Executive Summary

About the Study

AWS commissioned independent policy and research consultants Strand Partners to conduct representative studies of over 16,000 citizens and 14,000 businesses across the European Union, the UK, and Switzerland.

This research seeks to examine where Europe finds itself on its journey towards realising the European Commission’s Digital Decade goals, following the 2022 Unlocking Europe’s Digital Potential report by Public First.

This report – the first of its kind released since 2023 – witnessed the rapid and widescale adoption of generative AI and large language models (LLMs). It sets out the ambitious levels of AI uptake among European businesses and citizens.

This report emphasises Europe’s position at the precipice of an AI revolution, as businesses and citizens increase their enthusiasm and ambitions for the technology. At the same time, it reveals the gap between the ambitions for digital technologies set by the European Commission’s Digital Decade policy programme, which are being transformed by AI, versus the realities of digital skills, supporting infrastructure, consumer confidence, and cybersecurity.

Jump to full methodology

EU Data Summary

In 2021, the European Commission set a series of Digital Decade goals to make Europe a digital leader by 2030. The Digital Decade targets align with four key areas: skills, public services, infrastructure, and digital transformation of businesses.

It seeks to:

Improve citizens’ basic and advanced digital skills

Boost the adoption of infrastructure and new technologies in EU businesses and institutions

Make public services and administration available online.

The 2023 European Commission Digital Decade report finds that adoption of digital technologies by European companies is still well below the targets originally set by the Commission, in particular those for the uptake of AI and big data.[1] Under current trends, and without further investment and incentives, the goal of having 75% of businesses using cloud, big data, and AI will not be met by 2030.

Our research is the first large-scale survey conducted among both businesses and citizens on the Digital Decade since the boom in generative AI and LLMs launched a “year of AI”. This year’s edition of Unlocking Europe’s Digital Potential focuses on AI and echoes the Commission’s Digital Decade findings: the potential of Europe’s Digital Decade has never been bigger, but there are significant barriers to overcome that require decisive action.

The generative AI boom has launched a “year of AI” – five key changes in the past year, revealed by this research:

+21% average increase in spending on digital technologies by businesses

33% of businesses have adopted AI in 2023, compared with 25% in 2022.

50% of businesses say that digital technologies are essential to their business, up from 42% last year.

In 2023, 30% of businesses said that they’d adopted cloud technology, representing a growth rate of +15% from the previous year. Of those businesses who have adopted cloud technology, 85% say that this technology is crucial to their business, up from 79% in 2022.

Digital capabilities, especially skills, are not keeping pace with expanded ambitions:

Only 22% of businesses say that their business’ digital skills have improved in the past five years.

There is little increase in the percentage of businesses who say that they feel confident keeping their data secure (64% in 2023 vs. 63% in 2022)

A small rise in businesses who say that a lack of digital skills has slowed their businesses’ growth (35% in 2023 vs. 33% in 2022)

This report, which contains new data from businesses and citizens on the progress of the Digital Decade goals, is more optimistic than the European Commission 2023 Report. It finds that, if we can maintain this accelerated rate of growth from the past year for every remaining year of the decade, the EU would be on track to meet its target of 75% of businesses using AI, cloud, and big data analytics by 2030. Achieving this will require decisive action by governments, businesses, and society to overcome the barriers to AI adoption identified in this report.

The Expanding Potential of Digital in Europe

There is growing awareness and uptake of digital technologies, and excitement about their potential benefits among businesses in Europe.[2] Businesses foresee AI improving their productivity (83%), automating tasks and transactions (87%), improving decision-making and analysis (84%), and helping personalise customer experiences (86%).

Our study finds that businesses across Europe overwhelmingly recognise the potential of AI, with over half expecting that AI will positively transform their industry over the next five years. Businesses have shown exponential growth in AI uptake since the beginning of the digital decade, and 38% of businesses say that they are already experimenting with AI. This research considers the accelerated uptake in AI over the past two years, and therefore presents a more ambitious picture of AI uptake compared to the 2023 European Commission report on the Digital Decade. As acknowledged by the Commission, data from its report was last updated in 2021, and therefore fails to account for increased AI adoption in 2022 and 2023.

The current market landscape allows for a diversity of technology, which is crucial for AI adoption. European businesses are currently able to experiment with a range of digital technologies, which powers increased uptake.

Furthermore, those that say they have adopted AI report significant benefits. Seventy per cent of businesses who are using AI say that it has already streamlined their business processes, 75% say that it has increased revenues, and 75% say that AI has stimulated innovation.

