Another week and another #THEÜBERSICHT! This time on Digital Sovereignty (whatever that means…). More on this latest edition and other exciting news from Berlin and Europe below.
Enjoy and ping us for more!
FIRST, SOME SOLID INTEL:
Digital Sovereignty Explained in #THEÜBERSICHT
It’s no secret that when it comes to digital technology, Europe has been painstakingly lagging behind the two technology behemoths of our age: the US and China.
That being said, Europe has been acutely aware of its shortcomings, and has taken various measures to catch up. Alongside the conception and implementation of these digital technology projects, the term “European Digital Sovereignty” has emerged time and time again. But what exactly does it mean? The term has been thrown around quite a bit by European politicians, particularly since Germany took over the EU Council Presidency back in July. However, much like the term “football,” there seem to be multiple interpretations (us Germans will never get that).
To clear up some of the confusion and give a clearer picture of what this buzzword actually means, we’ve put together another special edition of #THEÜBERSICHT (English: The Overview). Take a look to find out how the German government understands the term, who is involved to turn words into actions, what important politicians and other stakeholders have said about it, and which European digital legislative initiatives are still to come this year. As Europe embarks on this self-determined journey into the digital world, we hope our ÜBERSICHT can be the map to help you navigate the turbulent waters of European digital policy.
Another €25 Billion for German Companies – Come, Get Your Money!
This week, Federal Minister of Economics Peter Altmaier (CDU) announced that his ministry will prolong the interim aid for companies until next year. To do that, according to Altmaier, an extra €25 billion are available for companies and self-employed persons, who are not eligible to access any other form of federal aid. Furthermore, the Federal Government wants to use the money to help pay fixed costs for the hotel and gastronomy industry, which is still suffering from the lack of visitors due to the pandemic.
Germany is actually doing alright financially. Sure, we have to watch that our debt levels are not increasing too much. However, like the stereotypical “Swabian housewife”, we saved quite a lot of money the last few years. The fact that Altmaier is announcing additional aid is a positive sign. However, to date, the program has only received applications worth €1.6 billion, with €1.1 billion actually being granted. The problem doesn’t seem to be the amount of money available but bureaucratic hurdles stopping companies from applying for federal aid. Consequently, Federal Finance Minister Olaf Scholz (SPD) demanded that impacted industries would need targeted help, and PLEASE: in an uncomplicated way. Let’s see whether we Germans are able to do anything uncomplicated.
What About Corona in Germany?
Yes, it is time for an update. Corona numbers are rising again in Germany, and we are fearing a second wave. This caused the Federal States to introduce some new measures, most of which were discussed at the meeting of the Head of States with Chancellor Merkel on Wednesday and Thursday. Under discussion: Curfew, accommodation bans for travelers from risk areas and so on, all based on certain infection rate thresholds.
We don’t want to bother you with details about the single measures. Accommodation bans were issued and withdrawn again, all in the same week. Curfews were overturned by courts. Besides this chaos, one thing is sure: With 7,334 new infections on Friday, Germany reached a sad all-time high. And something has to be done about it. However, no one can agree on what to do. Many are stressed out about this lack of consensus, most notably the Chancellor herself, who, according to insiders, said to the Head of States that their permanent talks about special exceptions for their own states are getting on her nerves. We can only hope the Chancellor is heard, as we need sensible rules and measures, and we need them fast.
New Dynamic for Regulation Tech Companies in the EU
In September, we reported on EU “emergency plans” to potentially break up big tech companies when their market power harms competition. This week, a joint position paper by the French and Dutch governments was sent to the EU Commission, in which both are calling for invocation of for this emergency option. They will have support by the European Parliament.
This update of the process is important for two main reasons. First, the dynamic shows how seriously the EU takes regulating the market this time around. Maybe, EU officials used some of their free time and watched “The Social Dilemma” on Netflix. Furthermore, the coalition of France and the Netherlands is key. France has been advocating for stricter rules a long time. The Netherlands, however, are home to many of big US-tech companies in the EU and speak traditionally for liberal legislation. A coalition between these two members shows the importance of the topic for the EU and makes it, from our point of view, very likely that something will happen here sooner or later. We will keep you posted, as always.
Customs to Declare?
