EUROPEAN COMMISSION Brussels, 6.6.2018 SWD(2018) 305 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT

Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing the Digital Europe programme for the period 2021-2027

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{SEC(2018) 289 final}

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Table of contents Contents 1.Introduction: Political and legal context 1.1.Scope and context 1.2.Lessons learned from previous programmes 1.3.Stakeholder consultations 2.Challenges and objectives 2.1.Challenges for the programmes of the next MFF 2.1.1.Main challenges for the digital transformation 2.1.2.Baseline: current EU framework for the financing of core elements relating to digital transformation 2.2.General objectives 2.3.EU Added Value 3.Programme structure and priorities 3.1.Structure 3.1.1.Capacity building 3.1.2.Deployment of Capacities and Interoperability 3.2.Complementarities and synergies with other programmes 4.Delivery mechanisms of the intended funding 4.1.Implementation modes

4.1.1.Co-investing with MSs in high-cost infrastructure accessible across the EU 4.1.2.Reinforcing existing MS capacities, networking and aggregating - making them available to users across the EU 4.1.3.Ensuring best use of capacities in areas of public interest and industry 4.2.Instruments 4.2.1.Use of procurement 4.2.2.Use of grants, including cascade funding 4.2.3.Use of Financial Instruments / budgetary guarantees 4.2.4.Use of blending 4.3.Cost/Benefit of a new Programme 4.4.Programming and priority setting 4.5.Competition rules and market distortion aspects 38 5.How will performance be monitored and evaluated?



Glossary Term or acronym Meaning or definition AI Artificial Intelligence CEF Connecting Europe Facility CSIRT Computer Security Incident Response Team DEP Digital Europe Programme DESI Digital Economy and Society Index DIHs Digital Innovation Hubs DSM Digital Single Market EAFRD European Agricultural Fund for Rural Development ERDF European Regional Development Fund ESFRI European Strategy Forum on Research Infrastructures ESIF European Structural and Investment Funds HPC High Performance Computing ISA2 Interoperability solutions for public administrations, businesses and citizen MFF Multiannual Financial Framework MSs Member States



1.Introduction: Political and legal context 1.1.Scope and context

The digital transformation impacts all sectors of the economy and transforms the way we live, work and communicate. Much as our transport, industrial infrastructure, education and high quality public services have ensured Europe's prosperity in the past, continued investments in strategic digital capacities and infrastructures, upskilling and modernising the interaction between governments and citizens will underpin our future prosperity. In Tallinn, European Heads of State and Government agreed that high performance computing and data, cybersecurity, artificial intelligence, digital skills and digitisation of areas of public interest and industry were the main pillars that the EU should invest in for a strong digital economy. These were subsequently endorsed by the Council and the European Parliament. The current EU investment framework covers important aspects of these pillars and notably research and innovation (R&I). However, lessons learnt from successful public policies for high tech areas show that, in addition to R&I, public action which supports "upstream input" in rapidly developing technology fields can be instrumental in generating value while addressing public sector needs. This is indeed the case for the key areas that underpin the digital transformation of the economy and society for the next ten years at least, i.e. advanced computing and data handling, cybersecurity, and artificial intelligence. Investment in acquiring the most advanced capacities in these fields and ensuring their best use in an interoperable way across the EU will provide an essential boost to digitization of our areas of public interest and our industry. In Europe, this upstream investment gap for large scale deployment, in addition to R&I, is evident from the mismatch between the growing demand for latest technology and the supply. In High Performance Computing, insufficient supply is pushing EU scientists and engineers to turn massively to computing resources outside Europe notably the US where governments' programmes maintain supply for high end computing at the frontier of performance. Europe is also home to a world-leading Artificial Intelligence (AI) research community as well as a host of small companies providing AI expertise, but its AI market is underdeveloped compared to the US, where the capacities available, notably in data, provide supportive conditions for innovation at scale. The fragmentation and relatively low public investment in cybersecurity is putting our society and economy at risk while the European cyber industry remains highly dispersed, with no major market players. Highly skilled technical expert jobs in areas such as AI, data analytics and cybersecurity go unfilled - there are currently more than 350,000 EU vacancies in these fields. Addressing this investment gap cannot be left to market forces alone given the rapid pace of development, the importance that these capacities have on improving quality of public sector and the spillover effect that the investment has on wide areas of the economy. The role of the public sector as first mover to acquire latest technologies is widely recognised. The internet would not exist without early publicly-funded support. The continuous public investment in acquiring highest end computing systems in the US is a key factor behind the US's technology and industrial leadership in digital. The spillover from the US's space or defense programmes are other examples of government acting as first mover to deploy technology and building common goods and capacities. As Mariana Mazzucato puts it, the role of the state is "not only to ‘de-risk’ the private sector, but to envision the risk space and operate boldly and effectively within it to make things happen" . In the past, Member States governments have played important roles as first movers and successful examples can be found in transport or healthcare. At the EU level, Europe's success in the Space field is also a clear example of a collective effort to build an invaluable and strategic common good. However, in the digital area, while competing countries such as the US or China have been able to invest heavily - for instance in successive waves of computing technology, or more recently in Artificial Intelligence and robotics - Member States alone have not been able to reach the necessary scale of investment to compete effectively on a global scale through the wide coordinated deployment of digital technologies. Given the considerable level of investment required, action at EU level is the only way the necessary scale can be achieved. Public intervention at EU level can play a key role as first mover in supporting the joint acquisition of "common goods" and capacities and in facilitating their use to address our societal challenges and drive innovation and competitiveness across the board. EU intervention is needed in areas where the necessary funding is so significant that no Member State can act - in a timely way - alone, in areas where there is a need to aggregate resources that are scattered throughout Europe (e.g. data), and in areas where interoperability is key to the deployment of pan-European services. In principle, amending the structure and legal requirements of existing programmes to implement this agenda would be possible. However, this would create a tension between different missions, which are subject to different time and implementation constraints, as well as fragmentation of actions - at a time where efficiency of deployment is essential. The EU therefore needs a new, integrated and ambitious financing programme to support the large-scale deployment and optimal use of the digital capacities that underpin innovation in areas of public interest and business. This impact assessment accompanies the proposal for a Regulation of the European Parliament and Council on a new programme dedicated to enlarging and maximising the benefits of digital transformation to all European citizens and businesses: The Digital Europe Programme. On 2 May 2018, the European Commission adopted its proposals for a new Multiannual Financial Framework (MFF) for 2021-2027. Under these proposals , the Digital Europe programme would have a budget of EUR billion 9.194 over this period. This impact assessment report reflects the decisions of the MFF proposals and focuses on the changes and policy choices which are specific to this instrument. This impact assessment satisfies the requirements of the Financial Regulation in respect of preparing an ex-ante evaluation. 1.2.Lessons learned from previous programmes

