POLITICO Pro Morning Tech, presented by EPiCENTER: Talking cyber in Lisbon — Macron’s digital report card — Data flows and Chile



By Joanna Plucinska, with help from Laurens CerulusMark Scott, Rosemary Belson, Judith Mischke, Hans von der Burchard and Nicholas Hirst | Send tips to [email protected][email protected][email protected] and [email protected] | View in your browser

**POLITICO Pro Morning Tech newsletter is free in partnership with Web Summit, where Mark Scott, our Chief Technology Correspondent, and Ryan Heath, Editor of Brussels Playbook, are reporting from this week. Have you heard of our POLITICO Pro premium news service? Contact us to learn more here.**

CYBER ON THE BRAIN: With cyberattacks becoming an almost daily occurrence and state-backed digital actors spreading fake news and other misinformation like wildfire, it’s easy to think that cyber warfare — in all its forms — is a new phenomenon. Think again. Digital attacks have been around since the beginning of the internet, and we can look back a decade to when Russia used cyber tactics against to briefly cripple Estonia to see that such online warfare hasn’t just sprouted up overnight.

What has changed is the speed, cost and impact of such attacks in an age when everyone has a smartphone (or two), and almost anyone can simply search online for ways to turn some of the internet’s darker sides to their advantage. And, as Jared Cohen, head of Jigsaw, the cyber-focused unit of Google’s parent company Alphabet, told Web Summit on Tuesday, countries are no longer the only game in town. A hacker in his or her bedroom with a laptop and decent internet connection often can cause as much havoc as the most sophisticated state-actor. “It’s a multi-polar world,” he said. “The international system is now about the online and offline worlds combined.”

So where does that leave governments — both those with tech expertise like Britain, as well as the majority of countries whose cyber skills leave much to be desired? Lawmakers can’t just sit around waiting for some international agreement or regional proposal to save their bacon. In short, if you’re not already thinking about the impact of cyber warfare (both from bottom-up hackers and top-down state actors), you’re seriously behind the curve.

Big Tech is eager to share its expertise on how to tackle these problem. After all, digital tricksters use these global digital platforms to spread their message or tactics around the globe. Sure, there’s a significant role for that. But relying on private sector solutions for such public focused problems comes with its downsides. That includes cementing the role of large tech companies into existing democratic institutions, making it more difficult to dislodge them in the future.

So what’s the solution? First, a recognition that cyber warfare has been around for much longer than many people think, and that it’s growing in sophistication. Second, there’s no easy (or fast) solution to these problems — which require urgent action between governments (with some help from the private sector) to ensure cyberattacks don’t turn parts of the digital world into a no-go area.

**A message from EPiCENTER: Artificial Intelligence: mass unemployment, enriched elites and people ruled by robots? Or better products, lower costs, and more leisure time for people? What does the future hold? Discuss at INNOV8 with MEPs, innovative companies, and policy experts on November 21 in Brussels. Register now!**

Hello and welcome to Morning Tech. Web Summit continues in Lisbon, with speeches from Estonian Prime Minister Jüri Ratas, Uber’s Jeff Holden on flying cars and a number of other tech experts. Read the agenda for more. Research and Innovation Commissioner Carlos Moedas will announce the winner of the iCapital awards. Hint hint: It’s Paris. POLITICO Playbook’s Ryan Heath will also interview Moedas in Lisbon today.

Digital Vice President Andrus Ansip will be in Budapest to give a speech at the ICT Proposers’ Day event. The International Association of Privacy Professionals hosts its annual Data Protection Congress in Brussels, where Justice and Consumers Commissioner Věra Jourová will speak. Digital Commissioner Mariya Gabriel meets with a member of ERGA, the European Regulators Group for Audiovisual Media, as well as BEUC’s director Monique Goyens and the CEO of music society Sacem. The Telecoms working party meets again in Council.

TWITTER DOUBLES CHARACTER LIMIT: It’s official — Twitter announced overnight it was doubling the character limit for tweets to 280. The feature is being rolled out to everyone except Japanese-, Korean- and Chinese-language users.

GRADING MACRON ON TECH: French President Emmanuel Macron gets an A+ for enthusiasm, but a C for execution when it comes to his strategy on digital issues. His digital bluster seems to have sparked conversation in Europe, but few tangible results have materialized from his push to tax digital companies, force online giants like Google and Facebook to be more transparent and boost innovation funding. Find out how we scored the keenest of digital students in France online or below.

