The past few years have seen the adoption of a regulatory push from the EU when it comes to digital markets, digital services and data. It reconfirmed Europe as the global rule-setter in the digital world. After the GDPR, we now have the Digital Services and Digital Markets Acts and the Data Governance and Data Act in place that could have a Brussels effect far beyond the EU’s borders. Whether this new regulatory framework is enough to change the dynamics of the digital economy remains to be seen. Past experiences should make us weary and realistic about the effectiveness of rules to stop the trend where the power of Big Tech firms seems to grow exponentially over time. Since the release of Chat GPT 3.5 in the autumn of 2022, the realisation has become mainstream that AI and the 4th industrial revolution are gathering momentum fast.
The narrative is that the wave of innovation of this industrial revolution will eventually benefit everyone. And yet, history shows that unregulated capitalism creates significant inequality, and benefits never spread automatically. We see that today, with inequality rising across the board, while a few big tech firms have amassed enormous power and wealth. This inequality is not just the result of the spread of digital technology but also closely wound up with the liberalisation of capital, globalisation, deregulation, and the decline of organised labour. Europe is searching for its model for the digital age, where there is space for non-commercial activities and public services and solid industrial relations are supported.
After the upheaval and technological change of the first industrial revolution, social democrats arose to provide refuge from market forces and exploitation by creating a range of new institutions (trade unions, voting rights, mass public education and healthcare, public libraries, etc.). A similar task awaits now as the institutions of the industrial era continue to disintegrate. In theory, digital technology can enhance forms of social coordination not based on commercial motives and competition (better public services, a more responsive democracy, social innovation), but this requires collective action. Europe is the continent where this innovation of the institutions of the digital age has the potential to originate, but it will need a progressive and strategic approach.