Digital Denmark: The Little Mermaid Wakes Up to Big Tech's Risks – Center for European Policy Analysis

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July 12, 2022
Denmark is a digital pioneer. Google developed its Chrome JavaScript engine in Aarhus and Apple and others are locating some of their biggest data centers on the Jutland Peninsula. The small, prosperous Nordic country produces half of the world’s increasingly digitized hearing aids.1 Denmark leads the European Union (EU) in broadband connectivity and Internet penetration. Most Danes shop online and more than 90% of them communicate online with the public sector.
At the same time, Copenhagen has joined with France and Germany to insist on tough EU-wide tech regulation. Danish European Commissioner Margrethe Vestager has teamed up in Brussels with French European Commissioner Thierry Breton to carry out a tough crackdown on Big Tech. Denmark is leading the charge to rein in online marketplaces, proposing to make them liable for the safety of products posted for sale on their sites, in line with a long Danish tradition of strong consumer protection.
Innovation and regulation are not contradictions in the Danish mind. A marriage of strong regulation with open markets and skepticism of concentrated digital market power are hallmarks of the ordoliberal Social Democratic notion of digital sovereignty — contrasted to the French state-directed dirigiste version.2 Digital Denmark is skeptical about Brussels-led proposals for digital protectionism and generous tech subsidies. Its vibrant freedom of expression tradition makes it wary of too strong of a crackdown on online speech.
Denmark ranks at the top of the class in the European Commission’s latest Digital Economy and Society Index (DESI). It is among the top four countries for human capital, connectivity, integration of digital technology, and digital public services.3
According to a 2021 Danish Statistical Office report, the COVID-19 pandemic boosted online shopping in Denmark by five percentage points from 2019 to 2020. Three-quarters of Danes bought online in 2020, compared to just over half in 2011. About 90% of Danish households own a smartphone and more than three-quarters of the population surf the Internet several times daily, with more than 80% subscribing to social media such as Facebook or Instagram.4
Government services are digitized. Since 2014, all communication with public authorities takes place online with exceptions only for the elderly and the disabled. In 2020, about 90% of Danes used the public mailbox for communications with the public authorities and 92% of Danes receive e-mail from the public authorities.5 About 80% consider their data safe with the government.6
Photo: Danish Prime Minister Mette Frederiksen (center) and European Council President Michel (second left) visit the Technical University of Denmark. Credit: European Council.
Danes are skeptical about the French concept of EU digital sovereignty if it is defined as a state-directed anti-US effort. First, the Danish government fears that this poorly defined concept could lead to protectionism. Second, Danes are sensitive to the use of the term “sovereignty” in an EU context. They fear EU integration that leads to the erosion of their own national sovereignty.
The Danish government joined with like-minded EU partners such as Estonia, Finland, and Germany to specify that EU digital sovereignty must mean digital regulation in line with EU values. This means protecting free speech, human rights, and personal privacy, and keeping the Digital Single Market open to the world.7 For Danes, digital sovereignty must allow individuals and society to take full advantage of digital innovation.
This means combining tough regulation with demands that data keep flowing to boost economic performance. The government has set up a Digital Partnership with representatives from businesses, unions, and academics. It recommends pushing Brussels to establish EU-wide digital health, allowing the country’s strong pharma industry to leverage its talents. Pharmaceutical companies like Novo Nordisk and H. Lundbeck account for almost half of Denmark’s exports to the United States.8
The Digital Partnership supports an EU digital push to fight climate change, leveraging Denmark’s status as a wind superpower. Denmark is home to Vestas Wind Systems, the world’s largest wind turbine manufacturer and wind-generated some 47% of the country’s total electricity consumption.9
On data privacy, Denmark takes a hard line. It is increasing funding for the Danish Data Protection Agency to investigate private sector abuses and has increased support for the Advisory Board on Data Ethics. Another Danish priority is bolstering the fight against fake news. At home, Denmark should establish data ombudsman with powers to issue fines.
Strong regulation of digital platforms is welcomed if it forces them to take increased responsibility for illegal content. In addition, Danes believe that mega platforms must be prevented from acting as gatekeepers that throttle competitors. In particular, these gatekeepers should be prevented from promoting their own services at the expense of competitors.
While these ideas are in the EU mainstream, Denmark is more radical in its approach to regulating e-commerce. In the Danish view, consumers must be protected from dangerous products. The government, Danish Members of the European Parliament (MEPs), and business organizations criticized the proposed Digital Services Act (DSA) for being too weak on marketplace responsibility for product safety. Danish MEP Christel Schaldemose proposed making marketplaces liable for the safety of products posted for sale on their platforms — an idea rejected by the full European Parliament and in the final DSA. Instead, marketplaces will have to improve their Know Your Customer onboarding of merchants and speed up takedowns of counterfeit and dangerous items. Consumers will have the right to seek compensation for damages.
On digital tax, Denmark’s former center-right government voted in November 2018 to block the European Commission’s proposal to impose a special tax on digital businesses.10 Although Denmark is traditionally skeptical about EU taxes, the present Social Democratic government and its supporting majority in the Parliament have changed the country’s position out of anger that the tech giants were not paying their fair share of taxes. As an alternative, Denmark supports the Organisation for Economic Co-operation and Development (OECD) process to set a minimum 15% tax rate on the largest multinationals.