Existing programmes cover important aspects related to digital transformation of the economy and society: support for research, technological development, demonstration, piloting, proof-of-concept, testing and innovation including precommercial deployment of innovative digital technologies under Horizon 2020, support for digital infrastructure projects under the CEF - where experience in current MFF showed that the programme was best suited for physical connectivity - and support for Media under the Creative Europe Programme. All these are important investments and need to be continued in the next MFF. They are not sufficient though. As shown in the following paragraphs, there is no current programme that enable the EU as a whole to act as first mover in acquiring common digital capacities in essential areas that underpin growth, jobs and the sustainability of high quality public services i.e. advanced computing and data, cybersecurity and artificial intelligence. Lessons learned for capacity building For computing, the European High Performance Computing strategy is currently implemented using both the Horizon 2020 (under three different program parts) and CEF programs. Despite the effort done to bring these funding streams into one agenda in the proposed EuroHPC initiative, the limitations linked to these implementation models have shown major shortcomings. First, there are the difficulties in implementing the HPC roadmap coherently and effectively because its activities are still funded through four different funding streams. Second, the rigidity of CEF as well as the scope of possible actions under Horizon 2020 makes it difficult to keep pace with technology progress and the growing demand for using these technologies also outside the scientific community. This results in Europe lagging behind in responding to the ever increasing computing needs in areas of public interest and industry. Third, by being "late movers" in acquiring the best HPC systems, we offer fewer opportunities for industry to integrate, under open competition, advanced European technologies developed in R&I programmes (including Horizon 2020) into final products. A pan-European vision with a more strategic and rational planning of development and procurement is necessary. The same applies to cybersecurity where Horizon 2020 and the related cybersecurity contractual Public-Private Partnership created in 2016 focus on research and innovation and not on large-scale deployment, for example through the procurement of the necessary equipment, software tools and skills to ensure their wide use. The September cybersecurity policy Communication concluded that the support to cybersecurity technological capabilities in Europe requires a step change. In addition to research and innovation, the strategic agenda developed within the public-private partnership (under Horizon 2020) highlights the essential role of public sector investments in acquiring latest cybersecurity technology capacities in order to better protect our areas of public interest and to strengthen industrial competitiveness. Artificial Intelligence technology is supported by a number of current initiatives, primarily under the Horizon 2020 LEIT programme including through public-private partnerships in robotics and big data. These activities concentrate mainly on research and innovation aspects that need to be intensified in the next framework under Horizon Europe to address next generation developments. As highlighted by recent reports, Europe lacks important capacities that are essential for the development of AI such as large data sets or facilities integrating latest technologies into real scale testing and experimentation. Actions to address these shortcomings within Horizon 2020 can cover up to pilot phases but typically do not go for full large-scale deployment in terms of common capacities and infrastructure across Europe. Regarding delivery mechanisms for large-scale deployment of digital technologies, experience from Horizon 2020, notably through ECSEL as the only tri-partite Joint Undertaking involving the EU, industry partners as well as Member States, has proven illustrative. The interim evaluation of this Joint Undertaking has highlighted its success in leveraging private and public investment in the relevant sector. The same evaluation also notes the success in fostering collaboration between all stakeholders, including industry and national authorities. Under Horizon 2020 the cPPP on cybersecurity also consists of around 200 members including industry, academia and public authorities (at local, regional, national level) from 18 Member States. Lessons learned for deployment and use of capacities The CEF Programme has supported broadband networks and facilitated cross-border interaction, and interconnectivity between public administrations, businesses and citizens, by deploying Digital Service Infrastructures (DSIs). This was complemented by the ISA Programme focusing on interoperability in administration applications. The CEF mid-term evaluation acknowledged that the effort devoted in the programme to capacities and infrastructures for digitisation could only support the very first steps towards an EU wide digitisation of areas of public interest . It highlighted that available funding levels under CEF and ISA have so far allowed current needs only to be partially addressed, and moreover, that the CEF framework limits the programme's ability to adapt to the latest technological developments and emerging policy priorities (for example cybersecurity-related challenges). CEF support under the previous framework has led to the creation of a European ecosystem of interoperable and interconnected digital services and focused on cross-border elements. Building on this investment, we now need to rapidly scale up pan-European investments - beyond interconnectivity – and ensure that the benefits of new development (e.g. AI, data analytics and advanced computing are seized in all public sector services across the EU economy. In CEF, Member States administrations and public sector have built up a cooperation framework for co-investment in digital services. This is an essential achievement to build on with fully up-scaled collective actions ensuring a successful transformation of areas of public interest. The ISA Programme complemented developments under CEF Digital Services Infrastructures. Its final evaluation highlighted some shortcomings and made recommendations to further align the ISA programme with other relevant EU policies. Under Horizon 2020, the support to Digital Innovation Hubs (DIH) as a means to provide access to latest digital technologies to businesses and notably SMEs was essential to take the first steps towards establishing and linking DIHs across the EU. To speed up the uptake of digital technologies across the EU and address issues of technological accessibility, there is a need to scale up the Digital Innovation Hubs and make them accessible for both private and public sectors. In view of the enormous potential of AI to benefit businesses and public administrations across the EU, DIHs should also be reinforced to provide access to AI capacities and help accelerate its take-up. Lessons learned for advanced skills The current MFF does not contain a dedicated budget for advanced digital skills development in particular in the key capacity areas identified above. Interventions in this domain are possible within the European Social Fund at national or regional level, at the behest of the competent authorities. However, only few examples are available in some Member States. The Digital Opportunity Traineeships pilot which is financed by Horizon 2020 and implemented through Erasmus+, is the only example of targeted intervention on high-end digital skills. Due to its small scale and implementation modes, it lacks the capacity to meet the existing and projected demand for ICT specialists. No current programme focuses on reinforcing the essential digital capacities on which our economy and society increasingly depend such as capacities in computing and data handling, cybersecurity, the growing field of artificial intelligence and advanced digital skills. No existing programme provides the scale needed for their wide deployment in areas of public interest and industry. 1.3.Stakeholder consultations The need to step up investments in digital capacities and in their broader use is widely supported by stakeholders and experts as well as at the highest political level. A number of consultation activities have taken place in preparation to this Impact Assessment work to ensure stakeholder views are systematically accounted for in the process of formulating the post 2020 EU programmes. These consultation activities ranged from stakeholder conferences and events, to expert groups, an on-line consultation, workshops, meetings and seminars and analysis of the position papers. Results of the stakeholder consultations show support for a more efficient, less fragmented approach to maximise the benefits of digital transformation to all European citizens and businesses in the EU. In HPC, AI and Cybersecurity, the Commission is engaged in continuous dialogue with stakeholders and Member States, notably under the Public Private Partnerships (HPC, big data and robotics, cybersecurity), the public authority groups setup under the EuroHPC initiative, the cybersecurity coordination network and the AI group in the Digitising European Industry governance.

The strategic agendas of the PPPs, and reports from the various groups all point to the lack of investment in deploying capacities – particularly in comparison with the US and China where such investments are key parts of the relevant strategies and policy priorities. Strong support for a strategic instrument was also expressed by the Digital Europe association, whose members include over 25,000 ICT Companies in Europe represented by 38 national trade associations . 1.4.Member States engagement Member States support and engagement to do more together, align strategies and co-invest in all strands of the Digital Europe Programme is also clear. HPC 17 MSs have now joined the EuroHPC initiative and signed the EuroHPC Declaration and 4 more are planning to do so in the coming weeks. The Declaration is an agreement in which the signatory countries commit to work together and with the European Commission to acquire, build and deploy an integrated world-class High Performance Computing infrastructure that would rank among the world's top three by 2022-2023. The declaration foresees that such infrastructure will be made available across Europe for scientific communities as well as public and private partners, no matter where supercomputers are located. This integrated EuroHPC infrastructure will upraise Europe's scientific capabilities and industrial competitiveness and will ensure joint procuring and deploying of exascale supercomputers accessible from everywhere in Europe and based on competitive European technologies. The declaration was signed on 23 March 2017 by seven Member States: France, Germany, Italy, Luxembourg, the Netherlands, Portugal and Spain. Since then other countries have joined the initiative: Belgium in June 2017; Slovenia in July 2017; Bulgaria in October 2017; Switzerland in October 2017; Greece in November 2017; Croatia in November 2017; Czech Republic in January 2018; Cyprus in February 2018. Other countries such as Sweden and Poland are in the process of formalising their endorsement. By signing the declaration, the above countries marked their intention to join the EuroHPC Joint Undertaking (JU), which has been proposed by the European Commission on 11 January 2018. The EuroHPC JU is a legal and funding entity which will enable pooling of the Union's and national resources on High-Performance Computer (HPC). The EU's contribution in EuroHPC will be around EUR 480 million under the current Multiannual Financial Framework, matched by a similar amount from Member States and associated countries. For the next MFF, the funding requirements to implement the full activities of the EuroHPC will increase significantly. The objective is to maintain the same level of co-funding with Member States. Cybersecurity Political commitment to an ambitious strategy in cybersecurity is clear from the November 2017 Council Conclusions on the Joint Communication to the European Parliament and the Council: "Resilience, Deterrence and Defence: Building strong cybersecurity for the EU". The Council underlined the need for the EU, its Member States and the private sector to ensure sufficient financing to support building cyber resilience and cybersecurity research and development efforts across the EU, as well as to strengthen cooperation to prevent, deter, detect and respond to cyber threats and to be able to respond jointly to large-scale cyber incidents and malicious cyber activities across the EU. The Council also invited all the relevant stakeholders to increase the investments in cybersecurity applications of new technologies in order to contribute to ensuring cybersecurity across all sectors of the European economy. In a separate legislation, the Commission is now proposing a dedicated body that will facilitate co-financing and allow to pool contribution and resources from all involved actors including European Commission, Member States, private sector and academia. The implementation structure will create synergies and pool resources to invest in necessary capacities at the Member States’ level and develop European shared assets (e.g. by jointly procuring necessary cybersecurity testing and experimentation infrastructure). In addition, national coordination centres will be financed by Member States and other public sources other than the Union budget. Artificial Intelligence On 10 April 2018, 24 Member States4 and Norway committed to working together on Artificial Intelligence. The signatories of the declaration are Austria, Belgium, Bulgaria, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, UK, Norway. To build on the declaration, the Commission has committed to work with Member States on a coordinated plan to help align and step up investments. The Commission published a Communication on AI on April 25, 2018. The discussion will take place in the framework of the existing European platform of national initiatives to digitize industry, with the view to agree a plan by the end of 2018. The objective will be to maximise the impact of investments at EU and national levels, encourage synergies and cooperation across the EU, exchange best practices and collectively define the way forward to ensure that the EU as a whole can compete globally. Every Member State is encouraged to have an AI strategy, including on investment. Several Member States have developed or are working towards strategies to support AI. On 29 March 2018, France presented its national strategy for AI, building on the Villani report.64 Germany, following the example of "Industrie 4.0", has set up a platform on learning systems to enable a strategic dialogue between academia, industry and the government. Finland has put forward its 'Tekoälyaika' strategy. Digitisation of industry and digital innovation hubs All Member States are today engaged in the digitisation of industry (DEI) initiative,, on which the Digital Europe Programme will build, with clear commitment to further collaborate in making the best use of digital in businesses. Member States are joining forces in a common European platform, co-investing into further development of digital innovations and reinforcing EU competitiveness. Digitisation is a key element of national industrial policies. Some Member States are among the 'trend-setters' and many are ‘fast-followers’ in absorbing the emerging trends. Member States co-investment in Digitisation of Industry and in Digital Innovation Hubs is currently monitored on a yearly basis through a study. The findings are reported in the European Digital Progress Report. In addition to the call for higher investment in digital at the Tallinn summit (October 2017), other examples of MS commitments include the following: organisations from 7 MS have endorsed the setting up of a European Lab for Learning and Intelligent Systems or 'EllIS' ; 16 MSs have committed to setup a genomic sequencing database for personalised medicine ; All MS have voted for a €50 million investment under Horizon 2020 to support a pilot for the aggregation of competences in cybersecurity. European countries also committed to jointly develop advanced solutions for public services (e.g. through the development of a European blockchain service infrastructure ).

