change in many organisations can also be a brake on the new data economy. Businesses may be reluctant to share valuable information, even though much of the effort in common data spaces goes into ensuring security, privacy, and ownership. We can see the same in public administration, one of the priority sectors within the European strategy: common data spaces should support the full digitisation of key public services, but internal inertia and bureaucracy are very difficult obstacles to overcome.

And even if we were to succeed in building these common data spaces, the lack of workforce in Europe with the skills to nurture and exploit them is a major problem, as we are far from the Digital Decade target of having more than 20 million ICT specialists in Europe.

Expert person

Julen Ugalde
Julen Ugalde

Bilbao Office

Head of European Projects at the Bilbao office

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