WEBVTT - Margrethe Vestager Talks EU 'Leap Of Faith'

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. The European Union is

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<v Speaker 1>facing a unique combination of challenges a war on its borders,

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<v Speaker 1>trade and security pressure from the US, competition from China,

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<v Speaker 1>and declining competitiveness as highlighted in the Dragi report two

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<v Speaker 1>years ago. So is this a moment of crisis or

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<v Speaker 1>something even more serious for the EU?

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<v Speaker 2>Joining us to discuss.

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<v Speaker 1>Margareta Vesteire, who is former Executive Vice President of the

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<v Speaker 1>European Commission until twenty twenty four, in our chair of

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<v Speaker 1>the board at the Technical University of Denmark, among other roles,

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<v Speaker 1>great to talk to you. You worked in the European

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<v Speaker 1>Commission through some of its biggest recent crises, including the

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<v Speaker 1>COVID nineteen pandemic, the start of the Russian invasion of Ukraine.

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<v Speaker 1>How would you compare the combination of challenges the EU

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<v Speaker 1>is facing now to those moments.

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<v Speaker 2>Does it feel more serious?

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<v Speaker 3>I think it's a bit different because the risk is that,

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<v Speaker 3>since for instance, competitiveness is a bit of an asymmetrical crime,

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<v Speaker 3>is not felt as a European crisis. And having seen

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<v Speaker 3>how fast, how coordinated, how strong member states have acted

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<v Speaker 3>together as one European unity, when it came to COVID,

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<v Speaker 3>the energy crisis, the war in Ukraine. The very slow

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<v Speaker 3>approach to increasing competitiveness, of course, is an issue of

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<v Speaker 3>concern because we know everything about this USLAF underline ask

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<v Speaker 3>Graghi to write this comprehensive report. Letter has done more

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<v Speaker 3>than a market on the Single Market, Ninisto has done

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<v Speaker 3>the report on safety and security, so everybody knows what

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<v Speaker 3>needs to be done. The progress on getting things done

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<v Speaker 3>is there, but it's really slow.

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<v Speaker 1>And could this be a moment though that may actually

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<v Speaker 1>activate more progress, more cooperation, because if we think of

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<v Speaker 1>some of the examples of what's in those reports, things

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<v Speaker 1>like the Capital Markets Union, there's you know, it feels

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<v Speaker 1>like a very long journey on that particular set of reforms,

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<v Speaker 1>and there are still divisions among members states about what

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<v Speaker 1>exactly they want of that union, despite all of the

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<v Speaker 1>conversation about how it could help Europe protect itself economically

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<v Speaker 1>and also from a security point of view.

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<v Speaker 4>So two observations.

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<v Speaker 3>One is that something new is happening the European Scale

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<v Speaker 3>Up Fund, because it's a generalely different way of thinking

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<v Speaker 3>about how to enable scale up. So instead of having

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<v Speaker 3>a commission program with all that comes with it. The

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<v Speaker 3>Commission is one of many anchor investors and the other

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<v Speaker 3>investors they're private investors, and now they're in the process

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<v Speaker 3>of finding that third party investment manager that can do

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<v Speaker 3>that with arm slength and professionally in the most critical sectors.

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<v Speaker 3>I think that's a general good sign because when people

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<v Speaker 3>start thinking and new about all problems, then they might

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<v Speaker 3>actually start to solve them. Second observation, I think everybody

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<v Speaker 3>has had it with that two decade long conversation about

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<v Speaker 3>the capital market. We need a smaller number of countries

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<v Speaker 3>to take the lead on this to say we will

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<v Speaker 3>establish that capital market. The rest of you more than

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<v Speaker 3>welcome on the terms that we core countries actually set

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<v Speaker 3>for this. My guess is that if we did that,

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<v Speaker 3>we would have a capital market with some debt within

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<v Speaker 3>the next four to five years.

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<v Speaker 2>Do you think we're far away from that happening.

