BERLIN — It was exactly five years ago that Edward Snowden’s disclosures regarding U.S. surveillance activities revealed the full furor about privacy concerns in Germany. The German outcry then over the risks of data collection has since translated into Europe’s bar-setting Internet regulations. Germany and the EU have been first-movers when it comes to shaping the rules that govern the Internet. They have had the foresight to start a debate on the pitfalls of technology’s intersection with society, but should also not neglect how a strong tech agenda can empower the bloc. Berlin could play an important role, Chancellor Merkel recently commented on the need for a stronger EU by way of cooperation on defense and migration as well as budgetary spending to boost innovation.
Over the last five years, German policymakers and their counterparts in Brussels have been zealous to mitigate moral hazard on the Internet. Recent examples of success have been Germany’s NetzDG law, which fines companies for not eradicating hate speech on their platforms or the EU’s groundbreaking General Data Protection Regulation (GDPR) that requires organizations to make EU residents aware of how they handle their data. There is a list of problems beleaguering the EU, ranging from populism to credit worthiness, which have strained relations among member countries. Germany has often taken the heat for its inaction or its seeming intention to instil Prussian mores across the continent. Just as Germany influenced the digital regulatory framework in Europe, it can also take action to establish the required conditions for Europe to emerge as a competitive tech player.
Policymakers in Germany often talk about a digital agenda for their country. In the run-up to Germany’s election last September, all campaigned on having the export-oriented country ready itself for digital transformation. It often rang hollow since the last Grand Coalition government had also pledged to make headway on areas like broadband access. The repeat Grand Coalition should not wait too long to embark on its plans, and should prioritize topics laid out in its agreement that can have spillover effects within the EU as it moves forward in its quest for a digital single market.
Entrepreneurs from Israel, Eastern Europe, and the United States have decamped to Germany’s capital to set-up shop in the hopes of producing a unicorn venture on the continent. Berlin is not the only city that boasts a strong startup ecosystem; Hamburg and Munich are also considered hubs. Germany itself ranks fifth among approximately 200 countries based on the strength and density of the startup scene. For this sector to thrive and become a permanent segment of the larger economy, the German government should follow through on its aims to cultivate a startup friendly environment by decreasing bureaucratic burdens, amending bankruptcy laws to promote risk taking, and unlocking public financing. These mechanisms are also taking root on a European level, and the current German government intends to compose a definition of a startup within the EU so that support measures can be applied in a comprehensive manner that will allow for scalability.
Artificial Intelligence and the Backdrop of Privacy
Given the magnitude of investment and large data repositories, the United States and China are in the lead when it comes to harnessing artificial intelligence (AI), and Europe’s more limited access to data puts it at a significant disadvantage. But when pooled together and if a coordinated strategy can be realized, Europe can hold its own in the field of AI. According to a Roland Berger study, EU countries, taking into consideration Brexit, corner approximately 15 percent of the AI-related market. The German government’s coalition agreement calls for a joint AI center with France in addition to positioning the country as an international leader in AI research. This complements the EU’s Declaration of Cooperation on AI and provides a motor for more innovation. Chancellor Merkel is also keen to leverage EU investment funds to kick-start AI and other R&D in EU member states that need to catch up on a structural level when it comes to technology. If Germany and Europe consult the private sector on legal frameworks involving some privacy checks, a backlash against AI could be avoided down the road.
Finally, before Germany pushes on any EU tech matters, the country needs to put money where its mouth is and invest in broadband. The same coalition partners in the last legislative period promised high speed connections, but at least a quarter of Internet users are still working with less than 50 Mbps and copper wires are still the norm. Germany ranks below the EU average when it comes to broadband access. This coalition government cannot afford to kick the can down the road. Like in other areas where German leadership in the EU is desired, such as on military initiatives or eurozone strengthening, genuine progress will be nearly impossible if Germany only pays lip service to having a digital strategy.