EU, CHILE AND DATA: EU ambassadors meet again this morning to discuss a negotiation mandate for modernizing the 15-year-old EU-Chile trade deal. France raised concerns about the integration of broad data flow provisions in the Chile agreement, three European diplomats said. Paris wants assurances that the implementation of the EU’s new data protection regulation won’t be undermined by new trade deals, they said. (Read more of our coverage on this thorny issue online.)

Nevertheless, as one diplomat remarked, a negotiation mandate would just set the broader guidelines for trade talks and not predetermine the final outcome on issues like data flows. “It’s not that we are discussing now which solution will be in the deal,” the diplomat said, adding that Paris hoped to get public assurances from the Commission that it won’t compromise on data protection.

The same diplomat was optimistic that France had meanwhile gotten those assurances from the Commission. A spokesperson for the French Foreign Ministry, which is responsible for trade, did not respond to a request from Morning Tech within time.

EUROPE’S NEW MUSIC ALLIANCE: Brussels has a new digital lobbying group with a single mission: representing the music world. But this isn’t another IFPI or IMPALA, representing indie music or recording labels. Digital Music Europe will represent Europe’s best and brightest in music streaming and sharing — and ensure they can keep innovating and growing in a “fair” environment for platforms. Members include European digital streaming providers, like Spotify, Soundcloud and Deezer.

“For a decade, European digital music companies have led the transformation of the music industry globally. Bringing these companies together to create DME is a great opportunity to highlight European leadership in this sector, inspire other European entrepreneurs and create a unique voice with policy-makers,” says Hans-Holger Albrecht, President of Digital Music Europe and CEO of Deezer. Expect some loud European lobbying on files like the Commission’s platforms to business proposal, geo-blocking and copyright in the months to come. You heard it here first. Read the press release for more information.

AVMS WRAP UP: Last night’s trilogue seems to have gone better than the previous one. But there was no major progress on the major political issues. There was some movement on how to promote European works, which content should be prohibited and transparency by media service providers. But other issues, like which which national rules media organizations should follow, remain aren’t settled. Don’t expect a final resolution under the Estonian presidency. The next trilogue will be November 28.

PRESS GROUP FEARS FACEBOOK: A new test by the Facebook that would divide the Newsfeed tool into two, in which unpaid news articles are relegated to a less prominent “Explore” feature, has the advocacy group Reporters without Borders up in arms. “In our view, this arrangement reinforces a discriminatory, pay-based distribution of media content that threatens journalism’s ability to survive,” RSF Secretary General Christophe Deloire said. “Given social media’s role in providing access to the news media, it would be dangerous for journalism to be relegated to Facebook’s cellars.”

**We’re constantly adding new issue area filters to Pro Technology. To ensure you’re receiving the latest news and analysis on the issues you care about most, please update and customize your settings here.**

SKY RAISES WARNING: Media conglomerate Sky said it could close down Sky News if it gets in the way of its proposed buy-out by 21st century Fox or “other corporate opportunities.” The deal has sparked concerns over potential media plurality in the U.K. Read the statement to the U.K. Competition Markets Authority online.

LOVE THY NEIGHBOR: U.K. Digital Minister Matt Hancock addressed a crowd in Paris on Tuesday to talk about cybersecurity. He referenced Alexis de Tocqueville for niceties but his speech, which you can read online, lacked specifics on how the two countries plan to work together on key cybersecurity challenges. Here’s the speech in one quote: “As one of the U.K.’s closest export markets and allies, France is a perfect partner for the U.K. in cyber, both in research and at a commercial level.”

… AND DON’T FORGET THE MOVIES: Techworld spoke to ethical hacker Ralph Echemendia, who found a glaring gap in the cybersecurity market: Hollywood. “It’s mind boggling that they’re spending $300 million on a movie and yet none of those insurances cover a cyber breach,” he said, while pointing out the damage that leaks have cost shows like Game of Thrones and entertainment companies like Sony in the past.

MAERSK’S CYBER WOES CONTINUE: The world’s largest container shipping line, A.P. Møller-Maersk of Denmark, cuts its profit guidance for Maersk Line this year, after the impact of the so-called NotPetya cyber attack as well as the rise of fuel costs hit its performance and share prices. The company said the cyber attack in June cost it between $250 million and $300 million over the summer months, the Financial Times reported. As a consequence, Maersk Line’s guidance was cut from more than $1 billion this year to “around” $1 billion.

UBER’S BELGIAN RESET: After having received “monumental” feedback, Uber in Belgium will improve its app in favor of its drivers, the company announced. It will shorten the rider cancellation time from five to two minutes, implying that after these minutes have passed the customers have to pay a cancellation fee. Notifications will indicate if trips possibly take 45 minutes or longer, and drivers also will have the option of setting an arrival time. Negative evaluations from riders — which aren’t the driver’s fault — will also have less impact on their profile ranking.