Following the Tallinn summit, several Council formations have also discussed the issue of EU digital capacity building. In the MFF Communication , the Commission highlighted a scenario of doubling the investments in digital. The willingness to act together is also clear from the strong engagement of MSs in CEF pilots under the current framework. This has also been reflected by the Council and European Parliament, which have repeatedly called for the urgent completion of the Digital Single Market and its individual files. The Parliament also expressed particular concerns that resources allocated to digital policies in the EU budget were insufficient to make a real impact and recognised the need to boost the European economy through productive investments. 2.Challenges and objectives 2.1.Challenges for the programmes of the next MFF 2.1.1.Main challenges for the digital transformation To fully benefit from the digital transformation, the EU needs to be equipped with state of the art digital capacity in critical areas such as advanced computing and data, artificial intelligence, cybersecurity and with the advanced digital skills related to these technologies. It must also ensure their optimal use in the private and public sectors. Yet, despite its strong position in science, research and innovation Europe lags behind when it comes to investments in the deployment of digital capacities and take up of advanced digital technologies. Europe is facing harsh global competition. The US and China both make huge injections of public capital in advanced digital capacities to boost their competitiveness, modernise their public sector or protect their society and economy. The US publicly invests large sums in defence and security, enabling the private sector to develop its products and services on the back of these upstream investments. Insufficient capacities in key digital technologies Computing Currently, Europe's scientific capabilities and industrial competitiveness critically depend on access to world-leading HPC computing and data infrastructures to keep pace with the growing demands and complexity of problems. However, the EU HPC capacity is fragmented and underdeveloped, with no European HPC facilities in the global top 10 and with insufficient capacities to meet current demand (see Fig. 1). At the same time there is strong demand, which is only likely to grow in the future. The EU currently consumes one third of HPC resources worldwide, but provides only around 5%. This is primarily why, in 2017, the EU committed to procuring 2 world-leading computers (known as 'exascale' computers) by 2023 . In the meantime, the global supercomputer market is forecast to grow with estimates ranging from 4.3% to 7% compound annual growth rate. A comparison between the USA (ASCR) and EU (PRACE) initiatives providing access to leading-edge HPC capacities indicates that European scientific and engineering communities obtain more support from US supercomputing facilities than from Europe, by a factor of more than 10. The EU is dependent on processing power from third countries in respect of analysing important or sensitive data. The lack of these advanced computing systems impedes Europe's success in the data economy. Artificial Intelligence The emergence of strong AI 'ecosystems' that unite AI developers, users and financers is currently hampered by a lack of high-quality data, limited availability of AI capabilities and lack of AI competence centres that can ensure technology dissemination. There is also poor awareness of the opportunities that AI can bring to the real economy. This contrasts with the importance placed on AI by scientists and opinion makers, who refer to AI as the next revolution in human history. The importance of AI for the future of Europe and our society has recently been highlighted in the Commission proposal of 25 April 2018 for an AI strategy for Europe and by the EP report on AI and robotics. It is also an important priority for several Member States as illustrated by the recently announced French strategy for AI. The Commission's proposed AI strategy underlines the gap in investment in AI between the EU and competing economies (above 10 Billion Euro per year) and puts forward a set of actions along three pillars: (i) reinforcing and investing in Europe's industrial and technological capacities in AI, (ii) addressing the ethical and legal issues related to AI and (iii) upskilling workforce and preparing for the new jobs and work environment. Cybersecurity A capacity to protect our critical infrastructures - and public services that depend on them - from potentially crippling forms of cyberattack is paramount. Currently, Europe is not adequately prepared to address this threat. Because of the fragmentation of resources and know-how across the EU, industry and the public sector struggle to secure the devices and infrastructures underpinning the DSM. Currently only two Member States are in the top 10 in the ITU Global Cybersecurity Index. The same index rates a large majority of Member States with average to weak cybersecurity readiness.

For cyber security, consultation with stakeholders and an analysis conducted by the JRC on the status of capacities in the EU highlighted clear weaknesses that need to be addressed urgently for the EU to remain "cyber-ready" in the next 5 to years. As shown in figure 2, it is mainly in the emerging and very advanced areas like Quantum technologies and high end computing that competences are less developed. The reason is the high cost of the equipment and tools needed as well as the high level of expertise that is required. Such systems are becoming essential to shield our economy and society and an EU level investment together with MSs will be needed to ensure that these capacities not only exist in Europe but also are accessible for stakeholders, engineers, researchers and public authorities, all over Europe. The illustrative example is indeed the emergence of quantum technologies such as dedicated quantum computers or key distribution that are technological game-changer in cyber-security. Today Europe is amongst the world leaders in quantum technologies research and innovation with a level of investment in R&D that is similar to the US. However the first deployment of technology developed in the EU and in EU programmes notably is not happening in Europe. First deployment of European Quantum key distribution is done in China and first quantum computers that can crack any existing encryption system is being done in the US. All the above implementations are done in government-led programmes in cybersecurity. Europe cannot continue to be the generator of ideas and inventions that other regions deploy first through government programmes, and take full benefit of them across the economy and society. Risks will also be amplified by the fact that cybersecurity and AI require computing power to function. The lack of HPC weakens our position in AI and exposes further our economy and society to cyber-threat. A position where data continues to flow out of the EU, and where latest data processing tools are scarce in Europe, will damage the sustainability and quality of public services, endanger our security and undermine our economic growth. Fragmented and below critical investments to acquire core digital capacities While China and the US, with ambitious government programmes, lead the race to acquire latest digital capacities that underpin digitisation, EU's investment remains fragmented and often insufficient. This has important socio-economic and geo-strategic implications. Despite the considerable efforts made to pool computing and data handling resources in the PRACE and EuroHPC initiatives, HPC investments in the EU remain sub-critical. Total investment in HPC in the EU is at 60% of US level (see Fig. 3). Similarly, analysts are united in their view that Europe is currently underinvesting in AI compared to the US or China (see Fig. 4). Europe invested USD 3 to 4 billion in 2016, compared with USD 8 to 1 2 billion in Asia and USD 15 to 23 billion in North America. A significant amount of current European AI investment is made in the United Kingdom (almost three times more than France in second place). The same is true of our investment in cybersecurity. While the cost of damage from cybersecurity attacks is expected to reach EUR 6 Tn. in 2021 , EU investment in advanced cybersecurity capacities remains modest (see Fig. 5). A recent study for the Dutch government estimates the total EU investment at close to 10 times less of the US investments. The figure is confirmed by announcements by MSs on their investments in cybersecurity. The US invests USD 19 billion/year in cybersecurity capabilities, including USD 900 million for research and innovation alone. China announced a programme for deploying quantum technologies with a focus on cybersecurity in the order of USD 10 Bn . EU investment is not only low but also highly fragmented across Member States. A recent report by the JRC on the status of cybersecurity competence centres in Europe highlighted the large fragmentation of the investments, the high redundancies in expertise and the large gap in the essential areas requiring relatively high investments such as HPC or Quantum. Inadequate uptake of digital solutions in areas of public interest Business in Europe has been slow in adopting and diffusing digital innovations in areas of public interest. Adoption is also uneven between Member States (see Fig. 6). This has led to a further entrenchment of the European digital divide, and significant divergences in economic development paths. For example, in 2017, the availability of Austrian eGovernment services offered fully online was 89.7%, but the EU average was only 68.1%. The use of ICT in justice systems across Europe is similarly patchy.This is documented in detail in the annual Digital Economy and Society Index (DESI) (see Fig. 7). Wide adoption is further impeded by a lack of interoperability. Despite the creation of Digital Service Platforms and building blocks under the CEF programme, which laid the foundations for an interoperable public services environment (notably in the area of e-government and e-health), complete interoperability is far from being attained. Key technological enablers (e.g. electronic Identity eID, eDocuments, etc.) were only used in 54% of public administration cases. In health, the IT systems in primary health care (such as general practitioners) are often not linked with those of specialist consultants or hospitals, even in the same city. Fig. 7 DESI Index