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<v Speaker 3>I think that the conversations they are moving in that

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<v Speaker 3>direction because I think a lot of people they have

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<v Speaker 3>lost their patients because it's so obvious that if you

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<v Speaker 3>want businesses to scale, you need to provide a market

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<v Speaker 3>four hundred and fifty million customers. Get that single market

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<v Speaker 3>toward and part of that is a single capital market,

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<v Speaker 3>and if you cannot have it in one go then

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<v Speaker 3>you need to have it in several goals.

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<v Speaker 1>Has in some ways President Trump done the EU a

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<v Speaker 1>favor by upending so many of the norm that the

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<v Speaker 1>EU has relied on over the past number of decades,

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<v Speaker 1>and perhaps helped to encourage some of those who may

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<v Speaker 1>be reluctant to take bigger changes to make them Well.

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<v Speaker 3>I wouldn't express it that way, because you know, I'm

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<v Speaker 3>really sad about some of the very very negative effects

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<v Speaker 3>of the Trump presidency, take the closure of USAID, the

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<v Speaker 3>risk of offsetting a new AIDES epidemic. So I think

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<v Speaker 3>one cannot see it like that. That being said, I

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<v Speaker 3>think it was about time for Europe to realize we

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<v Speaker 3>need to do better ourselves. The European social contract is

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<v Speaker 3>at stake here because many people feel that that social

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<v Speaker 3>contract is not being upheld. Europe is the best place

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<v Speaker 3>to live ever in history, and as I usould say,

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<v Speaker 3>especially if you're a woman, but that is not good

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<v Speaker 3>enough because a lot of people feel that their future

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<v Speaker 3>is not secured, their children cannot get their own place

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<v Speaker 3>to live, and so on and so forth.

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<v Speaker 4>So I think it's really important.

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<v Speaker 3>For Europe to realize this is not a race to

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<v Speaker 3>be more Chinese or more American. This is a race

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<v Speaker 3>for Europe to be a much better version of herself

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<v Speaker 3>and being that also being more competitive, more focused.

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<v Speaker 1>Can we sell that to Europeans though as well, that

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<v Speaker 1>the difficult decisions that will need to be made, and

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<v Speaker 1>you know, with their demographic challenges in Europe like there

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<v Speaker 1>are in other parts of the world as well, when

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<v Speaker 1>it comes to the social model, do politicians need to

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<v Speaker 1>be more honest with their voters that there are going

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<v Speaker 1>to be difficult choices to be made and some of

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<v Speaker 1>those are going to mean a change in perhaps some

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<v Speaker 1>parts of that social system that Europe has constructed.

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<v Speaker 3>Well, I think you need to make changes in order

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<v Speaker 3>to develop the social system that Europe has constructed. I

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<v Speaker 3>think that is the point. And I think people are

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<v Speaker 3>more than ready to hear this because they feel it already.

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<v Speaker 3>They see the problems, They see increasing inequality, they see

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<v Speaker 3>that businesses do not throw as they ought to do,

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<v Speaker 3>and some people they feel that they are not included

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<v Speaker 3>in society anymore. And I think we see some of

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<v Speaker 3>the conclusions from that in how people are voting saying yeah,

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<v Speaker 3>but then we want some strong person actually to cut

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<v Speaker 3>through all of this haze of democracy that we're hearing.

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<v Speaker 3>So thing is really really important that democracy says we

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<v Speaker 3>are going to deliver, and we are going to deliver

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<v Speaker 3>on that social contract. So, you know, a lot of

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<v Speaker 3>things need to do better. But it also for businesses

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<v Speaker 3>to lean in, for investors to be more willing to

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<v Speaker 3>take a risk on some of the amazing innovators and

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<v Speaker 3>entrepreneurs that we have in Europe, because we still have

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<v Speaker 3>the traffic across the Atlantic where businesses they get US

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<v Speaker 3>capital on board. Of course they want the businesses to

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<v Speaker 3>move to the US. I think there are no surprises

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<v Speaker 3>the surprises that is still happening after we made that

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<v Speaker 3>diagnosis ages ago.