Similarly, European citizens strongly believe that AI will positively transform key public services, including education (66%), healthcare (65%), and even fields such as agriculture (56%) and sports and culture (53%) in the next five years.

66

%

education

56

%

agriculture

65

%

healthcare

53

%

sports and culture

Europe has moved further along the European Commission’s ‘Path to the Digital Decade.’[3] In this report, we build on the 2022 Public First study, which found that only a quarter (25%) of European companies had adopted AI technology. In 2023, this has increased to 33% of European businesses, at a growth rate of 32% (percentage change).

A growing and diverse international market for AI tools and providers is enabling European businesses to experiment with AI through various technology providers. Similarly, the Global Innovation Index 2023 report has noted the importance of international collaboration in driving innovation. Promoting the pooling of resources, knowledge, and expertise will enable businesses to increase their adoption of new technologies and citizens to resolve concerns and increase understanding.[4] The ability to choose the best technology at the best price will also be crucial in increasing AI adoption.

If this accelerated rate of growth (+32% per year) can be maintained on a yearly basis, the EU would be on track to meet its target of 75% of businesses using AI by 2027. However, to do so, businesses and governments will need to overcome several obstacles that may slow the uptake of AI technology. This will necessitate investment in digital skills for both technical and non-technical roles, international cooperation to incentivise AI uptake, and maintaining a regulatory framework that provides clarity and certainty to businesses, as well as enabling a diverse range of cloud and AI services to prosper.

The European Commission 2023 Report similarly notes the importance of close cooperation between EU countries to guarantee collective progress and to accelerate Europe’s digital journey. Initiatives such as the Recovery and Resilience Facility, of which 26% of its financial allocation is devoted to the digital transformation, or Invest EU, of which 25% of its financial guarantees are devoted to supporting research, innovation, and digitalisation, showcase the power of international collaboration in advancing innovation and helping overcome financial barriers to technology adoption.[5]

And what does this expanded digital potential mean for Europe? This report demonstrates the economic impact of AI, estimating that faster-than-expected AI adoption could unlock an additional EUR 600 billion on top of Public First’s 2022 estimate of EUR 2.8 trillion. In total, this provides a new estimate of the economic impact of Europe’s potential of EUR 3.4 trillion if Europe can outperform its AI adoption targets as this study suggests is possible. To put this in perspective, this figure is similar in value to the European construction industry.[6]

To achieve its targets and to unlock this expanded digital potential, Europe will have to work to overcome barriers and maintain current momentum. The biggest single barrier this report notes is digital skills gaps. Despite strong enthusiasm around the aims of the Digital Decade, there are significant gaps in knowledge and capabilities among both businesses and citizens. There is a mixed and sometimes vague understanding of the specific opportunities AI presents, and the extent to which it is underpinned by cloud computing. Half (50%) of European citizens are confident that AI will create more opportunities than risks regarding job security and the future of work. However, if Europe is to reap the benefits of this new decade, we must ensure that everyone is equipped with the right tools.

A Foundational Technology: Successful Cloud Adoption at the Heart of Raised Ambitions

Cloud technologies form the crucial foundation for the further adoption of digital and AI technology. The cloud underpins the LLMs that power generative AI programmes and provides the storage capacity that permits Europe’s AI ambitions to grow. Europe’s digital ambitions are thus being driven by the cloud. In addition to providing the basis for AI adoption, businesses in our report also noted that cloud technology facilitates important business functions, such as supporting remote and flexible working (50%), keeping data secure (49%), and replacing paper processes (39%).[7]

Supporting remote/ flexible working

%

50

Replacing paper processes

%

39

Keeping their data secure

49

%

Further studies have marked the importance of cloud technology as a foundational technology to AI adoption, predicting that 70% of companies obtaining AI capabilities will do so through cloud-based software, while 65% of AI adopters will create AI applications using cloud-based development services.[8] This research further highlights that cloud technology is driving accelerated uptake in the Digital Decade, with 39% of adopters reporting that it has enabled them to digitalise systems, 25% noting that it has enabled them to automate existing business processes, and 17% stating it has helped them to develop new types of digital applications. In 2022, the Public First report found that a quarter (26%) of European companies had adopted cloud computing services – a significant distance from the EU’s target of 75% by 2030.

In 2023, 30% of businesses reported that they’d adopted cloud technology, representing a promising growth rate of +15% compared to last year’s research findings. Seventeen per cent of businesses also stated that cloud computing technology was the digital technology they were most likely to adopt in the near future.