Denmark supports EU digital industrial projects, provided they are transparent and consistent with strict state aid provisions. It has endorsed the EU’s ambitious plans to revive its digital industrial base, including cooperation and support for developing its semiconductor industry and creating an electric car battery alliance.  While Denmark does not take part in these chips and battery projects, it intends to leverage EU funding to promote the use of hydrogen power and for developing a common base for the secure use of standardized health care data.
Denmark’s strong welfare state and consumer protection tradition separate it from its low-tax, free-market Baltic neighbors. The divisions carry over into different stances on tech regulation. Baltics are skeptical. Danes are believers.
Photo: Participants at the 2019 WindEurope Offshore conference in Denmark, at a stand highlighting developments in green energy. Credit: Wind Denmark via Flickr.
Broad political agreement exists on the need to support Denmark’s digital transformation. In the country’s wireless spectrum auctions, Danish telecommunications companies agreed to roll out a high-speed 5G mobile network to 75% of the Danish population by 2025. The telecom companies have invested around €1.3 billion.
But problems with planning regulation for around 150 masts for rural areas mean that the target has been missed. According to the Danish newspaper Berlingske, a political majority in the Danish Parliament wants to ease permitting.11
In August 2021, the Danish government launched proposals to regulate social media. A national action plan would educate young people on the responsible use of social media.  Platforms would be required to delete illegal content within 24 hours after specific notification and to publish transparency reports. On the antitrust front, the government wants the Danish Competition Authority to block tech giants from acting as gatekeepers favoring their own services.
The government recognizes the need for support to strengthen critical technologies, adopting a risk-based approach to their regulation. It believes these should be identified via transparent analysis with clearly identified criteria. For artificial intelligence (AI), the upcoming EU rules should take account of the risks while not putting a brake on innovation.12
Denmark’s Digital Partnership issued 46 recommendations. These include proposals to improve the digital capacity of Danish small and medium-sized enterprises (SMEs). Among the most interesting ideas was to establish public robot libraries. They would lend the robots to individuals and businesses. Funding for digital education and training should be increased. Public data should be made available under simple and clear rules.13 Privacy protections should be bolstered, with increased funding of the Danish privacy regulator.
In response to these proposals, the government published its own digital strategy in May 2022 which in general endorses a large part of the Digital Partnership’s recommendations. The strategy includes 61 initiatives to increase digital security and competencies. About €300 million of public funding is earmarked between 2022 and 2026. A new Digital Advisory Board led by the former CEO of Microsoft Denmark, Nana Bule, has been established to monitor implementation. Danish business organizations have welcomed the strategy.
As part of the EU’s COVID-19 Recovery and Resilience Facility, another €300 million will be spent on digital projects over the next four years to extend rural broadband and digitize health care services.14 New investments will help bring public services online and promote cybersecurity and AI. Importantly, public-private partnerships that promote data sharing will be encouraged.
Although Denmark is a cybersecurity leader in some international rankings, cyberattacks have hit several Danish companies, including Maersk, ISS, and Vestas.15 A report from the Danish Parliament’s Committee of the Public Accounts criticized five specific public agencies for failing to meet standards for cybersecurity.16
Denmark usually is a bastion of freedom of expression. It opposes Facebook’s ban on nudity, which Danes feel is overly restrictive. A Danish politician who tried to post a photo of Copenhagen’s iconic Little Mermaid statue was told it could not be published because of nudity rules.17 Facebook subsequently relented and clarified its rules on nudity, allowing photos of paintings, sculptures, and other art that depict nude figures.18
At the same time, Denmark insists on increasing the responsibility of social media companies for the content they host. In January 2022, the Danish broadcasting company DR profiled the mother of a young Danish woman murdered by Islamist extremists. She had failed to get Facebook to stop the sharing of the murder. Facebook insisted that it was trying to block the video, but Danish Minister for Industry, Business and Financial Affairs Simon Kollerup, responsible for regulating social media remained unconvinced — and said the failure underlined the need for strict rules requiring platforms to take down illegal content.19
Denmark’s Digital Partnership recommendations endorsed by the government represent a solid strategy to tackle the main challenges for a successful digital transition. The open question is whether the government will unlock the needed resources and how the strategy will be implemented.
Denmark should continue to fight potential protectionism and insist that Europe build a true Digital Single Market. On issues such as digital taxation, Denmark wants to find a transatlantic agreement. If this is impossible, however, it will side with European solutions.
By Aurelien Portuese
French digital policy can point to undeniable tech success stories, but the French quest for digital independence creates tension within the EU.
 
Photo: Chairman of the Naalakkersuisut Mute B. Egede and Denmark’s Prime Minister Mette Frederiksen are seen on a video recording of a mobile phone as they speak to the media at the airport in Nuuk, Greenland March 14, 2022. Picture taken March 14, 2022. Credit: Christian Klindt Soelbeck/Ritzau Scanpix/via REUTERS
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