Soon the European Commission will propose two important pieces of regulation: the Digital Services Act (DSA) and the Digital Market Act. The DSA will replace or modify the famous e-Commerce Directive, or more precisely: The Directive on ‘certain legal aspects of information society services, in particular electronic commerce, in the Internal Market’.
I remember well the days of its writing. When my team, in particular Richard Sonnenschein, in what is today DG Connect, was busy with the e-Signature Directive (predecessor of today’s eIDAS Directive) my great colleague and brilliant lawyer, Margot Fröhlinger, from the Internal Market Directorate General approached me with an early draft of the e-Commerce Directive. Margot and her team pushed this Directive through and cleared the path for the growth of the internet economy.
Over two decades the e-Commerce Directive has not been revised because its spirit was de facto a de-regulatory approach and different rules could have hampered that. Recall: Around the year 2000, we, in the EU and the US, jointly, considered the nascent electronic commerce and the early internet as too vulnerable to be smothered by over-regulation.
Times of change. A revision is now overdue, but this is not the purpose of this post. I want to pick on the peculiar notion of information society services, which the DSA will most likely change into ‘digital services’. It will also introduce a definition of services that did not exist 20 years ago.
First, the e-Commerce Directive was not the first legal text to introduce the term of information society services but a Directive on the transparency of national rules, standards and regulations in the domain of information and communication technologies. What is more important though is the thinking behind it.
The background was the vision of a politician, namely the responsible Commissioner for industry and telecommunication, Martin Bangemann, a former German minister of economic affairs. If you will, he was the Thierry Breton of that time. Martin Bangemann set the objective to liberalise Europe’s telecommunication sector, which happened in 1998. From the start, his position was that technology and market forces will have a major impact on the society. Side remark: I always feel puzzled when I read documents of these days about the ‘revolution of digital technologies and its profound impact on society’ as it was a recent revelation. I really would like to invite the current generation of officials to think beyond this platitude. There is no need to repeat the obvious. Just move on, also on the narrative.
Coming back to the information society. We introduced and promoted this concept, speaking to Trade Unions, opening up dialogues with privacy advocates, and of course writing papers. Just one example: We concluded that strong encryption to preserve privacy should not be regulated or prevented, but promoted. Does it ring a bell? We published several action plans of the European way to the information society. Eventually this term entered a couple of legislations, which was a good example of technocrats following political leadership. It is fair to say that the US did not adopt our societal approach but stuck to their mantra of ‘it is all industry driven’.
Very quickly, the focus points moved to the internet, ‘internet for all’, broadband, 3G, etc. until today’s pet topics of AI, 5G, Cloud, etc. Information Society as a paradigm was no longer ‘en vogue’ , but it survived in some legal texts—up to today. Now it is time to say goodbye to this narrative and maybe an incentive to reflect on what we have learned over the last 20 to 25 years. More on this in future posts.
In a podcast interview with the German newspaper ‘FAZ’ on 31 July 2020 Sepp Hochreiter, Professor at the University of Linz (Austria), developer of the key AI algorithm LSTM, explained the background of his invention in the 90s. He also shared a revealing anecdote: At a conference in the US, Amazon people contacted him to tell him they only came to say thank you as his algorithms would help them increase their revenues by the billion, and invited him for a Mojito. He remarked that US companies know how to make billions and the European inventors get a Mojito. This is indicative and shows one thing: Digital sovereignty is not a question of technology but of entrepreneurship. I wonder whether this lesson will ever sink in with policy makers.
The German government launched its Corona Warning App on 16 June. By 3 July the App was 14.6 million times downloaded.
This is a good start, but more downloads should follow to increase the effectiveness of the App as its usage is voluntary. The current situation is paradoxical. The low infection rates will lead to low warning and people might think the App is not worth it. However, it is precisely when the pandemic is under control that the App is particularly effective as health authorities would not be overwhelmed.
The App works with Bluetooth connections and follows high privacy standards. For instance, it does not identify users, there are no location data, and whether to notify an infection is voluntarily. These privacy settings limit its epidemiological and public health usefulness, and this on purpose. The discussion in Germany was about maximising privacy. The question what is best from a health policy point of view came second. For instance, mandatory (i.e. centralised) notification of infections whilst still preserving anonymity would ensure a more complete exposure tracing.
This is something difficult to understand. Germans hand out their private data to US social media platforms but do not trust their own health authorities that are fighting a deadly pandemic. When Germany opens restaurants, they obliged customers to fill in paper sheets with their private contact data, open to everyone to see, and with no verification. Thus, either it violates privacy or is inefficient as the data are not correct.
The App does not integrate with a back office, which would dramatically enhance its usefulness. For instance, the health authorities cannot send a notification to the Apps of an infected person but people must call a hotline to find out the result of their tests.
Another point is the missing European integration of the various Apps. For instance, the German App would not recognise a positive corona test by the Belgian authorities.
Going forward, whilst the App is not a panacea, it is an essential tool to avoid a second wave. Therefore, let’s hope that more people will use it and that policy makers add a European solution.
On 11 March 2020 (just before the lockdown) I attended a meeting of the ‘Digital Transformation Council’ of the German Federal State of Rhineland-Palatinate (Rheinland-Pfalz). The Prime Minister Manuela Dreyer chaired the meeting. The Corona crisis was already looming and influenced the discussion. For information: One of the globally most promising Covid-19 vaccine trials is being carried out by BioNTech, a company from this State. They partner with Pfizer with the aim to develop a mRNA based vaccine by end of the year.
I took away two insights. First, the changes on the labour market and the consequences for re-skilling of the workforce are their biggest priority. Second, the transformation of the automobile industry will have a big impact on their regional economy as many suppliers are based in Rhineland-Palatinate.
In my presentation I described the drivers of digital transformation. I stressed the need to distinguish digitisation (from analogue to digital), digitalisation (making existing processes more efficient), and digital transformation (re-designing processes, disruptive innovation). This classification allows to assess the ambition of a digital strategy. When a government or a company talks about transformation often they just refer to ‘digitalisation’. Transformation means much more. Here is an example: Sending email instead of a letter is digitisation. Selling online is digitalisation of a purchase. Building a market platform with integrated services transforms the retail business.
When you look at the automobile industry, they well understand digitalisation, making driving safer and more comfortable, but technologies will transform a substantial part of the car business into mobility service.
Minister for Economic Affairs Volker Wissing
Prime Minister Manuela Dreyer
The Brexit negotiations are tough. We may end up with no agreement, a lose-lose situation that the EU and the UK need to prevent. I particularly worry that Brexit will reduce cooperation between the UK and the EU in research and investments in hi-tech. We need the opposite. Europe must stand together to face competition from the US and China.
The UK is an academic powerhouse. It attracts most VC investments amongst all European countries. It is leading in bio-technology and artificial intelligence. An EU strategy to catch up with the leading countries in AI must include the UK.
he annual ‘technation’ report puts together some interesting facts that triggered this blog. For instance, the UK is number three in the world for tech unicorns, with 77 valued higher than 1billion $, VC investments in 2018 amounted to 10.7 billion £, London and Cambridge are amongst the top 10 European cities for tech investments.
Thus, I hope that the negotiators put technology, science, and industry cooperation high on the priority list.