If this high rate of growth of +15% business adoption of cloud technologies per year can be maintained, a supportive environment for AI expansion would be established, overcoming a crucial hurdle to help the EU to meet its target of 75% of businesses using AI by 2030.

Overcoming Europe’s Digital Skills Dilemma

While it raises its digital aspirations, Europe finds itself facing a digital dilemma: how to realise its expanding ambition in the face of multiple adoption barriers, most notably, overcoming the existing gap in digital skills. Many European businesses have increasingly ambitious goals for their digital transformation, but these ambitions for technological change are fast outpacing current capabilities, as businesses struggle to both hire and train employees with good digital skills. In other words, businesses cannot keep up with the level of change and opportunity that digital technologies offer and will struggle to fulfil their own digital ambitions.

of European businesses see digital skills as critical to their daily operations

65

%

51

%

of all businesses report that basic digital skills are lacking in their organisation

Digital skills are crucial for meeting ambitious targets. Digital skills are playing an increasingly important role in the growth and daily operations of European businesses. Sixty-five per cent of European businesses currently see digital skills as critical to their daily operations, and this is only set to increase. Two in three (67%) business leaders say that their business’ digital skills levels have improved in the past five years, while the same number (67%) predict that in five years’ time a candidate’s digital skills will be more important than their university when it comes to hiring.

Yet large gaps remain. Despite the perceived importance of digital skills, fewer than one in five (19%) European businesses say that it’s easy to find new staff with the right skills. Those businesses who find it difficult to hire spend over six months on average to find an employee with the appropriate digital skills. More than half (51%) of all businesses also report that basic digital skills are still lacking in their organisation.

Overall, businesses report an inability to find the right digital skills is the primary barrier to their adoption of new technologies. Nearly half (44%) say that difficulties hiring new staff with the right skills is holding them back and almost one in three (29%) say that a lack of digital skills is impacting business growth.

Reflective of high levels of experimentation, around one in five (17%) businesses can currently see a clear problem in their business that AI can potentially solve. This drops to just 9% among businesses with a skills gap for basic digital skills but rises to 24% for businesses who can fill these gaps. In short, the existence of a digital skills gap within businesses presents major barriers to AI adoption. This underscores a critical point: to take advantage of the newer solutions that technologies such as AI can offer, training in basic skills must be increased.

The EU is set to fall 8 million short of the European Commission’s target to have at least 20 million people employed as ICT specialists by 2030.[9] This study indicates that citizens have high expectations for digital services, yet this deficit could hinder governments from meeting their demands. Similarly, businesses might struggle to achieve their digital goals, potentially missing out on the economic, innovation, and productivity gains that technologies like AI promise to deliver.

This study therefore suggests that a digital skills gap is holding back businesses across all levels of the workforce, from basic digital skills to advanced AI skills. There is a clear divergence between AI’s aspirational potential and current opportunities for successful uptake.

Consumer Uncertainty: Balancing Promise with Concerns

The promise of AI is compelling to most consumers and professionals, but some concerns remain over potential negative implications of the rapid development and deployment of these technologies.

European citizens believe that AI will have a positive impact on a range of areas that affect their everyday lives. Over half (58%) believe that AI will have a positive effect on day-to-day tasks and 50% believe it will have a positive impact on safety and security.

European citizens can also envision the promise of AI in their professional lives, especially through:

38

%

Automation of repetitive tasks

26

%

Improvement of decision-making and analysis

25

%

Increasing productivity

Half (50%) of European citizens are confident that AI will create more opportunities than risks regarding job security and the future of work.

Indeed, for businesses that have taken the leap, investing in digital technologies has resulted in significant benefits: 70% of businesses who are using AI say that it has already streamlined their business processes, 75% say that it has increased revenues, and 75% say that it has stimulated innovation. These figures underscore the substantial rewards awaiting those equipped with the capabilities and competencies to navigate the digital landscape.

However, the report shows that some citizens would like greater clarity on the decision-making process behind AI.

These findings indicate the importance of addressing questions over the impact of AI and other emerging technologies on the future of work and societies. Governments, businesses, and wider civil society must work towards building public trust in AI. To bring European citizens on the Digital Decade journey and support mainstream adoption of AI, governments will need to continue to expand their investment in digital skills training in businesses, schools, and among citizens in general. By upskilling citizens and increasing awareness of responsible AI, Europe will be able to provide its consumers with greater confidence in these technologies, enabling Europe to fully unlock the potential benefits they offer.