BROADCOM BID FOR QUALCOMM: Bloomberg and Reuters have their own takes on whether the mooted $130 billion deal would make it through regulators. Bloomberg says Qualcomm’s antitrust problems would likely weigh on regulators’ assessment: “The biggest hurdle to winning regulatory approval for the deal is Qualcomm’s reputation for ‘aggressive licensing practices.’”

Reuters suggests China would use the review process to extract advantage for its own industry: Chinese regulators “‘will be motivated by the government to look very closely not just from a competition perspective but also from a broader industrial policy perspective,’ said another Beijing-based antitrust lawyer…”

As a reminder, our piece from earlier this week is online.

DOES BRITAIN NEED MORE ROBOTS? The U.K.’s Centre for Policy Studies thinks so. In a new report, the think tank argues more robots are the best way to solve the U.K.’s productivity crisis. In the U.K., “there are only 71 robots for every 10,000 employees in manufacturing, compared to more than 300 in Germany,” according to the report. h/t POLITICO’s London Playbook.

MOVERS & SHAKERS: Sorin Grindeanu was officially appointed head of Romania’s communications regulator (which we reported earlier). Grindeanu served as PM the first half of this year before being removed in a motion of no confidence. Ana Gradinaru is now handling communications for Facebook in Brussels, focusing on the company’s message towards the EU institutions.

HIRING: OpenForum Europe is hiring a digital policy analyst to join its team in Brussels. The individual will monitor the EU policy scene, organize events and help out with research. Apply, apply.

Morning Tech wouldn’t be possible without Nirvi Shah and Zoya Sheftalovich.

**A message from EPiCENTER: Every country wants to become a world leader in digital innovation. But is Europe doing everything it can to be at the forefront of the digital revolution? Are we too worried about the potential risks and not focused enough on the enormous benefits of progress? INNOV8 is a conference for EU-decision makers, innovative companies, and start-ups to meet and explore how Europe can become the leading force in the adoption of new technologies. The conference will address several exciting areas of progress: artificial intelligence & digitization, fintech & banking, and innovation in food supply & health. INNOV8 will provide a unique forum to exchange ideas, shape policy and ensure that the EU is at the forefront of technological change and policy opportunities. Join Kaja Kallas MEP, former head of DG CNECT and DG SANTE Robert Madelin, and some of the most innovative start-ups to discuss the upcoming policy challenges. Join INNOV8 on November 21 in Brussels.**

***POLITICO Pro Articles***

Emmanuel Macron’s digital report card

— By Nicholas Vinocur and Joanna Plucinska

When Emmanuel Macron first burst into the limelight, he seemed like a godsend for European techies.

The 39-year-old owner of two iPhones, known as an obsessive user of the Whatsapp and Telegram messaging apps, would help transform Europe from tech regulator to digital innovator, while making France a leader in “hyper-innovation.”

Six months later, if Europe’s tech elite were to offer a progress report on Macron digital agenda, it would read: “Top marks for ambition. Still plenty of work to do to reach his full potential.”

Industry players and other EU leaders have faith in Macron’s intentions to make Europe a global player in tech. They note that he galvanized debate on the need to complete the EU’s digital single market, reformed French labor rules, announced the creation of a €10 billion investment fund in France and planted a seed for a European “innovation agency.”

But many of Macron’s promises remain just that: promises. Some critics fault him for overreaching, in a way that exposed divisions between EU nations and confused tech companies. One initiative managed to do both: a French-led push to tax web giants like Google and Facebook on revenues they generate in European countries.

If Macron were a student in a French lycée, such a move might have earned him a reprimand for being “hors sujet” — or off topic, one of the worst sins a student can commit in that system.

What follows is a POLITICO report card on Macron’s tech policy. Grades are on a scale from 0 to 20, just as they would be at the Lycée Henri IV, where he completed his high school studies.

Bonne chance, Emmanuel.


What his teachers say: As usual, Emmanuel had the right idea. He applied his bright mind to the task — optimizing taxation of digital firms — and determined that governments needed a better approach. Classmates were slow to find a solution, so Emmanuel proposed to start taking a slice of each firm’s gross revenue in the country where it was generated. Thanks to his charm and smooth talking, he enlisted 19 classmates in favor of his idea. But when the rest of the class examined his proposal, they had questions: Why tax only web firms? Won’t startups suffer? If Europe is the only region with such a tax, won’t big tech firms reduce their footprint there. Emmanuel had to scale back his ambition. Granted, the European Commission will include his proposal in a list of option for improving digital taxation to be submitted next year. But by moving too quickly, Emmanuel missed the mark on this one.

