Your Excellencies,

We write to thank you and the French Presidency of the G-8 for making the Digital Economy a high priority this week. The importance of your deliberations cannot be overestimated.

Around the world digital sectors of the economy are growing faster than the rest. As the economies you represent struggle to renew growth and employment, it is vital to recognise that digital infrastructure investment, new Internet-based services, and the digital transformation of every economic sector have become the most powerful drivers of economic growth and innovation. Europe itself presents compelling examples:

In France, the digital economy represented 20% of overall growth from 2004-2009, adding €60 billion to GDP and 1 million jobs.

-In Germany, investment in ICT and the Internet contributed 23% to productivity and GDP growth from 1999 through 2007. The ICT/Internet sector is Germany‟s second biggest employer, providing 850.000 jobs.

-In Italy in 2010, Internet‟s contribution to GDP was €31.5 billion, or 2% of total GDP, and is expected to grow at an annual rate of 18%.

-The UK Internet economy is worth £100 billion a year, and is growing at 10% per year; the Internet directly employs 250.000 people.

-For the EU 27, research concludes that eliminating barriers to the expansion of the digital economy based on the free flow of information and knowledge could deliver 4% GDP growth by 2020, a gain of €500 billion and similar in scale to the growth dividend achieved as a result of the EU‟s historic programme launched over two decades ago to complete its single market by 1992.

We are only at the beginning of this transformation in our developed economies, while there is likewise increasingly rapid uptake and penetration of these technologies in many emerging economies. Harnessing this vast new global growth potential now requires political leadership to avoid stifling regulatory fragmentation of digitally-driven communities, industries and markets. The Internet is global. No single sovereign state - or political union - can exploit its full growth potential in isolation.

As you consider the priorities for your common digital agenda, we offer the following observations for reflection:

-The digital revolution creates entirely new ways for each one of us to behave as individuals, as economic actors and as citizens in our relationship with government. There is potential for wider social progress and economic growth in all three of these spheres as innovative digital tools and services enlarge the opportunities and help reduce the risks inherent in each. Public policies now need to focus on reinforcing these same effects.

-The digital revolution is generational. Already today in Europe, 73% of 16-24 year olds are „digital natives,‟ born into the digital world over the past 20 years, while many emerging economies are younger and at least as digitally native. These rapidly growing, digitally skilled generations are the fastest adopters of new consumer-empowering solutions and other digital tools which challenge the old economic order. Their future economic opportunity, employment and level of civic engagement will depend crucially on the ability of today‟s leaders to put in place the policies and regulatory frameworks needed to accelerate the digital transformation of our economies. This is by far the most important legacy we can leave.

-The digital paradigm creates entirely new business models which in turn generate new jobs. Global youth unemployment has reached its highest level on record, increasing
from 11.9 percent in 2007 to 13.0 percent in 2009. We have been slow to leverage the
job-creating power of digital technology. We must now seize these opportunities as the
Internet becomes as essential to enterprises around the world as social networks have
become for citizens. Here again, public policies need to support the rapid emergence of this “Business Web”, disruptive though it may be.

-Each region of the world will implement its own digital agenda reflecting its specific
circumstances. Such diversity nevertheless requires a common commitment to
transparent, technology-neutral and compatible regulatory frameworks, or we risk market fragmentation (as exemplified by the way data privacy and intellectual property rules arestill handled within the EU) that deprives us all of the benefits of market integration and global economies of scale.

In view of what is at stake, we urge you to act decisively this week (and later this year in the framework of the G-20) to promote integration and avoid fragmentation of digitally-driven markets and industries at national and global level.

Please be assured that DIGITALEUROPE members, who represent the world‟s largest ICT organisations and small to medium size enterprises across the EU, are committed to active, constructive and transparent engagement in the public policy process at all levels in order to harness the growth opportunities and overcome the challenges that are holding back the revolution that our technologies are driving.

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