Example of eIDAS: The entry into force of the eIDAS regulation on September 29 this year will project Europe in a new era for the public administration. Many Member States are late with the implementation of interoperable solutions for eIDAS (only 4 MS have so far notified the Commission) and, more worryingly, the services envisaged by the eIDAS regulation are ill developed. There is therefore a need to continue and scale up the support of the service element developed under CEF. Equally, in the field of the judiciary, the lack of interoperable electronic communication between courts and legal authorities impedes seamless enforcement of civil and criminal law across the EU. Although the “European Single Procurement Document” simplified the process, the same problem occurs in public procurement, where buyers and suppliers have to gather certificates stored in several publicly owned, not interlinked, databases. Solving the issue of access to advanced digital technologies only at national level would most likely lead to a fragmented approach due to the different starting points of Member States. If we do not act now, the gap between Member States risks widening, further entrenching a digital divide across the EU, slowing down the adoption of valuable digital innovations that are ready for use and missing important opportunities of (re)use of data provided when using public services or health and care services. Slow and uneven adoption has also direct implications on the digital supply sector since a dynamic and high growth market attracts investment and drives innovation. Inadequate uptake of digital solutions in businesses As is the case for the public sector, uptake of digital solutions by businesses remains uneven between Member States, between sectors (particularly between high tech and traditional areas), and between large companies and SMEs. In the EU only 20 % of SMEs are highly digitised (compared to 58% of large enterprises). Knowledge and finance gaps are impediments to business uptake of digital solutions, particularly for SMEs. Slow diffusion of digital technologies thus poses a significant risk to the EU's ability to compete on the world stage. Digitisation of businesses is also highly uneven across Member States as shown below. 53% of Danish companies are highly digitised vs 8% in Romania (see Fig. 8). Fig. 8 Level of Digital Intensity Shortage of advanced digital skills Currently, the EU has a significant and systemic gap between market needs and what is offered in terms of skills related to advanced digital technologies. According to Cedefop (2016), while ICT professionals are among the most in-demand workers, almost all Member States face shortages for both software and developer analysts and database and network professionals. Skills availability is the most frequently cited obstacle to investment across the EU (expressed by 72% of firms), followed by “uncertainty about the future”. High skilled technical experts jobs in areas such as AI, data analytics and cybersecurity go unfilled (there are currently more than 350,000 EU vacancies in this field) . Finally, enterprises in all EU countries report difficulties in recruiting specialists, with 47.5% of companies experiencing difficulties in recruiting ICT specialists. According to the EIB, skills availability is now the most common obstacle to investment, with “lack of staff with the right skills” cited by 72% of firms. Filling the vacancy gap would boost the EU economy by around EUR 14Bn per year . The uptake of HPC, AI and advanced cybersecurity tools across public and private sectors will require more experts in those fields. Additionally, insufficient funding is allocated to the workforces' digital retraining. About 77% of EU workplaces reporting digital skills gaps have not undertaken any actions, while only 12% have done so (mostly training) and 11% plan to do so. Cost is a key barrier to undertaking actions to deal with digital skills gaps. 2.1.2. Baseline: current EU framework for the financing of core elements relating to digital transformation The programmes currently supporting activities in the digital area under the current MFF are Horizon 2020 (Horizon 2020), CEF, ISA2, and partially, Creative Europe and ERDF, ESF and EAFRD.. Horizon 2020 Under Horizon 2020, research to discover radically new technological possibilities and ICT contributions to upstream research and innovation are addressed in the ‘excellent science’ part of Horizon 2020, in particular under ‘Future and Emerging Technologies’ and ‘European Research Infrastructures’ (‘eInfrastructures’). Research and innovation activities related to ICT technologies (driven by industrial roadmaps or through a bottom-up approach) are addressed in the ‘Leadership in Enabling and Industrial Technologies’ (LEIT) part of Horizon 2020. In addition, as essential EU policy objectives on health, ageing, climate, environment, energy, transport, public sector modernisation and security cannot be achieved without ICT innovation, multi-disciplinary application-driven research and innovation leveraging ICT to tackle societal challenges are addressed in the different ‘societal challenges’.

Overall, the support for digital available under Horizon 2020 is around EUR 13 Bn. This includes several partnerships with the public and the private sector for research and innovation covering digital technologies , including public-private partnerships on photonics, future internet, cybersecurity , HPC , 5G, electronics components and systems, and factories of the future as well as support to the integration of business, academia and education within the digital Knowledge and Innovation Community (KIC-Digital) of the European Institute of Innovation and Technology (EIT). Horizon 2020 also covers, to a certain extent, funding for research on technologies that support teaching and learning. CEF The Connecting Europe Facility supports trans-European networks and infrastructures in the transport, telecommunications and energy sectors. CEF Telecom facilitates cross-border interaction between public administrations, businesses and citizens, by deploying digital service infrastructures (DSIs) and broadband networks. It also promotes free Wi-Fi connectivity in public spaces (WiFi4EU initiative). Investments in cybersecurity are limited to setting up the communication infrastructure for the CSIRT Network and supporting Member States for joining the network. Overall support for cybersecurity from CEF is limited to EUR 71m in 2014-2020. The total support for digital available under CEF amounts to EUR 1 Bn. Creative Europe The MEDIA sub-programme of Creative Europe supports initiatives that can generate a real impact for the sector across Europe, helping its adaptation to the digital transformation. These include supporting content creation and distribution, initiatives that promote new skills, and initiatives that promote international cooperation. MEDIA helps launching projects with a European dimension and nurtures new technologies; it enables European films and audiovisual works to find markets beyond national and European borders, and funds training and film development schemes. The support for digital available under the Creative Europe programme is EUR 1 Bn. The Culture sub-programme supports in particular cross-border co-operation projects but also platforms aiming at raising the visibility of emerging artists. Audience development and the testing of new business models using innovative technologies can be the object of grants both for partnership projects as for the business-to-consumer oriented platforms in the non-audiovisual creative sectors. ERDF, ESF and EAFRD Digital Single Market related investments ERDF, ESF and EAFRD funds are a catalyst for achieving the objectives of the Union Strategy for smart, sustainable and inclusive growth. They provide substantial support of over EUR 20 Bn in the current programming period making thus an important contribution to the implementation of the DSM and achieve local and regional ownership and engagement for the DSM. The European Regional Development Fund (ERDF) aims to foster the economic, social and territorial cohesion in all EU regions with a focus on less developed regions. It fosters innovation-led economic development involving the digitization of industry as set out in the smart specialization strategies (including investments in building up and improving Digital Innovation Hubs). The ERDF also supports the deployment of digital solutions, including cybersecurity, as part of the delivery on EU priorities in the area of modernization of public administrations, sustainable transport, improvement of the health and care systems, energy transition, circular economy and education. The ERDF and the European Agricultural Fund for Rural Development (EAFRD) also invest in broadband. The DEP will support the trans-national networking and mapping of digital capacities to make them accessible to SMEs and to make interoperable IT solutions accessible to all EU regions. The European Social Fund in particular can support, if allocated by national and regional authorities, digital skills development at local level. Interventions vary to a large extent - from creating e-schools with digitally trained teachers, training unemployed people for all jobs, among which also ICT in, to supporting SMEs in the ICT sector, and providing basic digital skills to citizens to fully participate in society. Member States have allocated EUR 2.3 billion across all thematic objectives to ICT for 2014-2020; however, it is not possible to have a detailed view of interventions implemented at national level and to identify the interventions targeting advanced digital skills, such as those needed for HPC, quantum or cybersecurity, if present. In the agricultural sector, 27 Member States programmed innovation projects under the EIP-AGRI funded by Rural Development Programmes. Available data show that around 1 in every 10 innovation projects work on precision farming or have a digital component. ISA2 Interoperability solutions for public administrations, businesses and citizens (ISA2) facilitate efficient and effective electronic interactions, cross-border or cross-sector, between European public administrations connecting them citizens and businesses. The Programme develops interoperability solutions autonomously or to complement and support other Union initiatives. 2.2.Objectives of the programmes of the next MFF As illustrated above and under sections 1.2 and 2.1.2, current interventions are either limited in scale or scope and remain insufficient to support large-scale capacity building in the identified areas and roll-out in areas of public interest and business. The new proposed Programme will focus on reinforcing Europe's digital capacities in High Performance Computing, Artificial Intelligence, Cybersecurity and advanced digital skills and ensuring their wide use across the economy and society. In doing so it will build on existing structures and past achievements and bring key digital infrastructures and capacities to the next level. In High Performance Computing it will build on the EuroHPC initiative and remove the current limitations to implement a more strategic and efficient approach. In cybersecurity it will build on the contractual Public-Private Partnership created in 2016 and enable large-scale deployment of cybersecurity solutions. In AI, it will build on research and innovation achievements and support testing and experimentation of essential capacities such as large data sets or libraries of algorithms. For digital skills, it will build on the Digital Opportunity Traineeships pilot and provide the scale needed to respond to current demand. Finally, for the broader digital transformation of areas of public interest and of industry it will significantly build on the achievements of the CEF/Digital Service Infrastructures Programme, on the ISA Programme and on the existing network of Digital Innovation Hubs. In all cases, the novelty is the focus on deployment of digital technologies, the broader scope, the increased level of collaboration between stakeholders and the scale of intervention. The Digital Programme will offer a spending instrument well-tailored to operational needs and capacity building in the areas identified by the European Council and will exploit synergies between those areas. Current interventions are not adequate to ensure the financing and roll-out of advanced digital technologies which are now mature enough to be deployed and scaled-up at European level. The programme will focus on the areas where no single Member State alone can ensure the level of investment required for digital success. It will also focus on the areas where public spending creates the maximum impact either because it is a topic in which there are massive public investments in competing regions or because public spending will accelerate the introduction of new services in areas of broad public interest. The components of the programme have been chosen because they are all prerequisite to the digital transformation of the economy and society and are key to the future prosperity of Europe. They are complementary and synergetic. Fostered simultaneously, these will lead to a thriving data economy, promote inclusiveness, catalyse innovative projects and ensure value creation. Ignoring or weakening one of the pillars will undermine the whole construction. Starting from a blank sheet, a new Programme with specifically aligned objectives will simplify procedures, provide clarity for users, and maximise impact. The general objective of the programme is to support the digital transformation of the European economy and bring its benefits to European citizens and businesses. The Specific objectives of the programme are:

a)reinforcing Europe's digital capacities in key digital technology areas through large-scale deployment, b)widening the diffusion and uptake of digital technologies in areas of public interest and by businesses in private sector. These objectives also derive directly from the Treaty on the Functioning of the European Union, notably Articles 172 and 173. Cross-cutting objectives (flexibility, coherence, synergies, simplification and focus on performance) The Programme is based on acquiring digital capacities that need EU level intervention and on delivering these capacities through Digital Innovation Hubs to ensure that they are accessible and used across the EU. The modes of implementation will ensure that co-investment with MSs is achieved in the most flexible and simplest way. Coherence will be ensured through the use of the same model of delivery for the three capacities, relying on a wide network of Digital Innovation Hubs to provide access to technologies and advanced capacities. Synergies will therefore be intrinsically supported by the implementation mode. See further details on implementation modes under section 4.1. 2.3.EU Added Value A guiding principle of the proposal is the added value of EU-level action. As shown in section 1.3, collectively, there is a new political will to cooperatively address what were previously domestic concerns. The EU is therefore in a unique position to plan, jointly finance, and coordinate actions on a scale capable of meeting these challenges, and ensure that the benefits of new digital technologies are fully shared - not reaped exclusively in a few Member States. Multi-lateral coordinated action can also avoid duplication, capitalise on synergies by linking funding with framework conditions, safeguard interoperability, and avoid blind spots or a major geographical digital divide. Given the urgency of the situation and the scale of the investment required, there is thus a very strong case for EU intervention. Acting swiftly and at European scale is also necessary in the current international context. The US and China both make huge injections of public capital in advanced digital capacities to boost their competitiveness, modernise their public sector or protect their society and economy. The US publicly invests large sums in defence and security, enabling the private sector to develop its products and services on the back of these upstream investments. In the areas of HPC, AI and cybersecurity, stakeholder consultations show that a set of critical investments are best done at EU level. Not only can the return on the high investment needed only be maximised by sharing the costs and the use, but also the high expertise required to specify and implement such technologies is not available in all MSs. A collective effort is the only way to bring their benefits to every business, public service and citizen in Europe. These are also areas where scale is essential to succeed, be it for acquiring the necessary capacities or for their wide use across the EU. For example, the access to High Performance Computing and AI expertise currently provided through the EU I4MS initiative, enables SMEs in non tech sectors anywhere in Europe to get access to latest simulation, modelling and data analytics expertise that is available in only few excellence centres. Given that knowledge and expertise in advanced digital fields is not available in all regions in Europe, EU-level action, notably through networking digital innovation hubs , can ensure that such expertise is made available in every region. To sum up, although a large part of investment in the targeted capacities is done by the private sector and targets commercial and industrial purposes, coordinated public investments at the EU level are essential: ·to serve areas of public interest across the EU (from health to mobility and environment), ·for the public sector (over 50% of GDP) to act as first mover in acquiring latest digital technologies benefiting our citizens while reinforcing our industry and business sector. ·to provide access to such capacities for businesses, on a pay per use basis, notably SMEs, with focus on areas of market failure with high spill-over effect across the economy, The proposed Digital Europe Programme addresses the above and targets areas where EU investment has clear added value based on three criteria: ·areas where the necessary funding is so significant that no Member State can do it, in a timely way, alone ·areas where there is a need to aggregate resources (computing power, data, expertise) that are scattered throughout Europe to ensure large-scale coordinated deployment, and ·areas where interoperability is important. Finally, core concepts that define the European Union: trust, solidarity, cultural heritage, human dignity, rule of law, democratic participation and inclusiveness, must be preserved in the process of digital transformation of our society. There too, the added value of acting at the EU level is very clear.

3.Programme structure and priorities 3.1.Structure The previous sections have highlighted the scale of the problem, the size of the funding gap, the urgency to act and the key role public investment at EU level could play, as a first mover to unlock the potential of the digital transformation. The proposed programme is structured around two main types of activities. To enable the digital transformation Europe must: first, reinforce its digital capacities in key digital technology areas (HPC and data, AI, cybersecurity and trust, and advanced digital skills), and secondly, make available and deploy digital capacities across societies and economies. These activities will be implemented, preserving competition within the internal market, not fettering private investment and in a non-discriminatory and transparent manner. The programme would correspondingly be structured around five interdependent pillars. Figure 9: Structure of the Digital Europe Programme 3.1.1.Capacity building High Performance Computing and Data Implementing the necessary step-change requires coordination and a level of investment that no one Member State can provide alone. Consequently the EU must embark on an ambitious strategy of co-investment with Member States to acquire and upgrade the technology. The level and scale of this investment is significant. As an example, today, the cost of 2 exascale machines is close to €1B. The networking and upgrading of mid-range computers in MSs requires a similar investment. Meeting Europe's needs for deployment and capacity building in the area will require a commensurate co-investment over the next decade. The EU investment should draw at least the same level of investment from Member States. High Performance Computing and data: build up and strengthen the EU's high performance computing and data processing capacities, and ensure their wide use both in areas of public interest such as health, environment, security and by industry, notably SMEs. The Commission will implement the European strategy on HPC by supporting a full EU ecosystem that provides the necessary HPC and data capabilities for Europe to compete globally. The strategy aims to deploy a world-class HPC and data infrastructure with exascale capabilities by 2022/2023, and post exascale facilities by 2026/27, endowing the Union with its own independent and competitive HPC technology supply, achieving excellence in HPC applications and widening HPC availability and use. Activities will cover: ·A joint procurement framework for an integrated network of world-class HPC including exascale supercomputing and data infrastructure. It will be accessible on a non-economic basis to public and private users and for publicly funded research purposes. ·A joint procurement framework of a post-exascale supercomputing infrastructure, including the integration with quantum computing technologies. ·EU-level coordination and adequate financial resources to support the development, procurement and operation of such infrastructure. ·Networking of Member State HPC and data capacities and support for Member States wishing to upgrade or acquire new HPC capacities. ·Creation and networking of HPC Competence Centers, one per Member State and associated with their national supercomputing centers to provide HPC services to industry (in particular SMEs), academia and public administrations. ·The deployment of ready to use/operational technology: supercomputing as a service resulting from R&I to build an integrated European HPC ecosystem, covering all scientific and industrial value chain segments (hardware, software, applications, services, interconnections and advanced digital skills).

