Guten Morgen!

We hope you had a wonderful week! Christmas is right around the corner, the new year is following right behind it, and we’re bringing you our newest episode of the Krautshell, the last one in 2020.

Happy reading, enjoy your weekend, and happy holidays!

Anna                                Christian

Big Problems for Big Tech

Large tech companies just can’t seem to get a break this week. While in the US, the FTC and dozens of states filed a pair of antitrust lawsuits against Facebook, the grass doesn’t look much greener for Facebook, Google, and co. on this side of the Atlantic either. This week, the European Commission presented its proposals for two long-awaited, pivotal pieces of digital legislation: The Digital Services Act (DSA) and the Digital Markets Act (DMA).

First, the DSA is mainly targeted at online platforms, and is meant to protect users from potentially harmful online activities or content. It contains three main areas of action: creating more safety for online users, achieving greater transparency in online platforms, and implementing better enforcement mechanisms. Meanwhile, the DMA focuses primarily on online marketplaces, specifically targeting what the EU calls “gatekeepers.” Long story short, gatekeepers are large players in online marketplaces, and the DMA seeks to block them from using their powerful market position to distort competition. These proposals are truly groundbreaking and will alter the future of the digital world. We’ll keep you posted.

When Family Arguments Go Public

Apart from the presentation of the DSA and DMA there was also some political buzz in Brussels about ongoing disagreements between the two Commissioners who presented the proposals: Commission Executive Vice President Margrethe Vestager, and French Commissioner (and former CEO of France Telecom) Thierry Breton.

While both seek to promote European sovereignty in the digital realm, the way they go about this seems to be a major point of contention. Vestager, the ranking Commissioner out of the two, is known for playing her cards close to her chest. Meanwhile, Breton, who struggles with taking orders, is outspoken, and unapologetically champions a “Europe first” agenda. Over the past few months, Breton has been a thorn in Vestager’s side when it comes to regulating big tech, bringing disunity among the Commissioners into public view. In an interview with the Financial Times, Breton insisted the Commission should have the power to break up American tech companies, directly opposing Vestager’s view that this “nuclear option” should not be part of the EU’s policy arsenal. Going forward, Breton’s interventionist approach to support European companies in global markets seems to be prevailing, but a rekindled EU-US relationship under the Biden administration may cause the tides to turn back towards global cooperation. Vestager would be quite pleased about this. So, yes, we also have juicy political drama in Europe, you’re welcome.

EU Budget Compromise: What it Really Means Going Forward

In mid-November, we reported that the details of the seven-year, €1.8 trillion EU budget had been agreed upon. In late November, we revised that statement because Poland and Hungary blocked approval in their national Parliaments. Today, we can finally report that compromises have been reached, all details have been ironed out, and ladies and gentlemen, we have an EU budget for 2021-2027!

However, the rule of law problem has not just magically disappeared, and we’ll tell you what this means going forward. The German EU Council Presidency managed to broker a compromise which leaves the text of the rule of law contingency unchanged. Therefore, if Hungary and Poland (or any other Member States) are found to be undermining democratic values like the independence of courts or the media, EU funding will be withheld. That being said, the compromise also stipulates that the mechanism will not be used against Member States until Hungary and Poland have challenged its legality at the Court of Justice of the European Union. For these two Member States, it’s a minor victory, as they will receive much-needed support from the EU’s Recovery Fund. For the Member States who insisted on the mechanism’s inclusion, it’s also a minor victory, as nothing in the original text has changed. Therefore, as is often the case in politics, the metaphorical rule of law can has officially been kicked further down the road. As Slovenian Prime Minister Janez Janša put it, the deal is, “Not good, not bad. As good as possible.”

These Drones Were Meant for Surveilling

The German military, the Bundeswehr, ordered itself a Christmas present: a fleet of five new Heron TP drones. These drones are controlled remotely from the ground, have a flight time of roughly 30 hours, and are primarily used for surveillance tasks. As an add-on feature, the military requested weapons to arm their brand-new equipment. The Ministry of Defense had already prepared a purchase contract, but it was not meant to be. This week, the German Parliament blocked the acquisition of these weapons systems.

More precisely, it was the SPD, the junior coalition partner to Merkel’s CDU that blocked the motion, despite having originally agreed to discuss the matter further in the original coalition agreement. The CDU’s main argument for arming drones focused on empowering soldiers to take action in the event of an attack, instead of merely “observing” events through a reconnaissance drone. On the SPD’s side, it is still unclear exactly what the rationale behind this decision was, as the topic was (and still is) heavily debated internally. Many believe the SPD’s decision was a politically motivated one, as their poll numbers have continued to drop over the last few years, and the largely pacifist German public is uncomfortable with their military having the tools to conduct extraterritorial remote killings. Fritz Felgentreu, the SPD’s main spokesperson on defense topics, was in favor of the program, but was ultimately overruled, and resigned in protest. With this rejection by the SPD, armed drones will have to wait at least until the new government is elected in the Fall.

 And then Ursula Said: Let There be Vaccines!

