Guten Morgen!

You probably will have to catch up on some sleep this weekend (the sleep deficit being even worse this side of the Atlantic #timedifference #3amwakeups), but hopefully you can squeeze in the latest Krautshell edition. Even more so if you would like to take a break from election coverage ?

Enjoy and ping us for more!

Anna                                Christian

Economic Projection for Germany

The economic projection in autumn by the Federal Government is tradition in Germany. During the last years, we always hoped for some growth; this time, we had to hope the downturn is not too harsh. For 2020, the German GDP will shrink by 5.5%, a little worse than the decrease in global GDP of 4.2%. We hope to reach the pre-crisis economic level by the end of 2021. Of course, we are only talking about the GDP figure here. Many things in the German economy will have changed by then, with many SMEs going bankrupt and the probable enhanced digital development bringing with it an inevitable structural change. It will be especially interesting to monitor how exports will develop as these suffered strongly over the past few months given the shrinking foreign markets that normally buy German products.

Just as it was in the US elections, we can expect that economy might be a major factor for the Bundestagswahl in 2021. The governing parties of CDU/CSU and SPD therefore hope for a fast recovery of the economy to gain voter support. This might also be one of the motivators for prolonging existing aid programs. We are very excited to see whether this will work out. Currently, Germany is certainly profiting from a strong budget situation before the crisis. We have to see if this holds true even if the restrictions stay for another while.

The Right to Life, Liberty, and the Pursuit of Updates

Most of us know this scenario all too well: your smartphone is a few years old, but still working perfectly fine. Suddenly, you get the notification: this app is not compatible with your current software version, please update your device. You go to update your phone, and, your phone cannot support the new software. You’ve been abandoned by your smartphone’s manufacturer. This week, the German Ministry of Justice and Consumer Protection (BMJV) said: “no more!”

The BMJV published a draft law to protect consumers buying software and apps in online marketplaces. Essentially, the law mandates that suppliers must ensure the consumer is informed of and provided with updates necessary to maintain the conformity of the digital product during the “relevant period” (intentionally vague to account for different types of digital products). However, the law does stipulate that the “relevant period” is not tied to the duration of the warranty, and should extend beyond it. The only way companies can get around the legally mandated updates is if they provide software for which the consumer does not pay a price, and the provider operates under a free and open source license. In case you were wondering: yes, selling customer data still counts as the consumer “paying a price.” If you’d like to further discuss what this means for you as a software provider, reach out to us!

A Digital Survey for a Digital Euro

How do you gauge citizens’ opinions and ask for feedback on political developments in 2020? On Twitter of course! This week, the European Central Bank’s (ECB) president Christine Lagarde took to the social media platform to announce the publication of an online survey concerning the issuance of a digital euro. Back in October, Lagarde was quoted saying the ECB is examining the possibility of a digital euro “very seriously.” As Europeans are increasingly adopting digital payment, savings, and investment products, the central bank wants to ensure it is in a position to launch a bitcoin-alternative if necessary.

The survey on the digital euro is meant to measure Europeans’ interest in such a digital currency, and determine what its features should be. It asks consumers to rank features a digital euro should have in order of importance, list possible barriers that prevent them from using it, and offer suggestions for how it can be made accessible to all. Another big question to be answered in the survey is whether Europeans want an intermediary to process payments or not. Lastly, the survey includes a section of questions for “experts working in the financial and technology industries” to help inform how the digital euro could be provided safely and efficiently. So, if you’re European, what are you waiting for? It’s not every day you get to tell a bank how to do its job…

Paid ads, platform economy and recommendations – The BMJV all-in-one law

This week, the Federal Ministry of Justice (BMJV) presented its draft for changes in the law against unfair competition. One part of the new draft would require online price comparison- and shopping platforms to make their ranking systems more transparent by disclosing which parameters are considered. Furthermore, the BMJV makes clear in which cases influencer advertisements have to be declared as such. Also, recommendations for products or valuations have to be made transparent: in future, websites shall disclose how they aim to ensure that authentic valuations are posted.

The Federal Cartel Office released an alarming report last month concerning some of these topics, which indicated that platforms have the power to distort the valuations and recommendations on their website. These practices deceive the consumer and – worst case – lead them to a transaction decision that they would not have made if valid information was at hand. The proposed changes by the BMJV are, however, a reaction to an EU regulation that Germany has to apply soon, not to the Federal Cartel Office. Still, the outcome will be important as it defines how online business and marketing is to be conducted in future. You should closely follow these developments if you are actively doing business in Germany.

You Better Behave, or Else…

This week, the European Parliament and the German EU Council Presidency finally reached a preliminary deal on a rule-of-law mechanism, tying EU budget money to respect for EU values. This topic has been a massive headache for the EU since 2018, when the Commission presented a proposal to protect the Union’s budget from “generalized deficiencies as regards the rule of law in the Member States.” Since then, Poland and Hungary, who both face rule-of-law disciplinary proceedings, have caused quite a fuss on the matter, claiming this sort of mechanism is an “ideological blackmail tool.” This choice of words by Hungary’s Justice Minister was quite interesting, considering that both countries have threatened to derail the €1.8 trillion budget-and-recovery package over the matter. Such action would be fatal, as the much-needed financial package requires unanimous approval from the Member States.

Regardless, many MEPs see this preliminary agreement as a huge victory, as the Parliament has been put under pressure to take both the rule of law and protection of EU taxpayers’ money seriously. The new agreement still requires final approval from the Council and Parliament, but as it stands, a decision to cut funds would require a qualified majority of Member States. Obviously, everyone is hoping this mechanism doesn’t need to be used. Rather, threatening to hit misbehaving Member States right where it hurts (their wallet) should be enough of a deterrent.

• January It Is: The CDU party convention to find a new leader and potentially the Chancellor-candidate will be held in January. After some arguments, the three candidates were able to come to this conclusion together with the party’s board. However, what still remains unresolved: How to hold this party conference in times of a pandemic.

• STOP THE COUNT: Okay, please forgive the joke. But the German census will be held in 2022, not in May 2021 as it was originally planned. This is of course because of Corona and local administrations currently having a huge workload with contact-tracing and so on.

• Finally, An Airport: YES, we have a new airport in Berlin. The Willy-Brandt-Airport Berlin-Brandenburg (short: BER) opened last weekend. Hurray! Nine years more than initially planned, and MANY jokes later, our capital has its new airport and we are happy for it. Even though we might miss some of the BER-jokes – we got used to them.

Arriving in time

Our Minister for infrastructure called for an end to jokes about the Berlin airport, on good grounds: This week, 14 years after beginning construction, and 34 years after the political leadership agreed on its location, the new Berlin airport is finally operational.

Let those who might laugh at our lengthy processes, be told by science: Political projects in democracies require more time than in authoritarian regimes, but prove to be more stable in the end. Well, sort of; two days after opening rain leaked through the roof of the airport.

Anyway, time is not so much of the essence. Consequently, kids are being taught patience and are rewarded for holding still for a while. Adults in 2020 politics tend to forget this, and their constant need to get everything done ASAP still looks like

Whether travelling from the new airport or investing time in politics (or US-elections), patience is of the essence these days. Or, as Pieter Hein, the Honorary Doctor of Yale, would phrase it:

“It ought to be plain how little you gain

by getting excited and vexed.

You’ll always be late for the previous plane,

and always on time for the next.”