Artificial Intelligence The real value of the data economy will be captured only if AI is widely adopted by both the public and the private sector. As highlighted by the recent Villani report to the French government , the EU needs first to significantly expand its pool of available data. Promoting open data principles, especially in the public sector, and creating EU-wide data spaces of open, accessible and interoperable data will provide the engineers, innovators and researchers with the essential resource for wider application of AI in all sectors, from health, mobility and energy to manufacturing and agriculture. It will improve the effectiveness of public services with better decision-making, based on combined data sources and patterns. Financing a large scale AI testing facility would require €300-400m. Making data sets interoperable and easy to access for AI use (e.g. health data) requires investment of several €100m. EU investment in the Programme should be sufficient to draw a significant investment from Member States and private sector with a direct contribution to the investment of at least the same amount. Overall, the total investment in AI in Europe should be brought closer to competing regions world-wide. Artificial intelligence: Build up and strengthen core Artificial Intelligence capacities in Europe including data resources and repositories of algorithms and making them accessible by all businesses, public administrations and researchers as well as reinforcement and networking of existing AI testing and experimentation facilities in Member States. Activities will include: ·Creation of Common European Data spaces that aggregate public information across Europe and become a data input source for AI solutions. The spaces would also be open to public and private sector. For increased usage, data within a space should be made interoperable as much as possible, both in the interactions between public and private sectors, within sectors and across sectors (semantic interoperability). ·Development of common European libraries of algorithms that would be accessible to all. Companies and public sector would be able to identify and acquire whichever solution would work best for their needs. ·Co-investment with Member States in world class reference sites for experimentation and testing in real setting focusing on the applications of AI in essential sectors such as health, mobility, security, manufacturing or finance. The sites should be open to all actors across Europe and connected to the Network of Digital Innovation Hubs. They should be equipped with large computing and data handling facilities as well as latest AI technologies including emerging areas such as neuromorphic computing, deep learning and robotics. Cybersecurity The resilience of our financial markets, electric grids, transport, health and many other services depends on our capability to prevent attacks and protect the information. As cyberattacks are constantly growing more complex and incorporate the latest technology , we need to ensure that new cybersecurity tools are developed that match this level of sophistication. In its September 2017 Communication the Commission stressed that it is in our strategic interest to ensure that the EU retains and develops the essential capacities to secure its digital economy, society and democracy, to protect critical hardware and software and to provide key cybersecurity services. In order to achieve this, the Communication recognised that Europe needs to go beyond the existing Public-Private Partnership on cybersecurity, and to complement the financial support to research and innovation with support for large-scale deployment and uptake of the latest cybersecurity technology and know-how by the public sector and industry. Here too the scale of the problem is so big that no Member State alone can develop the necessary response. As an example, establishing a quantum computing facility is a 500 M€ to €1B investment. The investment in the programme should be sufficient to draw a total investment in cybersecurity in the EU that is closer to the competing regions. Cybersecurity and trust: Stimulate the building of essential digital capacities to secure the EU's digital economy, society and democracy by reinforcing the EU's cybersecurity industrial potential and competitiveness, as well as improving capabilities of both private and public sectors to protect European citizens and businesses from cyber threats including supporting the implementation of the NIS Directive. Activities will include, among others: ·Co-investment with Member States in advanced cybersecurity equipment, infrastructures and know-how that are essential to protect critical infrastructures and the DSM at large. This could include investments in quantum facilities and data resources for cybersecurity as well as other tools to be made available to public and private sector across Europe. ·Scaling up and networking of existing technological capacities in the competence centers in Member States, and making sure that these capacities respond to public sector needs and industry, including in products and services that reinforce cybersecurity and trust within the DSM. ·Ensuring wide deployment of the latest cybersecurity and trust solutions across the Member states. This includes reinforcement of access to cybersecurity and trust technologies in the Digital Innovation Hubs, but also ensuring security and safety by design for products. ·Support to close the cybersecurity skills gap by e.g. aligning cybersecurity skills programmes, adapting them to specific sectorial needs and facilitating access to targeted specialised training courses. Advanced digital skills All the above gains from common EU investments in new technologies, such as HPC, AI, cybersecurity or blockchain, will only materialise if there are enough skilled people to develop, roll-out and use these new technologies. Advanced digital skills are a Europe-wide problem that needs a coordinated response. In its Communication on "enabling the digital transformation of health and social care in the digital single market; empowering citizens and building a healthier society", the Commission proposes a plan to reach 1 Million genomes sequenced by 2023. At the Digital day in Brussels on 10 April 2018, 12 Member States engaged to work together to achieve that goal and linking it to existing Member States effort in this field. The US is planning a 3.8 B€ investment in order to reach 1 Million sequenced genomes. Concrete actions are needed to close the advanced digital skills gap in line with the objectives of the Digital Skills and Jobs Coalition , one of the key actions of the New Skills Agenda for Europe. To fill the current gap, plus the additional demand created by faster growth and new investments in AI, HPC, cybersecurity and digital public services, the growth rate of ICT specialists employed would need to increase from 3.3% per year to 4.3% per year, resulting in an additional 1.3 million specialist ICT jobs by 2027. Further actions should be stimulated at Member State level and by private sector actors, which would thus cover the entire demand. In order to ensure interventions reach a critical mass, the target should be no lower than the upskilling of 500,000 people. Advanced Digital Skills: Ensuring easy access to advanced digital skills, notably in HPC, AI and Cybersecurity for the current and future labour force by offering students, recent graduates, and existing workers, wherever they are situated, with the means to acquire and develop these skills. The pillar would offer the opportunity to: ·access on the job training by taking part in traineeships in competence centres and companies deploying advanced technologies (building on the Digital Opportunity pilot); ·access to courses in advanced digital technologies which will be offered by universities in cooperation with the bodies involved in the Programme (topics will include AI, cybersecurity, distributed ledgers (e.g. blockchain), HPC and quantum technologies); ·participate in short-term, specialised professional training courses that have been pre-certified for example in the area of cybersecurity. Interventions will focus on high-end digital skills related to specific technologies and trainings will have a strong cross-border dimension aimed at high skilled workers mobility in the EU and attracting the world’s best talent to work in the EU. All interventions will be designed and implemented in close cooperation with Digital Innovation Hubs and other EU actions involved in the development and deployment of advanced digital technologies. In terms of delivery of advanced skills to SME’s and other players, Digital Innovation Hubs will play a key role. Their involvement will ensure that interventions are timely, relevant and consistent with the fast-changing needs of the labour market. Technologies such as HPC, Quantum, data analytics, AI, distributed ledger and cybersecurity are fast-developing, so advanced skills programmes and courses will need to reflect this, especially in higher education. Just as initiatives on HPC, AI and cybersecurity need a European response, so do the advanced digital skills linked to them. 3.1.2.Deployment of Capacities and Interoperability Deployment and best use of digital capacities in areas of public interest and interoperability There is high added value in engaging collectively in the deployment of digital solutions, notably in areas where scale and cross border access are essential success factors. For areas of safety, security or justice and for administrations in general, the ‘User-Centricity principles’ of the ‘Tallinn Declaration' should be applied in all public services. For instance, simpler and interoperable administrative procedures such as the ‘once-only' and ‘digital-by-default’ principles need to be systematically implemented across Europe. Interoperability of solutions will be essential.

A key asset for Europe would be a shared health data space where the data from the patients' records, self-measured data including the genome data that can be made available in a secure and anonymised way. While the technology for genome sequencing already exists, we lack the actors and investment to use it. The up-take of digital technologies in education and training systems needs to be scaled up across Europe to trigger innovation in education and to support the development of digital skills. The cost of deploying such technologies EU-wide will be high. Just in eHealth, the investment to digitise Finland's health system was estimated to be EUR 2Bn. The co-investment envisaged should be significant and proportionate to the objectives under this pillar. Digitization of areas of public interest with projects involving MSs ensures that public sector and areas of public interests (including but not limited to health and care, education, justice, culture) deliver the best public service, creating the minimum administrative burden on citizens and businesses based on a robust underlying infrastructure. Work builds on results achieved in the current programming period under the CEF-Telecom and ISA programmes and will make use of the experience gained in those programmes to provide a wider reach and a wider impact in compliance with the European Interoperability Framework Modernisation of administrations ·Support MSs in the implementation of the Principles of the Tallinn Declaration on e-Government in all policy domains, creating where necessary, the registries needed and interconnecting them in full respect of the General Data Protection Regulation. Provide a coherent eco-system of cross border digital services infrastructure and facilitate seamless end to end, secure, interoperable, cross-border, multi-lingual digital public services and procedures within public administrations. ·Cooperate towards a European ecosystem for trusted infrastructures using Distributed Ledgers (eg. blockchain) services and applications, including support for interoperability and standardisation and fostering the deployment of EU cross-border applications. Health ·Ensure that EU citizens can access, share, use, and manage their personal health data securely across borders irrespective of their location or the location of the data. Complete the eHealth Digital Service Infrastructure and extend it by new digital services, support deployment of the European exchange format for electronic health records. ·Make available better data for research, disease prevention and personalised health and care. Ensure that European health researchers and clinical practitioners have access to necessary scale of resources (shared data spaces, expertise and analytical capacities) to achieve breakthroughs in major as well as in rare diseases. The target is to ensure a population-based cohort of at least 10 million citizens. A milestone is 1 million of sequenced genome by 2022. ·Make digital tools available for citizen empowerment and for person-centred care by supporting the exchange of innovative and best practices in digital health, capacity building and technical assistance, in particular for cybersecurity, AI and HPC. Judiciary ·Enable seamless and secure cross-border electronic communication within the judiciary and between the judiciary and other competent bodies in the area of civil and criminal justice. Improve access to justice and juridical information and procedures to citizens, businesses, legal practitioners and members of the judiciary with semantically interoperable interconnections to national databases and registers as well as facilitating the out-of-court dispute resolution online. Promote the development and implementation of innovative technologies for courts and legal practitioners based on artificial intelligence solutions which are likely to streamline and speed-up procedures (for example “legal tech” applications). Smart cities, energy and environment ·Deploy decentralised solutions and infrastructures required for large-scale digital applications such as smart cities in support of transport, energy and environmental policies. Culture and education ·Provide creators and creative industry in Europe with access to latest digital technologies from AI to advanced computing. Exploit the European cultural heritage as a vector to promote cultural diversity, social cohesion and European citizenship. Support the uptake of digital technologies in education. Additionally a set of Digital Single Market support activities will be supported and will include a pan-European network of Safer Internet Centers to raise awareness and foster digital literacy among minors, parents and teachers, measures aimed at combatting intentional disinformation spread and an EU observatory for the digital platform economy as well as studies and outreach activities.

