Why Europe is lagging behind in digitalization
The European Union falls behind the United States and some Asian countries in certain areas of digitalization. Kazinform News Agency correspondent explores the reasons behind the slow adoption of digital technologies.
Strict data protection regulations
Europe enforces stringent data protection laws, such as the General Data Protection Regulation (GDPR), introduced in 2018. While essential for safeguarding the privacy of individuals and organizations, these regulations also hinder the implementation of new technologies due to the complex requirements imposed on digital solutions.
GDPR aims to strengthen the protection of EU citizens' personal data, standardize data processing rules across the region, and establish strict compliance requirements for organizations handling personal data, regardless of their geographical location, if they interact with EU citizens' data.
Barriers to digitalization
The European Union comprises 27 member states with diverse languages and legal frameworks. This diversity complicates the implementation of unified digital solutions and creates barriers to integration. For instance, northern EU countries are ahead of their partners in terms of digitalization progress. Additionally, the level of digitalization varies not only between countries but also across different sectors.
Job vulnerability
The trend of digitalization in Europe raises concerns about job losses and social inequality. The EU promotes a "human-centered" approach to digitalization, aiming for technologies to serve society rather than displace it.
Dependence on foreign components
According to analysts, Europe's lag in digitalization is also linked to its position behind technological giants in the U.S. and China. Dependence on external suppliers, such as American cloud services or Asian hardware, raises concerns about the EU’s strategic autonomy and slows the adoption of digital solutions.
Reluctance of older generations to embrace digital services
Another factor contributing to the slow pace of digitalization in Europe is the hesitation of older generations to adopt digital services. The proportion of the elderly population is increasing due to demographic aging. According to the latest Eurostat data, around 21% of the population was aged 65 and older in 2023. Projections suggest this figure will rise to 30% by 2050, driven by longer life expectancy and declining birth rates.
Bureaucratization of funding mechanisms
Many digital projects in Europe are funded through public programs, such as Horizon Europe. However, these initiatives often involve lengthy bureaucratic processes, which can delay progress.
What experts say
Belgian IT expert Inna Chefranova highlights that the EU’s cautious approach to digitalization reflects its commitment to security, privacy, and fairness.
“However, this caution creates significant challenges for businesses. Over 20 years of working with global IT giants like IBM, Microsoft, and Cisco, I have witnessed how regulation impacts innovation,” the expert notes.
In her view, although these regulations in Europe are designed to protect citizens and create equal conditions, the growing complexity of compliance often becomes a heavy burden for companies, from startups and small businesses to large organizations.
The General Data Protection Regulation (GDPR) has become a global benchmark for data privacy. However, Chefranova believes the associated compliance costs can be overwhelming. Full adherence requires hiring legal experts, implementing robust data management systems, and maintaining constant monitoring—all of which can be prohibitively expensive for smaller companies.
“A fine of €290 million imposed on Uber in 2024 for data transfer violations is a striking example. It’s important to note, however, that even small businesses can face fines under GDPR of up to €20 million or 4% of their total annual revenue, whichever is higher. For a startup or small company, such a penalty could be devastating and potentially lead to closure,” explained Chefranova.
But the challenges aren’t limited to startups. Businesses of all sizes face significant investment demands to comply with regulations such as the Digital Markets Act (DMA) and the ePrivacy Directive, the IT specialist noted.
“For example, major tech companies like Apple have faced accusations under the DMA for restricting alternative payment systems, forcing them to bear enormous costs to adapt their business models. Smaller companies relying on these platforms also struggle, as they must comply with new rules, increasing operational complexity. Similarly, the strict requirements of the ePrivacy Directive for obtaining consent for cookie use require constant updates, which not only disrupt the user experience but also demand technical and legal resources,” she explained.
The expert highlighted another issue: cybersecurity, which is governed by regulations like the NIS2 Directive.
“These rules are crucial in the face of growing cyber threats, but compliance requires significant effort and expense. Companies must invest in advanced security systems, conduct regular audits, and develop incident response plans. For many organizations, especially those in traditional sectors undergoing digital transformation, these requirements place a heavy strain on budgets and slow down innovation,” the speaker noted.
She added that the upcoming AI Act introduces another layer of complexity. While its risk-based approach aims to ensure the safe and ethical use of AI, the compliance requirements, especially for high-risk applications, are both costly and time-consuming. Businesses developing AI technologies must allocate significant resources for legal expertise, data validation, and risk mitigation, which slows down adoption and stifles experimentation.
“Even the EU’s sustainability initiatives, such as the Taxonomy Regulation, create additional challenges. Now, businesses must align their digital projects with environmental goals, adding a new level of reporting and regulation. While this aligns with global sustainable development goals, such measures divert resources that could otherwise be directed towards innovation and growth,” the Belgian expert expressed.
Earlier, Kazinform News Agency reported that U.S. President Donald Trump announced the launch of the Stargate project, aimed at investing up to $500 billion in artificial intelligence infrastructure development across the United States.