This week, the WTO made their decision: the EU is allowed to impose penalty duties on US imports amounting to $4 billion. This is because the US supported its aircraft manufacturer Boeing in an unfair way, or at least, in a way that harmed Airbus. The EU was directly seeking negotiations with the US, as Vice-President of the EU Commission Valdis Dombrovskis isn’t interested in a further escalation of US-EU-trade war.
The penalty process is largely a charade. Yes, the EU is allowed to impose penalty duties for unfair federal aid to Boeing, but the US is allowed to do the same for unfair federal aid to Airbus. So, some might ask what the whole point is. Of course, it has to do with power and influence. It is conceivable that the EU will try to prolong negotiations with the US, holding onto the hope that an election of Biden would reinstate the longed-after status quo in EU-US relations. Whether this is the smartest strategy, we don’t know. If you produce games consoles or ketchup though, you should follow the developments because your products might be subject for EU penalty duties.
Tech Start Ups: Rejoice!
If you’ve ever thought about launching a start-up in Germany, 2021 might be your year. The German government is to release its official 2021 budget soon, and according to Tagesspiegel Background, 10 billion euros will be allocated towards the “Future Fund” for promising technology start-ups over the next 10 years.
It was high time for the government to put forward such a fund, as foreign investors are currently involved in 9 out of 10 financing rounds for German start-ups. With the Future Fund, companies no longer need to solely rely on foreign investors (especially from the US and China) to upscale their business models. This is also positive for the German economy, as the fund decreases the risk of promising tech companies leaving the country. Thomas Jarzombek, the start-up representative of the Federal Ministry of Economics was quick to point out the Future Fund is six times larger than a similar fund planned in France, because what is European politics without a bit of healthy competition among old friends?
Despite this record-breaking sum, some CDU-politicians are unhappy with the structure of the fund, stating it does not do enough to mobilize private investors. The main complaint: the state still has too much influence on investments decisions. That being said, the effectiveness and market acceptance of the fund will be continuously monitored, and adjusted where necessary.
LONG STORY SHORT:
- Tax me if you can: The negotiations for digital taxation and global minimum taxation are making progress on OECD-level. However, will probably be ongoing until at least mid-2021. The EU Commission is definitely in grid position, in case there is no progress. In that case, the EU will propose its own tax.
- Filters: We reported, last week, about a new approach for the copyright act. This week, a first draft was publicly issued. If you want to know more about it, you can ping us as the draft and the website of the ministry are unfortunately German only.
- Brexit Ultimatum Due: Boris Johnson set an ultimatum for October 15th concerning Brexit negotiations. Like many deadlines before, it came and went. And now? Nothing! The talks are continuing, Boris Johnson is angry, but he has no choice, other than to step away without any agreement whatsoever. So far, it seems he is not yet ready to do that.
WHAT’S ON OUR MINDS
The Missing Campaign
When Federal Minister of Defence Annegret Kamp-Karrenbauer (AKK for the lazy) announced her resignation as CDU party chair in February 2020 (after she followed Merkel in this position and was supposed to follow her as chancellor as well…), several candidates declared interest. After some back and forth, currently there are 3 candidates the party delegates can choose from at their Corona party congress on the 4th of December.
We expected heated debates, passionate discussions, inspired campaigning. We got close to nothing. There is little to no reporting in the press, the candidates are almost timid in their demeanor and no one really cares anyways. Not sure if it’s because of Corona that people have other things on their mind, or because of the generally non-inspiring nature of the candidates and/or their non-existing campaigns.
What you see in the media today is less reporting on the current candidates, and more demands for new candidates. One name mentioned often, both in the media and within his own party, is Federal Minister of Health Jens Spahn, who has done a pretty good job in the pandemic.
Of course, whoever becomes party chair is not automatically destined to run for chancellor. There is another factor to consider: The CSU, the Bavarian sister party of the CDU. Their approval is needed. And they, too, have a party chair. Some say, he might be interested in running himself.
I am baffled that this is such a non-issue. At this point, probably no one would mind if we just reconsidered AKK’s withdrawal and let her remain party-chair. At least then the 1001 delegates to the party congress would not have to travel all the way to Stuttgart to a possible super-spreader event.