We have a little surprise for you coming up – keep an eye on your inbox this week! Until then, enjoy the newest Krautshell edition with your morning coffee.
And, as always, ping us for more!
FIRST, SOME SOLID INTEL:
Dear Mr. President, Let’s Cooperate
We’ve indicated a few times (or maybe more than a few) that, from the European side, there is a willingness to deepen cooperation with the USA once again under President Biden. Well, EU Commission President Ursula von der Leyen made a first approach across the pond when she spoke at the World Economic Forum in Davos … ehm sorry, I meant the WEF in “Online.” She offered Biden an opportunity to join forces on digital legislation and regulation. Specifically, to put rules on the (probably) most powerful companies in the world (that are unfortunately located on American soil).
Digitalization might be an acid test when it comes to transatlantic relations. The EU wants more regulations on GAFA and co, and the US seems to also somehow want that, while simultaneously not harming domestic industry (we totally get that). Still, this might be a strategic move from von der Leyen. It won’t be easy to re-establish the transatlantic relationship, so starting with an ambitious but manageable project that focuses on a concrete policy field might be a good move. If we manage to successfully cooperate here, who says we can’t shift towards cooperation on geopolitical topics that are definitely on both sides’ agendas? We will see how this plays out as competition policy, a digital tax and the fight against hate speech certainly are controversial topics where common ground might not be easily found.
Data Strategy: Germany’s Pot of Gold at the End of the Rainbow?
This week, the German Cabinet adopted the government’s long-awaited data strategy, which puts forward a whopping 240 measures to make better use of data in industry, society, and government. The idea behind the strategy: turn Germany into a pioneer for utilizing user-generated data for innovation, while simultaneously maintaining the European model of high data protection standards.
To be completely honest, Germany desperately needs this kick in the pants for digitization. Just to give you an idea why: currently, 90% of digital data generated in Germany goes unused*, and, in 2020, Germany (the EU’s biggest economy…) ranked 12th in digitization progress among the 28 EU countries. Ouch. Thinking more positively though, when the bar is set so low, the only direction to go is upwards – the Federation of German Industries (BDI) estimates the value-added potential of the German data economy at 425 billion euros by 2025. According to Digital State Minsiter Dorothee Bär (CSU), once the general fear about data use in the German population has been addressed, the applications are endless: movement data from cell phones to prevent traffic jams, digitization curricula in schools, or national registries to track and combat emerging diseases. Want to find out more about these 240 points? Ping us anytime.
*Article is in German, but we gotta back up that claim
Coronavirus Vaccines: Europe First or Good Old European Solidarity?
Last week, we reported that Germany was experiencing some difficulties in vaccine deliveries, and this week all problems went away, and everything is exactly as it should be. Of course, we’re just kidding; the vaccine production and delivery issue spread beyond Germany’s borders and took on a life of its own.
It all began when vaccine producer AstraZeneca announced that vaccine deliveries to the EU would be cut by 60 percent in the first quarter of 2021. That made the British vaccine manufacturer the second company (after BioNTech/Pfizer) to underdeliver on their agreements with the EU. Without a sufficient explanation from the company, EU Leaders like Council President Charles Michel advocated for using “all legal means and enforcement measures at [their] disposal.” And that’s exactly what they did. Despite its constant championing of free trade, on Thursday the EU announced it would impose a mechanism for Member States to block vaccine exports as long as the EU’s purchase orders have not been fulfilled. The EU pharma industry responded to the decision with great concern, stating that supply chains would be undermined globally. EU officials insist this is not a “Europe First” mindset, but rather a question of honoring contractual agreements. If you’d like to weigh in on the issue, feel free to reach out to us; we’d love to hear your take.
Autonomous Driving Should Be Regulated
Our Federal Minister for Transport and Digital Infrastructure Andreas Scheuer (CSU) has a hard life and a fable for autonomous driving (both are not necessarily connected). Autonomous driving is Scheuer’s prestige project and having a law ready for it would actually mean that Germany is a first mover in enabling a transfer from “research to road.” That being said, the situation is difficult as the second version of the draft law was picked to pieces by the Ministry of Justice for legal uncertainties regarding data security. Scheuer is now stepping on the gas so that we don’t have to in the future (send me to hell for that one, but I had to…). He wants this law passed ASAP, and a compromise version between him and the Justice Minister is open for consultation with industry. Time frame: 3 days.
Whether the law will succeed is still unclear. Scheuer needs a victory after he faced some severe setbacks like with the “foreigner road toll,” which was thrown out in the highest EU court. Scheuer’s enthusiasm to pass this law before the Federal Election most likely comes from a desire to leave office with a positive “balance sheet.” And industry would theoretically be on his side but – pardon my language – is now quite pissed because of the short time frame for consultation. This discussion is certainly not over. Even though Scheuer made some mistakes in the last years, no one would hold a victory against him as it is an important topic – which you probably already know as we heard that your new Secretary of Transport Pete Buttigieg is pursuing similar plans.