As more and more countries are approving Coronavirus vaccines and actually beginning to administer shots, we experience something many of us have been lacking for a while: hope. In the EU, authorities have been working tirelessly to supply Member States with adequate vaccine doses. In fact, the EU has managed to secure enough vaccine doses to immunize all 448 million EU citizens twice, and still have doses left over for poorer countries. In fact, back in September the EU announced it would invest in roughly 88 million doses of vaccines for poorer countries, as “well-off” countries have rapidly begun snatching up available supply.

Mass rollout of the vaccine will happen after the last hurdle is cleared: approval of the BioNTech-Pfizer vaccine by the European Medicines Agency (EMA), expected on December 21^st. As many things are in the EU, distributing vaccines is more complicated than what meets the eye. The EU securing vaccine doses simply acts as a down-payment for Member States, who ultimately must pay for the vaccines themselves, and have the freedom to choose how they distribute the vaccine. That being said, eight EU countries including Belgium, France, and Germany made a pact to coordinate on their strategies and information sharing. If all goes well, EU citizens could start being vaccinated even before Christmas. That was the present we all needed.

Cybersecurity Strategy or Superhero Plan? You Decide…

The past week has been fraught with cyberattacks on both sides of the Atlantic. After various US government departments were targeted by what is suspected to be Russian hackers, news broke that the systems of the European Medicines Agency were compromised as well, exposing sensitive documents related to the approval of Coronavirus vaccines.

To combat these increasing cyber threats, the Commission unveiled not one, but two legislative proposals this week. The first one, an update to the Networks and Information Security (NIS) Directive, places stricter rules for cybersecurity on “essential entities” in various critical sectors like energy, telecoms, and healthcare. The second proposal, the New EU Cybersecurity Strategy, is meant to collectively strengthen European entities in the cyber realm. This will be done through a new European mechanism for exchanging information about cyber threats and reactions. Of course, this mechanism had to be given a Marvel-esque name: the “Cyber Shield.” Along these same superhero lines, the Commission is setting up a new “Joint Cyber Unit” to strengthen cooperation between Member States on preventing, deterring and responding to cyberattacks. And lastly: what is a good superhero story without a villain? The plan also lays out procedures making it easier to impose sanctions on state-backed hacking groups, who have largely been able to escape any negative consequences to date.

• Zoomers, Boomers, and CDUlers: After months of back-and-forth, Merkel’s CDU has finally agreed on a date for the party Congress: January 15^th and 16^th. It also seems the CDU has finally arrived in the 21^st century, as the congress will be held digitally. We’ll remind you: the three potential candidates and their latest poll numbers are former CDU/CSU parliamentary leader Friedrich Merz (33.4%), North Rhine-Westphalian Minister President Armin Laschet (12.7%), and foreign policy expert (and koala meme hero) Norbert Röttgen (27.4%).

• Oops…: On Thursday, Belgian Consumer Protection State Secretary Eva de Bleeker accidentally published a table on Twitter containing prices per dosage of Coronavirus vaccines of six companies. As the post was removed shortly after publication, we’d be doing you a disservice if we didn’t share them with you. They are (per dose): Moderna: USD 18, Johnson & Johnson: USD 8.50, BioNTech & Pfizer: EUR 12, Curevac: EUR 10, Sanofi: EUR 7.56, and AstraZeneca: EUR 1.78. Whoever handles production costs at AstraZeneca deserves a promotion.

• It wasn’t me: Back in August, Russian opposition leader Alexei Navalny was poisoned with the Soviet-era-developed nerve agent Novichock. After intense investigations, the EU’s assessment points straight to Putin and his inner circle. In his annual press conference on Thursday, Putin, in typical Putin fashion simply stated, “if someone [in his circles] had wanted to poison Navalny, the work would have been finished… Navalny was not important enough to be a target.” At least he’s consistent…

Cracking the Frost in Wintertime 

When the Briton David Frost sat down with US-President Nixon for more than 30 hours of interrogation, Frost eventually cracked Nixon’s shell and made him remorsefully say things like “I let the American people down and I have to carry that burden with me for the rest of my life. My political life is over.” Long and unpleasant talks can bring down the toughest politicians like

When the Briton David Frost (UK chief negotiator on the Brexit deal) sat down with the EU chief negotiator and Frenchman Michel Barnier this week, he also took his chances. When asking Barnier to respect UK’s policy discretion as a sovereign state, meaning potentially reconsidering access for French fishermen to UK fishing waters, he might have hoped for that same crack in Barnier’s shell. But Barnier’s answer followed the logic of a “level shell-cracking field” when he basically replied: Sure, as long as the EU can sovereignly reconsider random other parts of the UK access to the EU market in return…..

Nice try, Mr Frost, but he got you there:

Will there be a deal under the Christmas tree? Some say no, some say maybe, who knows. According to British bookmakers for political bets, the odds for NO on “UK-EU Trade Deals by end of 2020?” jumped back from 20% on Wednesday to 40% yesterday. The deadline is tomorrow, and Merkel and Macron refused a call with Boris Johnson, ironically to not undermine the unity of the EU-bloc. Now, Frost is forced back to the table and probably feels like he’s in “Groundhog day”

Someone cracked Nixon, someone cracked the Coronavirus but there’s no cracking Barnier or Santa: Whatever may appear below the Christmas tree, whether a deal or no deal and how the heck it got there, will remain a surprise, again.

Merry Christmas!