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The missing puzzle piece in Europe’s bid for tech leadership

The next European Commission needs to foster fair competition and respect for intellectual property rights to make sure its industry doesn’t lose out on the global technology race.

There is growing concern about Europe’s declining position in the global quest for innovation. Industry and academia are sounding the alarm bells about the region’s uncertain future in the tech race, fueled by the perceived lack of a strong and modern industrial base as well as fragmented political views and policies across the EU.

The EU has rightly focused in recent years on advancing the Digital Single Market, in a bid to give European businesses and consumers wider and unhindered access to the benefits of digital technology.

Yet it has not paid enough attention to the global dimension of digitalization. In a worldwide economy, diverging approaches to innovation — sometimes expressed in industrial policies intended to shelter national champions — affect the EU’s ability to compete on fair terms with some of its trading partners.

For example, European Commissioner for Research, Science and Innovation Carlos Moedas recently told POLITICO about how he is trying to address the issue of reciprocity in talks with outside countries. “I know that a Chinese company that is in Europe … can get money from Horizon 2020. But if a European company is in China, they can’t get money from the government.”

While policymakers fiercely debate the ramifications of artificial intelligence, data and online platforms both in Brussels and at the national level, certain critical issues — standardization in high-tech industries, the role of intellectual property rights and the importance of fair competition in global markets — remain largely a blind spot. Yet, these are vital to protect and promote the EU’s position in a digital, knowledge-based economy.

To explain: The cellular standards known as 2G, 3G, 4G and now 5G are technological breakthroughs achieved by the combined efforts of some of the most talented engineers on the planet, working together in the Third Generation Partnership Project (3GPP). This open innovation framework brings together the world’s leading innovators in the cellular space, from large multinational companies to highly specialized smaller players. Together with other core wireless technologies, 3GPP standards provide the foundation of connectivity on which whole ecosystems are built, from the smartphone apps of today to the self-driving cars and smart cities of tomorrow.

While the 3GPP standardization model can be traced back to the European success of GSM, it now provides a truly global framework where players from all over the world simultaneously compete and collaborate to create the best solutions for mobile connectivity. Since any company can join the process and access the standard once it is published, many of today’s 5G technology contributors and users were not active in this field 10 years ago.

An ecosystem like this — built around human ingenuity, invention and collaboration — hinges on the need for intellectual property rights to be sustainable.

Intellectual property rights enable companies to share the results of their cutting-edge research and development with their competitors while developing standards for mobile communication, thereby contributing the best technologies to standards like 5G. In addition, the revenue earned from patented technology licensing, once the standard is deployed in the market, funds future investment in research. As a result, tomorrow’s standard-based innovation benefits all.

But there is a challenge. Today, some of the world’s top smartphone manufacturers do not license the patented technologies they use and are de facto protected in their home markets.

This allows for the release of lower-priced products compared to their licensed competitors, and gives them an unfair advantage. It also jeopardizes the ability of those who created this technology to receive a return on the results of their R&D, thereby endangering the long-term sustainability of standardization.

So while players from other regions see tremendous value in mobile communication technology and are increasing their involvement in 3GPP work, European companies may find themselves unable to maintain their leading role because of their struggle to recoup years of high-risk investments.

Ericsson alone employs more than 14,000 highly-skilled engineers across 22 R&D centers in Europe. In a pessimistic view of the future, at least from Europe’s perspective, the technology that connects the world could be developed entirely outside of Europe — with severe implications for EU jobs, innovation and growth.

What can we do about this? At a time when the EU political cycle is renewing, we need to tackle global fair competition head-on and make it a priority for the next European Commission.

As Commissioner Moedas said, real dialogue is needed with our trading partners in a way that brings us closer, rather than further apart. But the Digital Single Market must no longer be viewed as a sandbox in the global economy. While the EU may not (yet) be the home of big tech behemoths, many European small and medium enterprises want to become global Internet of Things champions. Let’s give them a fighting chance.

The next five years will be critical to establishing the EU’s position in the global digital economy, and its priorities need to be set boldly from the beginning of the term.

The EU needs to stand together and ensure that a global level playing field emerges — one based on fair competition, open standards and respect for intellectual property rights. Europe has the potential to lead by example and become the world’s leading digital ecosystem, where innovators are empowered and have the means to invest in and protect new ideas, scale up and compete fairly — inside and outside the EU.

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