By Tomasz Zalewski, partner at Bird & Bird
Bird and Bird_Contact

 

Tomasz Zalewski, partner at Bird & Bird, is a lawyer noted for his in-depth knowledge of IT. He talks with the BPCC’s Michael Dembinski about Poland’s structural strengths and weaknesses in digitalisation in a wide-ranging discussion focused on Poland’s international competitiveness in tech and the way it’s applied across the economy.

In some ways, Poland is quite advanced when it comes to digitalisation – payment solutions, for example – but in other areas it lags behind other OECD members. How would you assess the current state of Polish digital transformation, where does Poland shine, and where should it be doing better?

I think an assessment based on my individual opinion could be deceptive. Digitalisation looks different from the perspective of the 19th floor of an office building in Warsaw than from the perspective of a small company in Podlasie.

Reports prepared within the EU show that Poland is a leader in terms of ultra-high speed network coverage, with 81.1% of households covered, which is higher than the EU average (78.8%). Also, the growth rate of Polish start-ups is six times higher than in the EU.

On the other hand, Polish companies lag behind the EU average in the use of advanced technologies. In 2023, 3.7% of Polish companies had implemented artificial intelligence, against an EU average of 8%, and only 19.3% had implemented data analytics, which is below the EU average of 33.2%.

However, I am convinced that the pace of digitalisation will increase. The scope for innovation related to organisation and work culture is slowly starting to run out, hence more and more companies – both smaller and larger – are investing in modern solutions. The spread of digitalisation will especially be fostered by the integration of digital technologies into public services. Here, progress is evident, although of course there is still much to be done – such as the still-delayed implementation of electronic delivery, or the digitisation of court proceedings.

What are the key legal and regulatory issues facing tech across the EU right now? Are you among those who believe that Europe is less competitive in tech than the US and China because of over-regulation – or do you think that the EU leads the world in terms of keeping the balance between market players? Or are cultural differences at play – are Europeans simply less entrepreneurial?

The key EU regulations on the technology industry have already mostly become a reality – so I think that the discussion on the relationship between the competitiveness of the economy and the degree of regulation has become quite academic – its conclusions will have little impact on reality.

I believe that viewing regulation as a brake on innovation and progress is very one-dimensional and ignores a number of important aspects of the problem. Whether we perceive an economy as attractive and competitive is determined by a number of factors, among which regulation of those potentially most competitive sectors is not always the most important. There are studies that show that one of the sources of the US economy’s high competitiveness is not a lack of regulation, but US bankruptcy regulations, which make it relatively easy to start a business from scratch.

The EU makes it clear that the goal of all the regulations introduced is a human-centred digital transformation that prioritises people and their rights. In my opinion, such a vision has a good chance to be an inspiration for other jurisdictions around the world as well. From this point of view, the most important and ground-breaking EU regulations are the Digital Services Regulation (DSA), the Artificial Intelligence Regulation (AI Act), GDPR, and the cybersecurity regulations.

I’ve come across the opinion that when it comes to digitalisation, Poles are great at programming, but not so good at working out the business case. As a result, we have an industry that’s become a global powerhouse in outsourcing for others, yet home-grown successes are few and far between. What’s your view?

Poland does indeed have a good reputation as a country of highly-skilled programmers and engineers. It is also true that many of them actually work for global foreign companies. However, in order to translate technical knowledge into one’s own successful business ventures, one needs not only willingness, but also a favourable economic environment, including easy access to funding and support for start-ups. A lot has changed in this area in recent years, and I think we will see more Polish companies going out boldly into foreign markets.

The focus on outsourcing is the result of a long (and partly already historical) process of global companies moving part of their operations to CEE countries due to lower costs. This long-standing outsourcing by Polish programmers also has a good side, for it familiarised programmers with the global working environment on IT projects. So I don’t think we’ll have to wait too long for more successes from the domestic technology industry; it’s just a matter of time.

How do you assess Poland as a platform for global expansion – I’m thinking about access to tech talent, access to capital and well-established global networks? Is Poland in danger of losing its best tech minds to cities such as London?

Poland is often mentioned as a potential platform for global expansion, and not only in the IT sector. This view is supported by the country’s wealth of talent – again, not only in technology – and a growing start-up ecosystem. But access to capital is still a challenge. Also, Poland’s location is favourable as it can become a hub for talent from the whole of Central and Eastern Europe.

In my opinion, Poland should be more involved in European initiatives at every possible level, so that its voice is more prominent in, for example, how regulations should be interpreted and implemented. This would make it easier for Polish ventures to become leaders with solutions that meet European regulations.

The other steps to be taken are fairly standard – increasing the availability of venture capital, mentoring programmes and international partnerships, an attractive working environment for technology professionals (not only from Poland but also from other countries) – all this will allow Poland to retain the best. Will it be successful? Time will tell.

AI-powered Big Data is a massive consumer of electrical power. Despite continuing improvements in energy efficiency, the number of data centres and keeps on growing. Are you worried about the sustainability of the compute required for Big Data’s onward march?

The energy consumption of data centres is indeed a significant problem, but at the same time, new solutions are being developed to make better use of resources. These could include developing more energy-efficient algorithms, and optimising data centres to make greater use of energy from renewable sources. Here I am optimistic – the solution to the problem is technology, so sooner or later we will have a solution.

In the previous issue of Contact Magazine Online, I spoke with PwC’s Michael Wodzicki, who suggested that Polish FinTechs have much less to disrupt than those in the US or Western Europe because the Polish banking system is so far ahead in digital solutions. How do you see the future of Polish FinTech challengers? Should they be looking abroad for opportunities?

It’s true that the sophistication of the Polish financial system means there are fewer inefficiencies that can be addressed domestically. However, this is probably not a limitation, but rather an opportunity to innovate further and start exploring international markets, as is already happening with regard to, for example, payment services.

The only obstacle may be the lack of capital, as the competitiveness of the Polish market is so high that any other market will be a blue ocean for Polish companies.

Do you think that the promise of distributed ledger technology had been oversold? Many game-changing breakthroughs were heralded, but other than cryptocurrencies, DLT seems to have been overshadowed by AI in recent years. Does DLT still have a bright future?

The initial enthusiasm around distributed ledger technology (DLT) has not fully materialised in all areas, but the technology still has significant potential. DLT has simply become one technology that can be used for various projects. DLT has given rise to cryptocurrencies and a whole new business area related to crypto assets, but it can also be used wherever data security in a digital environment is important – in supply chain management, healthcare, finance, and so on.

DLT is now a mature technology that is finally starting to be used where it can be useful, not just because of a fad for it. There are fewer and fewer uncertainties around its use, including those of a regulatory nature, which is why I believe we will see it being met with renewed interest and development.

Finally – what’s your take on quantum computing? Is it mainly hype, will it bring huge advances in AI, or will it eventually succeed only in limited and niche applications?

Quantum computing is certainly one of the most exciting technologies on the horizon, but it seems to me that – for now – it is in a highly experimental phase.

The main problem at present are errors caused by ‘noise’, which is caused by external factors such as small temperature changes or stray electric or magnetic fields.

The term ‘near-term quantum computing’ has started to appear in publications instead of simply ‘quantum computing’, indicating that the industry has accepted that, with ‘true’ quantum computing still unachievable, the modified term better describes what can actually be achieved. I expect that soon we may see limited and perhaps not-so-spectacular uses for this technology, but there is still a long way to go before the full application of quantum computing.