Digitisation of industry To speed up the uptake of digital technologies across the EU and address issues of technological accessibility, there is a need to scale up the Digital Innovation Hubs (DIH) and make them accessible for both private and public sectors. Networking the hubs will ensure that regional best practice can be exported to other regions, and missing expertise can be imported, ensuring an efficient innovation system. Additional help provided by the DIH in the form of grants to support SMEs and valuable information for access to finance, would be crucial to facilitate the digitisation of EU businesses in all sectors. EU investment should ensure a sufficient leverage factor for the programme to upscale and network DIHs and provide a meaningful contribution to the current gap in private investment in digitisation that is several tens of billion Euros. Digitisation of industry: ensuring businesses, notably SMEs, have access to state of the art digital technologies, in particular HPC, AI and cybersecurity, and finance for adapting to digital change. Access to private sector would be done largely on pay per use basis. ·Contribution to the upscaling of the infrastructure and technology facilities (equipment, software and tools) of the network of Digital Innovation Hubs to ensure access to digital capacities to any business, notably SMEs in any region across the EU. This includes notably: - Access to Common European Data space and AI platforms and European HPC facilities for data analytics and compute intensive applications - Access to AI large scale testing facilities and to advanced cybersecurity tools - Access to advanced skills ·Activities will be coordinated with, and will reinforce the innovation actions supported notably under the Horizon Europe Programme as well as investments in Digital Innovation Hubs supported under the European Regional and Development Funds. Grants for market replication would also be provided from the Digital Europe Programme in line with state aid rules. Support for access to finance further steps in their digital transformation will be achieved with financial instruments making use of the InvestEU scheme. Figure 10: Illustrating the level of ambition 3.2.Complementarities and synergies with other programmes The Digital Europe programme has complementarities and synergies with a number of other proposed instruments in the post-2020 MFF, notably Horizon Europe, Connecting Europe Facility (CEF2), EU Values Fund (MEDIA programme), InvestEU Fund, COSME, European Regional Development Fund, European Social Fund (including Youth Employment Initiative and basic digital skills), Erasmus +, European Globalisation Adjustment Fund (basic and advanced digital skills), Defence Fund, Internal Security Fund, Internal Border Management Fund, Environment and Climate Action (including Energy Efficiency) and European Agricultural Fund for Rural Development. The section below presents in brief the main complementarities and synergies between the DEP and the most relevant instruments in the digital context. A detailed description of the complementarities and synergies with these – and all other – instruments can be found in annex 3 to this document. Complementarities and synergies with Horizon Europe Although several thematic areas are addressed by both Horizon Europe and DEP, the type of actions to be supported, their expected outputs and their intervention logic are different and complementary. Horizon Europe will provide extensive support to research, technological development, demonstration, piloting, proof-of-concept, testing and innovation including pre-commercial deployment of innovative digital technologies, in particular: ·a dedicated budget in the Global Challenges pillar for "Digital and industry" to develop next generation enabling technologies (Artificial Intelligence and Robotics, Next Generation Internet, High Performance Computing and Big Data, Key Digital Technologies, combining digital with other technologies); ·support to e-Infrastructures under the Open Science pillar; · the integration of digital across all the Global Challenges (health, security, energy and mobility, climate, etc.); and ·support for breakthrough innovations under the Open Innovation pillar (many of which will combine digital and physical technologies). Horizon Europe will be the sole centrally-managed EU programme supporting research and technological development and the main programme for demonstration, piloting, proof-of-concept, testing and innovation including pre-commercial deployment. Horizon Europe will cover the innovation chain from basic research to applied research, to prototyping, piloting, demonstration and pre-commercial deployment accelerating wider market uptake. Horizon Europe will not, in general, support deployment at wide scale, infrastructure costs or provide institutional funding (for example the support to research infrastructures is for cross-border access to and integration of research infrastructures and the development of ESFRI pan-European research infrastructures, but not the construction or operational costs). The DEP, on the other hand, will invest in:

·digital capacity building in High Performance Computing, Artificial Intelligence, Cybersecurity and advanced digital skills; and ·national and regional deployment within an EU framework of digital capacities and latest digital technologies in areas of public interest (such as health, public administration, justice and education) or market failure (such as the digitisation of businesses, notably small and medium enterprises). DEP will focus on large-scale digital capacity and infrastructure building. These capacities and infrastructures will support the wide uptake and deployment across Europe of critical existing or tested innovative digital solutions. This will mainly be implemented through coordinated and strategic investments with Member States, notably through joint public procurement, in digital capacities to be shared across Europe and in EU-wide actions that support interoperability and standardisation as part of developing a Digital Single Market. Synergies between the two programmes will be exploited. As an example, novel digital technologies developed by Horizon Europe will progressively be taken up and deployed by DEP. By the same token, capacities and infrastructures under the DEP will be made available to the R&I community, including for activities supported through Horizon Europe. DEP and Horizon Europe will align their strategic programming. Their governance structures will involve the respective DGs as well as others concerned by the different parts of the respective programmes. For their implementation, Horizon Europe and DEP will align operating procedures (e.g. common processes, IT tools, etc.), inter alia using the services provided by the Horizon Europe Common Support Centre. Horizon Europe initiatives for the development of skills and competencies curricula, including those delivered at the co-location centres of the European Institute of Innovation and Technology's KIC-Digital, will be complemented by DEP-supported capacity-building in advanced digital skills. Complementarities and synergies with CEF2 and other programmes CEF2 will provide the trans-European networks supporting high capacity broadband and 5G corridors necessary to enable the deployment of digital services and technologies proposed in the DEP. At the same time the critical infrastructures across sectors - supported by CEF2 – will need the appropriate level of cybersecurity and will thus rely on the deployments made under DEP. In the future only DEP will provide support to the deployment of digital services in areas of public interest. Clear synergies with the DEP can be found in the 'MEDIA' strand of the EU Values Fund. 'MEDIA' supports targeted actions (e.g. access to content, promotion and audience development) in the digital transformation of the cultural and creative sectors as a whole. The DEP will also support these sectors by providing wide access and adoption of cutting-edge technologies, standards (where needed) and infrastructure necessary for the capacity-building. With regard to cybersecurity, synergies will be established between the Internal Security Fund, Horizon Europe, the Defence Fund and DEP, supporting a future European Cybersecurity Research and Competence Centre. Synergies may involve the inclusion of civilian, law enforcement and military cyber defence research entities in an EU network to jointly carry out research, solving law enforcement challenges and possibly creating a cluster of expertise involving law enforcement actors. Complementarities and synergies with the shared managed EU funds Investments from DEP, ERDF and ESF need to be complementary and mutually reinforcing. Most of the national and regional smart specialization strategies either include ICT research and innovation or the adoption of digital solutions for other fields of innovation. Given the importance of digitisation for innovation and industrial transition, this should be reinforced. The DEP and Horizon Europe can facilitate cooperation and synergies between the countries and regions and complementarities in the implementation of those programmes at regional, national and European level in a manner which does not distort competition. At least four of the areas addressed by the DEP (cybersecurity, digital transformation of industry, digital transformation of Services of Public Interest and advanced digital skills) have a clear regional impact but the scope and scale is completely different. DEP aims at building and federating excellence. This is done through procurement and capacity building of facilities which have a European dimension. The Digital Innovation Hubs will support faster adoption of the latest digital technologies, notably by SMEs. The Hubs are very effective in helping companies with their digital transformation, especially in regions where there is a high industrial activity and an under-investment in digital technologies. At the same time, Local and Regional Administrations (LRAs) have an important role in modernising administrations and services and enabling smart, digital transformations of their territories. Through the Digital Hubs and the excellence networks the actions supported by the DEP offer clear opportunities for collaboration and coordination with the operational programmes under ERDF policy objective "Smarter Europe". The DEP will build on and complement other efforts financed among others by the ERDF. For example, the DIHs will be scaled up and networked to allow them to work in partnership with those in other Member States, inter alia by sharing human and technical expertise. As a further example, the focus on HPC in the DEP is on co-investment (through procurement) in latest supercomputers, the networking of supercomputing centres and the development of application which have an EU interest notably in areas of public interest (health, public administration, climate, etc.). Therefore, programme synergies, attentive to preserving competition within the internal market, could cover the deployment and innovation actions funded through DEP which have a common European Interest or projects with regional relevance jointly funded by DEP and ERDF (e.g. National HPC competence centres) for example addressing the use of HPC in 3D high resolution mapping and analysis of the territory. Complementarities and synergies with the Erasmus+ The Action Plan (Digital Education Action Plan (COM(2018) 22 final)) of January 2018 sets out how the Commission, over the coming three years, will support Member States in ensuring that education systems make good use of digital technologies and are prepared for future change. It will also set out measures to support teachers and learners in developing the competences they need to live, work and thrive in the digital age. In particular, one of the priorities of the Digital Education Action Plan is to support the development of digital skills and competences.