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<v Speaker 1>When you were at the Commission, you oversaw some of

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<v Speaker 1>the most contentious parts of the relationship with.

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<v Speaker 2>The US, particularly over tech regulation.

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<v Speaker 1>Given the current context of pressure, and I'm thinking this

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<v Speaker 1>about in the context of what you're just talking about,

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<v Speaker 1>can the EU afford to keep pushing on regulatory issues

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<v Speaker 1>on regulation of technology or does this risk becoming another

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<v Speaker 1>flashpoint in the relationship.

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<v Speaker 3>But you cannot afford to give up what has been

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<v Speaker 3>you know, with one hundred percent democratic legitimacy, saying listen,

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<v Speaker 3>we have promised Europeans that social platforms would be safe

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<v Speaker 3>to use. We have promised Europeans that the market would

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<v Speaker 3>be open and contestable, so more innovation would happen. This

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<v Speaker 3>is not about the outer world. This is about Europe

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<v Speaker 3>who we want to be. And I think this is

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<v Speaker 3>absolutely crucial because a lot of people gets more and

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<v Speaker 3>more reluctant with technology, artificial intelligence in particular. If Europe

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<v Speaker 3>cannot show that you can trust this technology to work

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<v Speaker 3>for you, well, then you know, the risk is a

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<v Speaker 3>much bigger backlash than what we see slowly coming already.

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<v Speaker 1>Do you worry that some of the efforts being called

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<v Speaker 1>simplification by the Commission to I suppose you could argue

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<v Speaker 1>pull back or simplify parts of the regulation for technology

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<v Speaker 1>is perhaps giving up on some of those tenets.

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<v Speaker 3>Well, I think if I look at what has been

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<v Speaker 3>done in order to implement the AI Act, I think

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<v Speaker 3>that is a very pragmative, constructive approach that has been

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<v Speaker 3>put forward, and I think that is really important, you know,

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<v Speaker 3>to show in businesses that there are ears and there

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<v Speaker 3>are you know, minds that take on board the difficulties

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<v Speaker 3>that was put out in front of businesses. I think

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<v Speaker 3>that's very well done, so of course one need to

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<v Speaker 3>take care. But it's no surprise that when you have

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<v Speaker 3>been legislating from some time that there will be overlaps,

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<v Speaker 3>that there will be overlaps where the wording is kind

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<v Speaker 3>of different. I would think that it would be the

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<v Speaker 3>same any lawyer would say no, no, no, no, no,

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<v Speaker 3>I'll cut you another ten thousand euros in lawyer fees.

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<v Speaker 3>So of course there is potential not all legislation is

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<v Speaker 3>made ready for digitization, because there is a relationship between

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<v Speaker 3>the laws on digital issues and other parts of laws

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<v Speaker 3>like consumer protection, copyrights and so on and so forth.

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<v Speaker 3>So I think it's one hundred percent legitimate to look

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<v Speaker 3>for simplification where it becomes slow and more contested. Is,

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<v Speaker 3>of course, if that is a disguise for deregulation, for

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<v Speaker 3>not keeping the promises that we're giving to Europeans about

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<v Speaker 3>tech actually being trustworthy.

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<v Speaker 1>Is there an issue with enforcement though when we look

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<v Speaker 1>at the fines on the Digital Markets Act, they are

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<v Speaker 1>very small amounts of money compared to what we had

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<v Speaker 1>seen in the past in competition cases. Is there a

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<v Speaker 1>risk that there is a chilling effect on enforcement because

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<v Speaker 1>of the political pressure coming from the US.

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<v Speaker 3>If you look at the enforcement of competition law, that

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<v Speaker 3>is something that has been done since the early days

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<v Speaker 3>of the European Union, when it was even the European Union.

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<v Speaker 3>So you have a tested instrument, you know, you have

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<v Speaker 3>calibrated it, you know what level of fines actually work.

