BLOG: The digital sector is supporting the fight against Coronavirus – here’s how the EU could help us

This week I’ve been consulting with our members about how Coronavirus is affecting digital businesses and what the EU and governments can do to help. Yesterday we sent our initial insights and recommendations to Presidents Michel, Von der Leyen and Sassoli, the leaders of the European Council, Commission and Parliament respectively.

Digital technologies have been at the forefront of efforts to detect, track and find a treatment for the virus, but also in mitigating the effect on the wider economy. Many European citizens are working from home using teleworking software and equipment, or their children are being taught by online education tools. Many of our members are providing these premium services free of charge. We should not forget that the ICT sector also provides the critical infrastructure which supports governments and hospitals in their response to the crisis.

The effects on the digital sector

Like others our sector is suffering due to the economic slowdown associated with the spread of COVID-19. This will lead to a further setback for digital competitiveness and digital scale ups in Europe – even before the crisis, the EU only had 5% of the world fast-growing unicorn companies. Many of the Member State support packages are understandably targeted primarily to save small businesses with lower salaries. Tech companies face different challenges and are facing a real possibility of brain drain and may not recover from the crisis. The crisis is also exposing need for investment in digital infrastructure, which is a lifeline for citizens and business.

We have seen that in the early stages of this crisis it is those companies who gain a large share of revenue from online sales are less affected than others. Likewise, for those companies whose employees can work remotely. The digital transformation, with a large share of revenue possible from online sales, is helping many businesses show their robustness. Exactly like in the 2008 crisis, the digital frontrunners will survive and will benefit post-crisis from their agility.

Global supply chains have been severely disrupted as factories have closed in China, Italy and now elsewhere. For many companies, there is a lot of uncertainty about what happens to existing contracts that cannot be fulfilled. Legal clarity here is so important. There is huge uncertainty in the market and SMEs are being affected more than others. This is where governments can make a huge difference.

Even for those who can work at home there are several issues that are hindering them. The networks seem to be holding up for the moment, although they are showing signs of strain, as anyone who has tried to hold a videoconference in the last few days will tell you. For many, it could be a lack of basic connectivity. Only one in ten people in rural areas has access to 4G, let alone 5G, and only one in five households has access to broadband of over 100Mbps. In addition, border restrictions and shop closures during the lockdown are affecting the supply ICT equipment and the movement of the maintenance engineers we need to come and install and fix them.

In terms of legislation, there is also some concerns that companies will be unable to meet deadlines for compliance because of disruptions to their supply chains. In Brussels too, consultation deadlines will be hard for industry to meet as their attention is understandably drawn elsewhere.

Next steps

Together with one of our German national members Bitkom, we have designed a survey to send to all of members to gain a deeper understanding of the effects of this crisis on our industry. We will have the results back very soon.

In the meantime, stay safe.

Cecilia