Innovation in the Digital Economy Architecture: Ensuring Regulatory Simplification Drives Innovation and Growth

This article for VoxEU from authors Paul Twomey, Vicente Arias González & Dennis Snower (CEPR) discusses how the proposed Innovation in the Digital Economy Architecture (IDEA) framework seeks to unlock innovation and strengthen competition within the EU’s Digital Omnibus initiative without weakening fundamental rights or overhauling existing law. By giving individuals greater control over verified personal data, creating fiduciary duties for data intermediaries, and enabling collective negotiation, the framework introduces market-based mechanisms designed to streamline compliance and strengthen Europe’s digital competitiveness.

The authors argue that the EU’s current regulatory landscape—comprised of the GDPR, DSA, DMA, DGA, and AI Act—has become too complex and fragmented. Citizens hold extensive rights but lack practical tools to exercise them; firms, especially SMEs, face overlapping and costly compliance obligations; and regulators struggle with enforcement across multiple regimes. This patchwork generates uncertainty, inconsistent oversight, and high transaction costs that dampen innovation and leave consumers disempowered in an opaque digital marketplace.

According to the piece, the Digital Omnibus package attempts to simplify rules but risks weakening key protections in GDPR, ePrivacy, and the AI Act while failing to resolve underlying structural issues. Instead of continually modifying laws to keep pace with evolving technology, the authors argue that the IDEA framework offers a more sustainable solution by empowering data subjects as active economic participants—aligning trust, compliance, and innovation rather than placing them in conflict…

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