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<v Speaker 3>Here with the Digital Markets Act, you have a completely

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<v Speaker 3>new instrument. You need to figure out how should you

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<v Speaker 3>make this work. When you have a first you don't

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<v Speaker 3>go full scale. You need to say, well, we need

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<v Speaker 3>to listen to you. We need to figure out how

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<v Speaker 3>we do this. We need to get our procedures in

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<v Speaker 3>place so that you have due process within the framework

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<v Speaker 3>of the law.

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<v Speaker 4>I think this is only natural.

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<v Speaker 3>What I think is important is, of course, that we

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<v Speaker 3>had the green Landing moments. I think everybody realized that

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<v Speaker 3>Europe has readlines. Europe is not seeking conflict. This is

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<v Speaker 3>not about picking a fight. This is about, when there

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<v Speaker 3>is a fight, being firm on what we believe in

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<v Speaker 3>and the promises that has been made to Europeans.

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<v Speaker 2>Do you think that's being done effectively?

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<v Speaker 3>I think we're getting there more and more. I think

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<v Speaker 3>that is absolutely crucial. But I think there has been

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<v Speaker 3>sort of a long period of learning trying to figure out, well,

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<v Speaker 3>how do we do with our how do we work

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<v Speaker 3>with our partners when they're truly different from what we

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<v Speaker 3>were used to. But I think that learning materializes more

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<v Speaker 3>and more. I think European leaders they say, well, listen,

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<v Speaker 3>it's our job to develop the national economy, the European economy,

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<v Speaker 3>how the social contract actually is being fulfilled. This we

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<v Speaker 3>will do on our own terms, and we'll do that

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<v Speaker 3>in a relationship with external partners, but we'll do it

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<v Speaker 3>in our own terms.

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<v Speaker 1>Is technological sovereignty something that your need or is it

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<v Speaker 1>even possible?

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<v Speaker 2>Is that something that you worry about?

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<v Speaker 3>It depends a lot about how you define it. I

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<v Speaker 3>think it's really important to define technological sovereignty as a

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<v Speaker 3>question of control. Can you control what is essential to you?

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<v Speaker 3>And of course not all data is equal, but some

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<v Speaker 3>data is more important than other data. And I think

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<v Speaker 3>it's really important that data that you really want only

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<v Speaker 3>to be for European jurisdiction, that you make sure that

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<v Speaker 3>you have only European jurisdiction. So first things first, you

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<v Speaker 3>need to enforce European laws. No matters of, for instance,

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<v Speaker 3>what social platform people are using or what cloud businesses

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<v Speaker 3>are using. You need to know that it's good, it's

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<v Speaker 3>safety use. Second, to provide alternatives, we need many more

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<v Speaker 3>European alternatives, and when I look at European.

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<v Speaker 4>Social platforms, you have almost too many.

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<v Speaker 3>You know, you need some consolidation in that sector to

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<v Speaker 3>have European scale. When you look at cloud you see

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<v Speaker 3>real European Also to the price points, relevant alternatives.

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<v Speaker 1>Feel very small at this stage compared to the prevalence

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<v Speaker 1>of the American companies.

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<v Speaker 3>But that leads me to my third point, which is

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<v Speaker 3>to be much more cautious about market creation. We're not

0:12:56.679 --> 0:12:59.600
<v Speaker 3>at all using the demand site. You know, the data

0:12:59.640 --> 0:13:02.400
<v Speaker 3>is government or the Danish Party is then negotiating government

0:13:02.400 --> 0:13:05.440
<v Speaker 3>platforms right now. It would be great if they say, listen,

0:13:05.520 --> 0:13:08.600
<v Speaker 3>we'll work with three European AI developers as long as

0:13:08.640 --> 0:13:11.880
<v Speaker 3>they're European in order to deliver best and public services

0:13:11.920 --> 0:13:16.160
<v Speaker 3>to our citizens, so that you activate that demand side.

