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Europe’s Big Success Story In Digital: The App Economy

Steve Jobs unveiled the first iPhone in 2007. In 2008 Apple opened its App Store, the same year Google opened its Google Play Store. Hence, the year 2018 marks the 10 year anniversary of the two most popular app stores. One could also say it marks the beginning of unprecedented growth in the app economy fuelled by the wide adoption of smartphones and other devices.

To understand the magnitude of this development and its European dimension, all you need to do is to read this recent briefing on the ‘European app economy’ prepared by the European Parliamentary Research Service (EPRS). This service produces independent research for Members and staff of the European Parliament on various topics with a European focus. And when it comes to the app economy, it is certainly worthwhile to pay greater attention to its European dimension.

The EPRS refers to a lot of existing literature and studies to highlight the the key finding: Europe’s app economy is significant and shows no signs of slowing down. In 2017 Europe overtook the United States in the number of app economy jobs created for the first time. While the intensity of app economy jobs, i.e. their share among all jobs, remains higher in the US, it continues to grow in Europe while it is slowing down in the US. Six EU Member States are among the top 20 countries with the most app developers: the UK, Germany, Spain, France, Italy, and Finland. Helsinki has the second highest concentration of app developers globally per capita after the San Francisco Bay area. Interestingly, European apps are generally more popular in the EU than US apps.

A 2014 study prepared for the European Commission estimated the revenues for European app companies to amount to EUR 63 billion in 2018. That would represent 27 percent of the global app market. These numbers translate into 2.8 million employed people with an additional 4.8 million support and marketing jobs. And all research points to these numbers growing even further in the coming years.

One cannot help but have the feeling that Europe’s app economy is probably its biggest success story in digital that hardly gets the attention it deserves. However, there will be plenty of opportunity to pay closer attention to it in the future. The growth of the app economy is here to stay. By the year 2021 the app economy is expected to be worth USD 6.3 trillion, up from USD 1.3 trillion in 2016. That growth will be fuelled by average app spend – such as app store purchases, advertising, and commerce – growing from just under USD 400 to just above USD 1000 per person by 2021.

All of these growth stats are ultimately driven by consumers who have never had this amount of choice. In mature markets users have up to 100 apps installed on their devices, 30 of which they use on a monthly basis. In 2016 alone, more than 82 billion apps have been installed from the Google Play Store. With respect to Apple’s App Store that number amounts to 50 billion downloads from June 2016 to June 2017. And yet again there is no evidence of this growth slowing down in the near future.

In the last ten years the app economy has spurred growth, jobs and innovation in Europe. There are very good reasons to pay more attention to what is probably the most dynamic sector in our economy and to be optimistic about the future.

European Union

DisCo is dedicated to examining technology and policy at a global scale.  Developments in the European Union play a considerable role in shaping both European and global technology markets.  EU regulations related to copyright, competition, privacy, innovation, and trade all affect the international development of technology and tech markets.