The renewed EU agenda for Higher Education (COM(2017) 247 final) address four main challenges by focusing on four corresponding priorities for action, supported by EU-level activities: ·Tackling future skills mismatches and promoting excellence in skills development; ·Building inclusive and connected higher education systems; ·Ensuring higher education institutions contribute to innovation; ·Supporting effective and efficient higher education systems. Figure 11: Digital in next MFF: Five main complementary blocks 4.Delivery mechanisms of the intended funding This section will consider delivery mechanisms at various interlinked levels. There are: implementation modes, the specific instruments used, and programming and priority-setting. 4.1.Implementation modes Given the nature of the activities to be covered under each programme pillar, a one-size-fits-all mechanism should be avoided. The Programme will be implemented directly as provided for by the Financial Regulation or indirectly with the appropriate entities or bodies referred to in Article 58(1)(c) [new 61(1)(c)] of the Financial Regulation. Without prejudice to the possibility to provide funding in any of the forms laid down in the Financial Regulation the intention is to implement the programme as described below: ·For HPC, the continuation of the EuroHPC joint undertaking which is currently under discussion with the Council is deemed to be the most effective and efficient instrument to implement the HPC strategy, in particular to coordinate national and Union strategies and investments in HPC infrastructure and Research and Innovation, pooling resources from public and private funds, and safeguarding the economic and strategic interests of the Union . The Joint Undertaking is expected to draw budget from both DEP and Horizon Europe. ·Grants relating to AI activities would be awarded directly by the Commission or through an existing agency. ·Most of the cybersecurity related activities would be implemented through the creation of a cybersecurity network and competence centre, as proposed in a separate impact assessment . The cybersecurity activities related to the implementation of the NIS Directive would be managed through an Executive Agency as is currently done, to a limited extent, under CEF. ·Funding relating to the promotion of advanced digital skills would be implemented primarily through the Digital Innovation Hubs. The work programme will be drafted by the Commission in collaboration with the above-mentioned relevant cross-European networks, which would be able in this way to provide the inputs needed to ensure consistency of interventions in the field of advanced digital skills with the latest technological developments. The aim is thus to provide a swift response to the fast-changing needs of the labour market. ·As is currently the case under CEF, funding relating to digitisation of areas of public interest would continue to be managed by an executive agency. European Commission management will continue to be used for development of solutions to ensure common design and architectural interoperability, while the most standardised, mature and non-sensitive services could be delegated to an existing regulatory or executive agency. Whether such an agency could also take over the management of grants, and any modalities for such a transition, would still need to be considered. The management of specific sectorial core service platforms could potentially be transferred to the operational management of already existing agencies, if this possibility is already provided for in their remit. In the context of the e-CODEX core service platform for example, a potential transfer to the eu-LISA agency is one of the options being explored . ·The digitisation of industry will also be implemented through the Digital Innovation Hubs via an existing executive agency. During the first year of the implementation of the Programme, an initial network of Digital Innovation Hubs shall be established. This initial network shall consist of entities which shall be nominated by each Member State subject to the Commission's approval. Additional Digital Innovation Hubs shall be selected on the basis of an open and competitive process, in such a way to ensure the widest geographical coverage across Europe.

The implementation modes will seek to develop strong synergies between the various components of the Programme and with other programmes at European, national and regional level. These are further described in annex 4 to this document as concerns HPC, AI and cybersecurity. The sections below provide more details on the implementation modes for each area of intervention along three strands of investment: 4.1.1.Co-investing with MSs in high-cost infrastructure accessible across the EU For HPC, the intervention will cover the acquisition of machines and equipment for Exascale and post-Exascale. It will also cover the operation of exascale and post-exascale supercomputers and the interconnection of supercomputers across the EU. It will be implemented through EuroHPC Joint Undertaking (which will also implement Horizon Europe supported activities in HPC). There will be co-investment with MSs (MS entrust the JU with their funding) implemented through procurement only (JU procurement). The ownership of the machines will be with the JU and the governance as well. For Cybersecurity, the intervention will cover the acquisition of advanced cybersecurity equipment and tools. It will be implemented through the Cybersecurity competence network with a European Cybersecurity Industrial, Technology and Research Competence Centre (which will be open to the Defence Fund supported activities in cybersecurity). There will be co-investment with MSs and facilities can be owned, governed and used by members of the network and it will be implemented through procurement only. For Artificial Intelligence, the intervention will support the establishment of high-cost infrastructures accessible across the EU supporting common data spaces, AI-platform (incl. software tools – European libraries of algorithms) and large scale testing facilities for AI. These will be shared facilities, possibly setup from the ground up, accessible throughout the EU which could involve a subset of “first movers” Member States that are ready to share facilities. The intervention will be supported through Grants implemented under direct management by agency and/or Commission (agency is default) in co-investment with MSs (details to be defined). 4.1.2.Reinforcing existing MS capacities, networking and aggregating - making them available to users across the EU For HPC the intervention will cover the upgrade or acquisition of MS computing facilities below exascale performance level as well as interconnecting and federating national supercomputers and making them accessible across the EU (super-computing as a service). This will also be implemented by the EuroHPC JU through calls for expression of interest for potential hosting entities, followed by call for tender. There will be joint procurement by JU and MS. The EU financial contribution will be subject to the selected hosting entity allocating access time available EU-wide equivalent to the EU's contribution. The ownership of the equipment will be shared between hosting entity and JU. The governance will be with the JU. For cybersecurity, the intervention will cover scaling up of existing technological capacities in cybersecurity in MSs, networking them and making them accessible across the EU. This will be implemented through a Cybersecurity competence network with a European Cybersecurity Industrial, Technology and Research Competence Centre mainly through procurement. Selected capacity owners will procure upgrading equipment. EU support will be conditioned on making available a certain percentage of the capacity EU wide, with consideration of the national security conditionings. The ownership will be with the capacity owner. The governance will be entrusted to the Cybersecurity competence network with a European Cybersecurity Industrial, Technology and Research Competence Centre. For AI, the intervention will focus on reinforcing and connecting Artificial Intelligence capacities in the MS to form an AI hub in Europe in partnership with the European Data Infrastructure and European Open Science Cloud supported under Horizon Europe. This could also address capacities such as datasets and large scale testing facilities that would not necessarily be available EU-wide (eg. could be large scale pilot in AI and Robotics for health involving several sites). This will be implemented through grants under direct management by agency and/or Commission (agency is default). There will be co-investment with MSs. For skills, the intervention will target the reinforcement of advanced skills capacity building in MS through Traineeships, Bootcamps and Master/specialised Courses where needed. This will be supported through grants implemented under direct management by EU Agency (AI) and JU (HPC) or Cybersecurity specific body. For traineeships, an executive agency will publish a call for Digital Innovation Hubs willing to provide traineeships in enterprises (or directly through the Digital Innovation Hubs). For Master/specialised courses and bootcamps: the EU Agency, JU HPC or Cybersecurity body will publish calls for education providers willing to design and provide Master/specialised courses and bootcamps. 4.1.3. Ensuring best use of capacities in areas of public interest and industry Digital Innovation Hubs Digital Innovation Hubs will be involved in the implementation of the Programme by: ·providing digital transformation services - including testing and experimentation facilities - targeted towards SMEs and midcaps, also in sectors that are slow in the uptake of digital and related technologies. ·transferring expertise and know-how between regions, in particular by networking SMEs and midcaps established in one region with Digital Innovation Hubs established in other regions which are best suited to provide relevant services; ·providing thematic services, including services related to artificial intelligence, high performance computing and cybersecurity and trust to the administrations, public sector organisations, SMEs and midcaps.; ·managing grants, in particular as regards provision of financial support to third parties, in the areas of advanced digital skills and the digitisation of industry. The Digital Innovation Hubs will receive funding in the form of grants.

Supporting broad use of capacities in areas of public interest and in industry This intervention will be covered by grants implemented under direct management by agency and/or Commission. Procurement can also be used for elements where ownership by the commission (or agency) is required, like e.g. under the current CEF programme. For industry, this intervention will be covered to a large extent by financial instruments under InvestEU or by grants for market replication activities. Access to capacities will be on pay-per-use basis. For the example of HPC capacities, the Governing Board of the EuroHPC Joint Undertaking shall define the access rights to the Union's share of access time to the pre-exascale supercomputers and petascale supercomputers in accordance with the following guiding principles: ·Allocation of access time for publicly funded research and innovation activities for any user of a Member State or country associated to Horizon 2020 should be based on a fair and transparent peer review process. ·Access time may be granted without a call for expressions of interest in certain strategic scientific European research initiatives or in emergency and crisis management situations. Up to 20% of the Union's share of access time may be allocated to commercial services on a pay-per-use basis. ·Use of the Union's share of access time shall be free of charge for applications related to publicly funded research and innovation activities. The Governing Board shall regularly monitor granted access per Member State and country associated to Horizon 2020 and per user category. Figure 12: Overview of main implementation mechanisms 4.2.Instruments The programme will be implemented through a toolkit of available instruments that would be used depending on the policy need to be addressed and favoring those having the least distorting effect on the market. So as to ensure the achievement of objectives and maximum flexibility throughout the lifetime of the programme, each of the pillars should have the capacity to use the instruments offered by the Financial Regulation. 4.2.1.Use of procurement Procurement in its various forms will play a prominent role in the implementation of the Digital Europe Programme. In contrast to the USA, China and Japan, innovation procurement instruments have not been used extensively so far by Member States in areas such as HPC or cybersecurity. The procurement of systems is still done by Member States in an uncoordinated way. The impact assessment for the EuroHPC Joint Undertaking has highlighted that more joint procurement by Member States could allow Europe to take advantage of efficiency gains. It points to the initiatives of global competitors providing critical mass for procurement, obtaining better value for money in acquisitions, and the link to technology supply, ensuring national suppliers remain at the forefront of technology advancements. For cybersecurity, there is no common European strategy to develop and acquire costly cybersecurity infrastructures. The specifications and procurement of the necessary equipment are done in an uncoordinated way and are mainly guided by own or natio