0:13:16.320 --> 0:13:19.880
<v Speaker 3>Because if you have a big public customer, well then

0:13:19.960 --> 0:13:23.720
<v Speaker 3>investors will see that you have great potential. So you know,

0:13:24.120 --> 0:13:26.640
<v Speaker 3>when things are small, it's because they don't have customers.

0:13:27.000 --> 0:13:31.079
<v Speaker 3>So to activate the demand side of all these markets

0:13:31.160 --> 0:13:34.120
<v Speaker 3>that are not fully matured in Europe. That is something

0:13:34.240 --> 0:13:36.480
<v Speaker 3>that we have still failed to do. So there's a

0:13:36.480 --> 0:13:37.920
<v Speaker 3>lot of potential here.

0:13:37.840 --> 0:13:40.640
<v Speaker 2>And cannot be driven from Brussels from the EU.

0:13:41.360 --> 0:13:43.040
<v Speaker 4>Well, it can be coordinated.

0:13:44.280 --> 0:13:49.320
<v Speaker 3>I oversaw some of the defense material procurements in the

0:13:49.400 --> 0:13:52.640
<v Speaker 3>last part of my tenure, and what I saw was

0:13:52.640 --> 0:13:55.360
<v Speaker 3>that if you put up just a bit of incentive,

0:13:56.080 --> 0:13:59.040
<v Speaker 3>you know, a small pile of money that maybe will

0:13:59.040 --> 0:14:02.280
<v Speaker 3>cover the costs of coordinating and getting things in place,

0:14:02.720 --> 0:14:05.680
<v Speaker 3>then you see member states saying, okay, if that's the

0:14:05.720 --> 0:14:08.160
<v Speaker 3>name of the game, we will actually buy.

0:14:08.040 --> 0:14:09.319
<v Speaker 4>A lot of stuff together.

0:14:09.920 --> 0:14:12.600
<v Speaker 3>That gives you better prices, that gives you better material,

0:14:12.840 --> 0:14:16.000
<v Speaker 3>that eases coordination if you ever have a military operation.

0:14:16.640 --> 0:14:19.160
<v Speaker 3>So I think definitely there is a role for Europe

0:14:19.200 --> 0:14:23.280
<v Speaker 3>here and also for having the discussion with heads of

0:14:23.280 --> 0:14:27.280
<v Speaker 3>state and government to say, listen, organizing that demand side

0:14:27.360 --> 0:14:30.520
<v Speaker 3>is absolutely crucial if we want a European market.

0:14:30.520 --> 0:14:32.640
<v Speaker 1>For this, we keep coming back to the idea of

0:14:33.440 --> 0:14:37.880
<v Speaker 1>more cooperation being what will advance progress for Europe. I

0:14:37.920 --> 0:14:42.600
<v Speaker 1>wonder do you worry about individual government's, individual member states?

0:14:42.640 --> 0:14:44.640
<v Speaker 1>You know, big elections that are coming up. We've got

0:14:44.640 --> 0:14:47.560
<v Speaker 1>France next year, for example, that you may get leaders

0:14:47.640 --> 0:14:50.880
<v Speaker 1>who are not so pro European integration and that could

0:14:50.880 --> 0:14:53.880
<v Speaker 1>actually slow down the entire project or any of these

0:14:53.880 --> 0:14:56.080
<v Speaker 1>plans which could help the EU overall.

0:14:56.640 --> 0:15:00.640
<v Speaker 3>But no election is done until it's done. If you

0:15:00.680 --> 0:15:04.800
<v Speaker 3>look at den Macron, I think a year before the

0:15:04.840 --> 0:15:09.080
<v Speaker 3>election he was not considered a contester for the presidency.

