Guten Morgen!

We wish you a wonderful start into your weekend and week with the newest Krautshell edition. Enjoy and ping us for more!

Anna                                Christian

Slow and Steady wins the Digital Race

In line with Germany’s recent efforts to accelerate Europe’s endeavor into the digital world, the German Chancellery released a first draft for a comprehensive German data strategy last week. As you would expect from the Germans, it’s planned down to every last detail. So, in case you were wondering how and when the government plans on modernizing its film archives, or how 3D underground models will be stored digitally, you’re in luck!

On top, the strategy clearly outlines how individual citizens, SMEs, larger businesses, and the public sector can all play their part in achieving digital- and data sovereignty (spending money). Second, it details how increased data sovereignty in Germany will lead to concrete economic growth and societal progress (regulative framework being adjusted).*

The strategy is certainly welcomed among those who have been calling for greater investment in digitization projects for years. That being said, it’s hard to believe this is a paper from 2020 – and it makes you realize how painfully far behind Germany is compared to other industrialized countries of equal global status. On the other hand, the all-encompassing nature of the data strategy could be the foundation for an incredibly effective (albeit slow) digital transformation. As the saying goes, better late than never, right?

*(Ping us for the detailed measures, not enough space here…)

EU vs. Big-Tech – No future in the EU for Google and Co?

Looks like the EU Commission is planning for stricter rules to guarantee a fair competition in the digital markets. The proposed solution by the EU Commission, which is part of the soon-to-be-released Digital Services Act (DSA), provides an approach for the divestiture or sale of big tech companies in case of “emergency”. This emergency is reached whenever the dominance of one company threatens the interests of customers or smaller competitors. In extreme cases, the Commission should be enabled to exclude a company from the EU market.

With the stricter rules for data protection, the EU showed that they are able and willing to enforce rules on the probably most powerful industry in the world. However, it remains a question whether or not Big-Tech has become too big to be truly challenged. Regulating this market will be one of the major challenges for the EU in the coming months and years. The first version of the DSA is expected by the end of this year. Ping us if you don’t want to miss it.

World Fastest DARPA Made in Germany?

Is Germany capable of forming its own DARPA? This was (and remains) a question when the “Agentur für Sprunginnovationen” (transl. “Agency for Breakthrough Innovations”) was founded end of last year. Now, not even one year later, the first project has been accepted. The project seeks to develop… WINDMILLS. The to-be-developed windmills are not ordinary, but meant to be 200 to 300 meters high so that they are not subject to lower ground turbulences.

The idea behind the agency: German politicians would like to have a pendant to the successful US agency DARPA, which was – as you most likely know – involved when first parts of the Internet had to be financed. A better transfer of scientific findings to “real” economy has been a major goal of German research and industry policy for various years. Still, it won’t be easy to imitate the success story of DARPA. We are applauding the optimism and the pace at which the agency began its work. That being said, given that DARPA was already founded in the 1950s and developed holistic structures and calculated processes over decades, it is hard to imagine the Germans imitating its success only few months or even years.

75 Years of UN: Developments, Disputes and Digital

This week there was the ceremonial act for 75 years United Nations. Congratulations! But there was also a lot of critique and reform proposals coming from its members, also from Angela Merkel. She is primarily concerned about the Security Council, which is often ineffective due to its single-member veto mechanism.

To use the words of the UN Secretary-General Gutierres the world has a “surplus of multilateral challenges and a deficit of multilateral solutions”. Coupled with this is the US’s gradual retreat from global alliances, leaving a power vacuum often filled by China. However, this might not be the only reason tempers are flaring at UN summits. What certainly did not help was the digital setting for the event. The UN is always offers fiery speeches and mutual criticism. But, in normal times, the working group sessions afterwards help find solutions. Not much of that could be seen after this summit. Not the birthday one would wish for.