Unlocking Ambitions

This report seeks to highlight the financial, regulatory, internal, and social obstacles that threaten to hinder the full realisation of Europe’s digital potential, while spotlighting the enthusiasm and ambitions surrounding AI. Additionally, it offers suggestions for both businesses and governments seeking to overcome these obstacles to fulfil Europe’s digital aspirations and resolve its digital dilemma.

In line with the findings of this study, opportunities emerge for governments, businesses, and citizens to meet the ambitions of the Digital Decade, specifically to:

Invest in digital skills training for businesses and citizens. As our study has shown, there are insufficient digital skills within the current workforce, with businesses struggling to source new employees with the necessary digital capabilities. It also found that 56% of citizens learn most of their digital skills through independent learning, while a further 36% of citizens reported that their businesses offer no form of skills training or support. This calls for the delivery of well-funded training programmes that align with industry demand and that can empower citizens and businesses to use the digital tools best suited for their needs. There is an imperative for strong collaboration between businesses, governments, and educational institutions to develop digital skills training programmes that match the ambitions of the Digital Decade and that are tailored to the needs of different groups.

Address legal and regulatory uncertainties. Our research revealed regulatory and legal uncertainty regarding the use of AI technology as the second-most significant obstacle to tech adoption for businesses. Businesses and citizens desire a supportive and risk-based regulatory environment, which incentivises international collaboration and innovation around digital technologies like AI and cloud. A stable marketplace, supported by a principle-based and open regulatory framework, provides the best basis for increasing technological experimentation and adoption. Allowing for an open and secure environment with a diverse range of digital technologies could result in increased digitalisation, including AI adoption, with choice enabling companies and citizens to access the best technologies and providers to compete.

Tackle financial concerns. Limited budgets and resources can stand in the way of businesses adopting digital tech that can help them achieve their goals. When considering the adoption of AI and other emerging technologies, one in five (20%) cite high costs as a key barrier. Financial concerns also exist in digital skills acquisition – for example, 45% of citizens say that the cost of training programmes is a barrier to learning the digital tools they need. Whether for accessing digital skills or building digital capacity, these findings suggest the need for new thinking on ways to support democratising access to innovative technologies, enabling businesses to access and build around the best technology at the best price. As also revealed in this study, financing to expand skills and training and to reduce the burden faced by learners should be priorities for funding schemes.

Raise awareness and educate consumers on responsible AI use. Consumer understanding and confidence are pivotal for the successful adoption of new technologies, particularly AI. While there is increasing experimentation with AI, our study shows that 35% of citizens don’t understand the decision-making process behind AI, which contributes to public concerns about the technology. Businesses and governments should collaborate to elevate public awareness and knowledge of AI’s benefits and possibilities while emphasising the feasibility of implementing responsible usage. Empowering consumers and businesses with the necessary information and working within principle- and risk-based regulatory frameworks are essential to develop trust and to ensure responsible AI adoption during the Digital Decade.

Promote international and multi-stakeholder cooperation on AI to ensure interoperability. To foster the responsible development of AI, enhanced cooperation between governments, businesses, citizens, academia, and other stakeholders across borders is needed. Collaboration between public and private sectors can promote cutting-edge innovation in AI while developing guardrails to mitigate risks. Academic and civil society engagement ensures AI solutions reflect shared values and human rights. A diversity of perspectives will lead to more robust, inclusive, and equitable AI systems. International collaboration early on will build trust and prevent fragmentation in the nascent AI landscape.

Preserve customer choice. As the market for cloud services and AI capabilities advances, maintaining customer choice should be a priority. Customers should have the ability to choose between cloud providers based on factors like security, scalability, carbon footprint, and cost efficiency. In the emergent generative AI foundation model market, preserving choice empowers customers to select AI vendors aligned with their specific needs. With choice among cloud and AI providers, businesses will be best placed to realise the benefits of these transformative technologies.

These suggestions serve as guidelines on how businesses and regulators can collaborate to navigate the challenges and opportunities presented by new and emerging technologies. By investing in digital skills, addressing legal and regulatory uncertainties, providing financial support to enhance adoption where needed, and promoting responsible AI use, Europe can harness its full digital potential and lead the way in the transformative Digital Decade ahead.

The outcome of the current gap between ambition and capabilities will determine the trajectory of Europe’s Digital Decade and the outcome of Europe’s bold digital agenda.