What classmates say: Some loved Emmanuel’s approach. Others said it was unfair to digital firms and risked making the EU look protectionist. “The increasingly virulent stigmatization of (web-based) platforms… is in our view somewhat inappropriate given the services they provide and their appeal to the French population,” said Loïc Rivière, managing director of lobby group TechinFrance. “Cracking down on big tech platforms always means cracking down on small platforms first,” said Lenard Koschwitz, director for European Affairs of Allied for Startups, another lobby group.

Overall appraisal: Emmanuel certainly got the debate going on digital taxation, but his approach fostered some division, and may not win out at the end of the day. He needs to refine his diplomatic skills.

Grade: 9/20


What his teachers say: Emmanuel is a poetic soul with grand ambitions. Presenting his project for tech, he invented a word: “hyper-innovation.” The class loved it, and so did the European Commission, which named Paris Europe’s capital of innovation and awarded the city a €1 million prize. Techies cheered when Macron vowed to get venture capital funds for tech flowing in Europe, via a €10 billion French fund for innovation, a €1 billion Franco-German fund, and a European innovation agency modeled after the United States’ Defense Advanced Research Projects Agency. But they are still waiting for the money. The €10 billion fund, financed via sales of French state-owned assets, will not be online for years, and when it is up and running, only its dividends will be used for tech projects, providing just €100 million to €200 million per year. The Franco-German fund is still embryonic. And so is the European innovation agency: an exciting idea, but for now, just that.

What his classmates say: Sure, Europe is no Silicon Valley when it comes to venture capital for startups. But Macron has done us plenty of good anyway. In France, he’s reformed a rigid labor code that caused small firms plenty of headaches, and he’s getting ready to slash social charges and a much-decried wealth tax, a move that his government says will release €3 billion into the economy and make France much more welcoming for potential investors. “Macron is doing a lot to make France a more attractive place for tech investors. Obviously, a lot of this is happening at the European level, and will take time to bear fruit. But we appreciate the positive signal,” said Yves Weisselberger, founder of the Snapcar ride-sharing app.

Meanwhile, his fellows in the EU hope Macron takes an inclusive approach to tech investment. If he chooses to work only with Germany to launch new agencies or investment funds, central and eastern EU countries could be left out. “On a European level, we need more coordination,” said Krzysztof Szubert, the Polish digital ministry’s secretary of state and EU negotiator.

Overall appraisal: It will be some time before Europe has a broad stable of tech unicorns — firms valued at over $1 billion. But insiders appreciate Macron sending the right signals.

Grade: 13/20

Digital single market

What his teachers say: Emmanuel gets top marks for public speaking and motivating his classmates. His performance at the Digital Summit in Tallinn at the end of September reinvigorated the EU’s passion for digital and kickstarted talks on a number of European initiatives.

But Macron loses some major points for a lack of originality. Some might even call it an egregious case of plagiarism. A rule he proposed to force platforms to become more transparent in how they treat less powerful players is a copy-paste job on proposals put forth by his predecessor, François Hollande. His transparency rules —designed to prevent big platforms from de-listing or pushing down their competitors — may seem like an original thought. In reality, they are simply an initiative launched by the previous French government wrapped up in new PR packaging.

What his classmates say: All in all, they seem to think their peer has the right idea. Member countries are happy that someone powerful is pushing the digital discussion forward. The European Commission is happy to see Macron defend ideas similar to its own, including a transparency mechanism due to be put in place early next year. Like the French, the Commission wants to give small third-party sellers stronger negotiating power.

Where Macron falls short is in advocating a revenue tax for big tech companies, a move that tech insiders say goes against the spirit of the EU’s digital strategy. “It will break the digital single market,” a tech industry lobbyist said of Macron’s broader platforms and tax proposals. Others worry that such moves may mask a less welcome agenda. “We do need to have Europe moving forward on the digital agenda,” a Northern European diplomat said. But, the person added: “We will look carefully so it doesn’t turn into French protectionism.”

Overall: Macron seems to grasp the basic concept of a digital single market, but it’s still not clear if he will take a more protectionist route, burning bridges with his fellow classmates.

Grade: 15/20

The POLITICO Global Policy Lab is a collaborative journalism project seeking solutions to challenges faced by modern economies in an age of political disruption and technological transformation. Join the community.

Source: Politico

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