FDP Party Convention – Awakening Light

This week, the FDP (the liberal party in Germany) had their federal party convention. The motto was “Aufbruch”, which is probably best translated to “awakening” or “the emergence into something new”. The FDP elected Volker Wissing as its new secretary-general, who is an expert in industry and finance policy. Besides that, there wasn’t much more “awakening” being done. In fact, electing Volker Wissing was not really an emergence into something new but rather a “back-to-the-roots” decision.

In the last months or even years, the FDP has been struggling to find their way. Germany’s liberal party is often at strife about what “liberalism” they want. Their party leader, Christian Lindner, is, like Wissing, a representative of the economic-liberal part of the party. However, in the last months the conservative and social-liberal parts of the party gained influence. The party convention definitely showed the party is still on track with Lindner. And, while many in the FDP are asking what implications this might have for a potential government coalition after the elections 2021, another big question remains: Will the FDP get enough votes to overcome the 5% threshold? This is very much still up in the air.

Corona: A Second Wave and Another Market Crash? Winter Is Coming

Every second EU country is now a risk area, or at least has some cities or regions being declared “high risk,” by German standards. In many regions in the EU, especially in those with crowded cities, the infection rates are rising again. Often rapidly. Germany issues travel warnings for such regions, and individuals returning from there have to take a Corona test within 48 hours. Then, they must quarantine themselves until they get their result.

The stock market has been, after a crash in early March, one of the most optimistic actors in the crisis. Nearly all stock markets rebounded quickly after the first crash, and digital stocks like Zoom even skyrocketed. However, especially this week, optimism was marred. The stock market reflected investors’ expectations of the future (to a certain extent), and that future is largely uncertain. With increasing infection rates in big markets like the EU and the US, things are not looking good. This is a critical atmosphere especially for politics. With elections in the US this year, and Germany the year after, we will most likely see some drastic actions to calm individuals and companies. Winter is coming and everyone can feel that.

• Billions to ballot for Bundestag-elections: Germany is planning for €96 billion in additional debt for 2021. This is less than 2020 but still more than the “debt brake” would normally allow. Many new debts, especially in 2020, are used for programs like short-time allowance, which are certainly needed to avoid the fallout from the biggest economic crisis since WWII. Nonetheless, they have another tangible side-effect: No public turmoil until the German federal elections, which raises the question whether Germany’s government is buying a peaceful 2021-election at the cost of future generations.
• The Recovery Fund No-News: No further development could be reached in the negotiations for the EU budget and the included recovery fund. After the budget framework was agreed upon by the Member States, it is now on the EU institutions (Parliament vs Commission vs Member States) to negotiate how much money to spend and where.
• Bad News for Deutsche: Deutsche Bank was part of the Mirror Trade scandal and payed fines because of it in 2017. However, the new FinCen files implicate that money laundering via the “Deutsche” continued. It is unlikely the Bank actively engaged in malpractice, but rather implemented a flawed structure. Nonetheless, it is a major setback for the Germany’s biggest bank which has now pledged improvement quite a few times.

The German Warning Day

In Germany, we like to be prepared. Even before COVID-19 hit, we kind of knew that a disaster ​was looming. We might not be prepared to deal with the catastrophe itself (that’s for another WOOM), but at least we want citizens to know about it. So in June 2019, the German State Ministers of the Interior decided to have a countrywide warning day.

The goal: To sensitize the population to the topic, give them a better understanding of the process, check the warning infrastructure and raise attention to warning tools.

The tools: Sirens, warning-apps, digital advertising boards.

The time: 20 September 2020, 11.00 am.

Our team and myself were ready to get sensitized.

What happened? Well, close to nothing.

Turns out, the sirens in Berlin were dismantled years ago. Why? High population density and sirens in one part of the city could cause panic in other parts. Apps: Did not work either. Why? Because of the decentralized infrastructure with too many authorities having access, the alarm trigger seems to have caused a self-induced DDoS reaction. And advertising boards: No idea actually, I was not outside.

What did we learn? If the world’s ending, no one will notice. But maybe that’s not a bad thing after all…