Case Study:

Growy: Overcoming the Digital Dilemma

A Case Study of How Cloud Computing is Helping Businesses in Europe To Unlock Their AI Digital Potential

Over half (52%) of citizens see AI as important to tackling big societal issues like climate change.
Despite some scepticism, the majority of citizens are optimistic about the future of AI. One area in which citizens are convinced about its transformative power is agriculture, with over half (56%) expressing this belief.

Growy exemplifies the transformative impact of AI in agriculture. As a Netherlands-based start-up, Growy operates vertical farms where robots tend to the plants. The company – based in the heart of agricultural science in the Netherlands, Wageningen – has developed an automated vertical farming system called Growy Cube that uses hydroponics. The Growy Cube uses LED lights, sensors, cloud software, robotics, and AI to optimise growing conditions. It monitors factors like temperature, humidity, CO2, etc. in real time. The cubes are modular and can be linked together. Growy claims each module can grow the equivalent of 1 hectare. The technology aims to improve yields, reduce resource use, and allow year-round production.

Core Features:

Robots at Work: Robots equipped with advanced cameras and IoT sensors closely monitor plant health. They analyse water intake, growth rates, and nutritional needs.
Valuable Data Points: These tech-savvy robots gather over a million pieces of data annually. This isn’t just for efficiency; it’s to truly understand and optimise plant health and growth.
Quality Produce: Armed with this vast amount of data, Growy ensures that their plants aren’t just grown but nurtured. The result? Plants that not only look but also taste superior.
Global Expansion with Cloud: Growy’s innovative use of cloud technology makes launching new farms a breeze. Each farm, regardless of its location, connects back to a central cloud system, ensuring consistent quality and care.

Key Advantages:

Continuous Care: Robots, working round the clock and backed by cloud data, ensure plants always receive the care they deserve.
Data-Driven Excellence: Every decision at Growy is backed by data, leading to continuous improvements in plant quality.
Quality and Efficiency: Growy’s technology ensures that every plant gets the best possible care.

As Growy expands, its need for a reliable and scalable infrastructure will only increase. Using cloud computing, the company can focus on its innovative agricultural methods instead of IT maintenance.

Here are some of the ways that cloud computing is helping Growy to embrace AI:

Cloud computing allows Growy to automate its farming operations, reducing the need for manual labour. This frees up the company's employees to focus on more skilled tasks, such as developing and deploying AI applications.
Cloud computing provides a scalable and reliable infrastructure for Growy. This ensures that the applications are always available and that they can handle the increasing amounts of data that Growy’s robots are collecting.

Cloud computing makes it easy for Growy to collaborate with partners and suppliers around the world. This allows Growy to share data and insights, and to develop new AI applications more quickly.

View Key Findings

References:

1. European Commission (2023) 2023 Report on the state of the Digital Decade. Available at: https://digital-strategy.ec.europa.eu/en/library/2023-report-state-digital-decade

2. We refer to digital technology as tools, systems and devices that can generate, create, store or process data. The European Commission focuses in particular on ‘new technologies, such as the Internet of Things (IoT), cloud computing, innovative digital platforms and blockchain technologies’ (European Parliamentary Research Service, 2019, p. 1).

3. European Commission (2021) ‘Europe’s Digital Decade: digital targets for 2030.’ Available at: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/europe-fit-digital-age/europes-digital-decade-digital-targets-2030_en

4. Global Innovation Index (2023) The GII Partners. Available at: https://www.wipo.int/edocs/pubdocs/en/wipo-pub-2000-2023-intro1-en-the-gii-partners-global-innovation-index-2023.pdf

5. European Commission (2023) Report on the state of the Digital Decade. Available at: https://digital-strategy.ec.europa.eu/en/library/2023-report-state-digital-decade.

6. Eurostat (2022) Key figures on European business: Construction

7. In this report, digital technologies are defined as electronic tools, services, systems, and resources underpinned by cloud technology. While cloud is crucial to digital technology, ‘cloud computing’ is separately defined as a means of storing, processing, and accessing data remotely over the internet (services such as web-based email, or social networks, for example). This distinction in definitions is provided by the European Commission and can be found here: https://ec.europa.eu/commission/presscorner/detail/en/MEMO_12_713

8. Deloitte Global (2019) Artificial intelligence: from expert-only to everywhere. Available at: https://www2.deloitte.com/us/en/insights/industry/technology/technology-media-and-telecom-predictions/cloud-based-artificial-intelligence.html

9. European Commission (2023) Question & Answers on the First report on the State of the Digital Decade. Available at: https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_4620