0:15:09.600 --> 0:15:12.520
<v Speaker 3>So you know, I'm holding my bets for what is

0:15:12.560 --> 0:15:15.320
<v Speaker 3>going to happen in France. What I think is important

0:15:15.520 --> 0:15:18.720
<v Speaker 3>is that those who have ambitions to work fast, that

0:15:18.760 --> 0:15:22.720
<v Speaker 3>they actually come together. For instance, the Nordic country Scandinavia,

0:15:23.160 --> 0:15:25.960
<v Speaker 3>you have a coherence here, you have ambition here. I

0:15:26.000 --> 0:15:28.280
<v Speaker 3>think it's really important that they come together and show

0:15:28.320 --> 0:15:32.560
<v Speaker 3>what is actually doable because it is really attractive for growth,

0:15:32.800 --> 0:15:35.000
<v Speaker 3>for being able for every member stay to deliver to

0:15:35.040 --> 0:15:38.040
<v Speaker 3>their citizens, that they come together and make this happen.

0:15:38.280 --> 0:15:40.800
<v Speaker 3>You cannot have that capital market on your own. That

0:15:40.920 --> 0:15:42.960
<v Speaker 3>is part of the problem. We see that very clearly.

0:15:43.640 --> 0:15:46.760
<v Speaker 3>So no match in the color of the government. Everybody

0:15:46.800 --> 0:15:48.880
<v Speaker 3>needs scale in order to deliver.

0:15:50.320 --> 0:15:52.720
<v Speaker 1>If you're thinking about the challenges facing the EU, and

0:15:52.760 --> 0:15:55.040
<v Speaker 1>there are many, many of them, what are you most

0:15:55.240 --> 0:15:57.480
<v Speaker 1>concerned about in the coming months.

0:15:58.000 --> 0:16:01.360
<v Speaker 3>I think we have some cultural challenges. I think sometimes

0:16:01.400 --> 0:16:04.800
<v Speaker 3>we need to overcome ourselves to take that leap of

0:16:04.800 --> 0:16:11.360
<v Speaker 3>faith in our European colleagues, compatriots, coast citizens, to say, listen,

0:16:11.760 --> 0:16:16.520
<v Speaker 3>we are so much more alike than what we actually think.

0:16:16.720 --> 0:16:19.040
<v Speaker 3>We have so much more in common than what we

0:16:19.120 --> 0:16:22.080
<v Speaker 3>actually think, and we are much stronger than we think.

0:16:22.480 --> 0:16:25.640
<v Speaker 3>If you look at the for example, the US efforts

0:16:25.640 --> 0:16:29.800
<v Speaker 3>of having Open and win the Hungarian election. The Vice

0:16:29.840 --> 0:16:34.440
<v Speaker 3>President came over Tromp called and promised all the economic

0:16:34.520 --> 0:16:38.200
<v Speaker 3>might of the US if only the Hungarian voters would

0:16:38.280 --> 0:16:40.680
<v Speaker 3>keep Open in place. Because he was the one who

0:16:40.720 --> 0:16:44.120
<v Speaker 3>was always triggering in veto preventing Europe having a common

0:16:44.520 --> 0:16:48.880
<v Speaker 3>foreign policy. That shows the kind of strength that Europe

0:16:48.920 --> 0:16:52.000
<v Speaker 3>is holding that we're not aware of. And I think

0:16:52.000 --> 0:16:54.920
<v Speaker 3>this is a cultural thing that we do not realize

0:16:54.920 --> 0:16:57.640
<v Speaker 3>the power that we hold, and because of that, we

0:16:57.720 --> 0:17:01.280
<v Speaker 3>don't use it for the benefit of your herself.

0:17:01.680 --> 0:17:04.800
<v Speaker 1>Do we need to pay less attention to the United States?

0:17:05.040 --> 0:17:07.760
<v Speaker 3>But it's not a question of paying less attention to others.

0:17:07.880 --> 0:17:10.800
<v Speaker 3>It's a question of focusing on who we are and

0:17:10.840 --> 0:17:15.600
<v Speaker 3>what we want to achieve for this beautiful, amazing continent. Yes,

0:17:15.760 --> 0:17:18.760
<v Speaker 3>it's challenged, but oh my god, what we have achieved

0:17:18.760 --> 0:17:21.440
<v Speaker 3>so far, we can achieve great things in the future too,