Digital economy
"[3] The digital economy is backed by the spread of information and communication technologies (ICT) across all business sectors to enhance productivity.
A phenomenon referred to as the Internet of Things (IoT) is increasingly prevalent, as consumer products are embedded with digital services and devices.
[7] Digital transformation of the economy alters conventional notions about how businesses are structured, how consumers obtain goods and services, and how states need to adapt to new regulatory challenges.
According to Thomas Mesenbourg (2001),[9] three main components of the digital economy concept can be identified: Bill Imlah states that new applications are blurring these boundaries and adding complexity, for example, social media and Internet search.
The digital economy results from billions of daily online transactions (data exchanges) among people, organizations (businesses, educational institutions, non-profits), and distributed computing devices (servers, laptops, smartphones, etc.)
For instance, McKinsey adds up the economic outputs of the ICT sector and e-commerce market in terms of online sales of goods and consumer spending on digital equipment.
This includes key sectors like information and communication technology (ICT),[25] but also other economic activities such as internet finance and digital commerce that are not seen as a part of the ICT-sector.
[24] Examples of industrial digitalization in traditional sectors include remote sensing, automated farming equipment, GPS-route optimization, etc.
45% of spending on business equipment are investments in IT products and services, which is why companies such as Intel, Microsoft, and Dell have grown from $12 million in 1987 to more than half a billion in 1997.
[26] The widespread adoption of ICT combined with the rapid decline in price and increase in the performance of these technologies, has contributed to the development of new activities in the private and public sectors.
It contained the promotion of five principles used to guide the U.S. government's actions towards electronic commerce so that the digital economy's growth potential remains high.
This investment in and development of intangibles such as software is a core contributor to value creation and economic growth for companies in the digital economy.
[27] In early 2000, companies started substantially increasing the amount of capital allocated to intangibles such as branding, design and, technology rather than in hardware, machinery or property.
[36] Advancements in information and communication technologies (ICT) have significantly reduced the cost associated with the organization and coordination of complex activities over a long period.
By adopting common European data protection standards, the EU was able to harmonize conflicting national laws that were emerging as a trade barrier, inhibiting commerce in Europe.
When platforms compile personal data, they gather preferences and interests, which allow companies to exert a targeted action on the consumer through advertising.
[41] Given its expected broad impact, traditional firms are actively assessing how to respond to the changes brought about by the digital economy.
The Conseil National du Numérique concluded that the shortfall in corporate tax gain for Apple, Google, Amazon, and Facebook was worth approximately 500 million euros in 2012.
The variations in adoption rates between the European Union and the United States are driven by the lower use of technologies connected to the internet of things.
[76] The crisis created opportunities to place the Single Market upfront in the European agenda and was aimed to resolve two issues: financial supervision and economic coordination.
[81] In order to limit this problem in the digital ecosystem, the EU aims to qualify certain firms as either as an "abuse of dominant position" or a "cartel" which are against the competition prosperity within the Single Market.
Aside from the fiscal revenue shortfall, this issue has taken a political turn in recent years since some people and politicians feel that, in a time of financial crisis, these highly profitable firms do not contribute to the national effort.
The EU sanctions cartels’ behavior and examines mergers in order to preserve competition and protect small and medium enterprises (SMEs) entering the market.
The decision to approach the DSM from a different point of view is also because the digital space is in constant evolution with the growing importance of online platform and the change of market share.
It found that the digital economy had grown two and a half times faster than global GDP over the previous 15 years, almost doubling in size since 2000.
[8][95] These dynamics create concerns about market power, which could enable firms to charge higher prices and pay lower wages than if they experienced competition.
[96][97][8][98] By increasing automation of tasks previously performed by human workers, the digital economy has the potential to cause job displacement.
As a result, online platforms encourage the flexibilization of jobs and a higher volatility of the labor market, as opposed to traditional companies.
[102] Gig economy companies such as Deliveroo and Uber hire self-employed drivers who sign a contract with the digital platform while the way they work is similar to a regular employee statute.
Yet, for the first time, in March 2020, France's top court (Cour de Cassation) ruling acknowledged that an Uber driver could not qualify as a ‘self-employed’ contractor because he could not build his clientele or set his prices, establishing a relation of a subordinate of the company.
