Europe wants to develop its digital economy

  • Between now and 2016, the European mobile app market will be worth 15 billion EUR.
  • In the United States, the digital economy has created over 500,000 jobs.

In Berlin on Wednesday the European Commission presented preliminary results from a large study conducted by GigaOM and the National University of Ireland, Galway. The study’s objective was to define the EU’s priorities for the development of the European digital economy.

“It’s a dynamic market with very strong growth,” explains Maciej Dabrowske, researcher in charge of the Eurapp program. “The European Union has to find a way of countering Silicon Valley to attract talent.”

Neelie Kroes, vice president of the European Commission, constantly repeats the idea that Europe has to work together if it wants to become a major player in the digital economy. During TedxBrussels, she spoke of the enormous gap that separates Silicon Valley and the various European innovation hubs. “Out of the 20-plus giant cloud providers, only two companies are in Europe. Seventeen are in the United States.”

Since 2007, the digital economy has created over 500,000 jobs in the United States. Europe has only begun to realize this market’s enormous potential.

Despite its lagging start, the European digital economy represents a breath of fresh air in the current economic stagnation. Between now and 2016 the European mobile app market will experience an economic boom of close to 15 billion dollars according to a Vision Mobile study.

In the near term the GigaOm study provides a less than glorious report on the European digital economy. The fragmented European mobile app market is too focused on the local economy and not enough on the rest of the world. According to GigaOM, the majority of European developers primarily target their domestic markets, while American developers concentrate their efforts on emerging countries.

Despite the fairly enthusiastic figures on jobs (over 60% of businesses surveyed want to hire developers next year – and some nice success stories) the situation remains precarious for developers on the old continent. It’s not surprising that the majority of European developers are currently concentrating on mobile apps for multinationals. “We launched Mubaloo with two people, and now we have over 50 employees,” explains Mark Mason, Mubaloo’s CEO. Mubaloo is a young British start-up that developed apps for businesses such as HP, Virgin, AXA and the Royal Bank of Scotland.

The problem “is that there’s not a culture of failure in Europe,” according to David Card, GigaOM’s vice president. Young entrepreneurs tend to focus on profitable contracts with big companies rather than to develop their own applications. 58% of mobile apps produced within Europe have a purely commercial objective for established businesses.

In its study GigaOM also discussed the fact that American multinational corporations control the major mobile application platforms. Google, Facebook, Apple and Microsoft currently govern the principal app stores.

There are of course intrinsic problems within the European Union. Different cultures, official languages, poor 4G coverage and low smartphone adoption rate in some markets make a developer’s work much more difficult than in the United States. Faced with this hostile environment developers have no choice but to seek the European Union’s aid.

It is a real challenge for European companies. Disparities between the EU’s different geographic areas run the risk of favoring hubs that already exist in the major European capitals of Berlin, Stockholm and London.

Next February GigaOM will present its study’s final results. The European Commission will study the issue and put a strategy in place for the support of the Union’s digital economy.


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