Huawei, Cybersecurity, and Indirect Bans
It was sometime last year that we reported on German plans for a second IT Security Law, or short “IT-SiG 2.0” (if you plan on founding a dope Hip-Hop Crew with that name, well, go ahead, it will be a banger). The updated law shall govern the way we protect critical infrastructures such as the 5G network. Therefore, the Federal Ministry for the Interior wants to extend the competencies of the “Federal Office for Information Security” (BSI) to implement a “security seal” approving (or disapproving) the security of telecommunication infrastructures. It was a long path to reach a consensus in the governing coalition and of course, criticism isn’t far away.
The law probably will exclude Huawei from our 5G network without naming them directly because of the hurdles it establishes. Furthermore, it designates more competencies to the BSI which might result in a conflict of interest. The BSI is subordinate to the Interior Ministry, which controls domestic intelligence services, which in turn use security flaws in communications networks to surveil, but these flaws are to be closed by the BSI. Does this make any sense to you? Don’t panic if it doesn’t. But if you are doing business in Germany you might be affected by the law as it also regulates industry. Feel free to reach out if you need to know more.
Italy’s Government-Sized Jigsaw Puzzle
In case you missed it, two weeks ago, the Italian government was launched into crisis mode after Matteo Renzi pulled his Italia Viva party out of the governing coalition over a Coronavirus recovery package. Last week, it looked promising for Prime Minister Giuseppe Conte as he survived two confidence votes in parliament. But, it was not meant to be. No workable compromise could be found since then, and he handed his resignation to President Sergio Mattarella on Tuesday.
Where do we go from here? The power now rests with Mattarella, who will hold consultations with party leaders and heads of the parliamentary chambers to find a workable solution. One option would be to form a coalition with alternative parties, and another option could even see Mattarella hand the mandate back to Conte. This option isn’t as out-there as it sounds, as Italians are eager to see an end to this uncertainty, and many politicians still believe Conte is the man for the job. Luigi Di Maio of the 5Stars Party stated on Twitter that “we must all rally around Giuseppe Conte,” and leaders of the Democratic Party believe a pro-European majority, centered around Conte, could be found relatively quickly. There also have been whispers of including Silvio Berlusconi’s center-right Forza Italia party in a new coalition. We’ll keep you posted.
LONG STORY SHORT:
- We Don’t Use That Here… is what the CDU/CSU parliamentary group told their employees in the Bundestag concerning Clubhouse. The hype is big everywhere, however, imagining that employees upload their contacts with the phone numbers of the parliamentarians didn’t seem too cool for the CDU/CSU
- Short-Time Allowance: We made quite some use of the short-time allowance scheme in the pandemic, where the state pays part of workers’ salaries who were sent home because of less work to do. Now, however, it’s clear that in 2020, quite a few companies abused this system. Not cool during a time in which the majority is trying to be as solidaric as possible.
- We Will Be Back: Our Federal Minister for Economic Affairs Peter Altmaier (CDU) said this week in parliament he was confident that economy will continue to go upwards. According to him, we will be back at pre-crisis level in 2022. It seems as if some silver linings are visible. We wouldn’t mind.
WHAT’S ON OUR MINDS
Stop the Game
The stock market discriminates against me – when there is real movement and I want to trade, “traders” are always too late to offer little unworthy me an acceptable price. I accepted I’d never be one of those lucky hunters who charges their portfolio in time for bulls or bears to be baited into roaring. Instead, the “traders” take my money and leave me out of the game, like
I’ve been a fool in stock trading for a lifetime, but now I’m not the only one who doesn’t get it anymore.
→ Stocks up!
Biden’s elected President but no majority on the hill: “That means no big regulatory change!”
→ Stocks still up
As countless examples have shown us: clueless puppies reading off charts would bring us as much understanding about the inner workings of the stock market as analysts on air do. At least the puppies can accurately represent my face when I lose money without understanding why.
As Elizabeth Warren put it “Hedge funds […] treated the stock market like their own personal casino while everyone else pays the price.” Now, as so many Millennials and Gen Zers detest hedge funds for “creating a house-of-cards financial system that led to the 2008 crisis” (CNN), the game might actually change: GameStop’s share price was handed a death sentence by shortsellers and hedge funds, but the masses went toe-to-toe with these hedge funds, causing GameStop stock to soar. Even if I don’t get how they did it, it feels good that SOMETHING happened because I’m tired of fetching the same old stick for the same old system.
GameStop, what an iconic name at this potential turning point in history; the whole game could be changing. And you know what, this might be the bursting of another bubble and an equally costly fight for me: But at least I would have more fun, so I wouldn’t mind seeing more of this kind of action.