LEGAL CONFLICTS IN THE DIGITAL ECONOMY: THE UKRAINIAN AND EUROPEAN EXPERIENCE

Abstract

This article examines the ethical and legal issues arising in the digital economy. These conflicts are conceptualised as contradictions between innovative technological practices, ethical norms and applicable legislation. Three key types of conflict are identified: those relating to privacy and data monetisation, algorithmic autonomy and accountability, and digital security and fundamental rights. Particular emphasis is placed on the wartime context in Ukraine, which presents unique challenges for digital transformation and legal regulation. Methodology. The research methodology employed is a synthesis of the comparative legal method and a Law and Economics approach. The comparative legal method is employed to compare the regulatory instruments of the European Union (GDPR, AI Act, DSA, DMA) with those of Ukraine (the Laws of Ukraine ‘On Personal Data Protection’, ‘On Virtual Assets’, ‘On Media’, and ‘On Electronic Communications’). The empirical basis of the study comprises reports by the European Commission (Digital Economy and Society Index, DESI), Eurostat statistical data on the digital transformation of EU Member States, and analytical materials published by the OECD (Digital Economy Outlook) and the World Bank (Digital Development Report). The Law and Economics analysis is employed to evaluate the impact of legal conflicts on the investment climate, transaction costs and innovation activity. Results. The study demonstrates that the development of the digital economy in Ukraine and the European Union is determined not only by the pace of digital technology adoption, but also by the quality of the institutional environment in which digital markets operate. The European model is distinguished by the establishment of common rules governing data flows, the utilisation of artificial intelligence, and the operation of digital platforms. This contributes to a reduction in regulatory uncertainty for businesses and the creation of conditions conducive to long-term investment in digital technologies. Ukraine continues to face an institutional and technological gap with the EU, as evidenced by uneven levels of business digitalisation, limited investment capacity among some businesses in digital infrastructure, and heightened risks associated with the use of data and artificial intelligence technologies. At the same time, a lack of clear rules governing the digital economy could lead to higher transaction costs for businesses, reduce investment activity and make it more difficult for Ukrainian companies to access the European digital market. The study establishes that digital regulatory conflicts have not only legal but also direct economic effects: they affect regulatory compliance costs, the level of market competition, access to digital services, consumer trust, and the ability of businesses to scale digital business models. In this context, the harmonisation of Ukraine's digital environment with European approaches may be regarded as one of the factors reducing institutional barriers to digital investment and deepening Ukraine's economic integration with the EU. Practical Implications. The practical value of the findings lies in their potential application to shaping Ukraine's economic policy on digital transformation, aimed not merely at regulatory adaptation but, above all, at creating conditions to increase enterprise productivity, attract investment, and expand the participation of Ukrainian firms in European digital markets. Priority areas include reducing regulatory and transaction costs for digital businesses; establishing rules for data flows and AI deployment that align with the European market; promoting the digitalisation of small and medium-sized enterprises; developing digital infrastructure; and encouraging competition in digital markets. The implementation of these measures takes on additional economic significance under martial law, as digital technologies can ensure business continuity, reduce the costs of coordinating economic processes and boost enterprise resilience to external shocks. Therefore, the effectiveness of harmonisation with European digital regulations should be assessed not only by the number of provisions implemented, but also by their impact on investment activity, productivity, competitiveness and the resilience of Ukraine’s digital economy. Value / Originality. The scientific novelty of the study lies in its identification of the economic consequences of regulatory and ethico-legal conflicts arising during the digital transformation of Ukraine's economy and its integration into the European digital space. The proposed typology of key conflicts enables the systematisation of factors that generate regulatory uncertainty, increase transaction costs, and affect investment activity and the competitiveness of digital economy enterprises. The developed cyclical model of conflict evolution is intended as a tool for identifying the interrelationship between technological change, regulatory adaptation, economic costs, and institutional responses. Its application may prove useful in assessing the digital resilience of the economy, underpinning public policy on digital transformation, and setting priorities for Ukraine's economic integration into the European digital market amid wartime conditions and post-conflict recovery.