German Chancellor Olaf Scholz was asked at the cabinet meeting in Meseberg whether Ursula von der Leyen had his support for a second term in office. The Commission President was standing right next to him. She reportedly has not yet decided whether she wants to do the back-breaking job for another five years. But she may well have taken the Chancellor’s words as encouragement to throw her hat into the ring for the post of top candidate in the Christian Democratic party family EPP: “I think,” Scholz said with regard to the EPP, “they’re sticking to the top candidate principle,” he said with his mischievous Scholz smile.
Very specific was von der Leyen toward the German cabinet: She presented what measures Brussels has up its sleeve to keep clean-tech industries in Europe and boost the competitiveness of European businesses. For my analysis, I was able to take a look at the draft of the Net-Zero Industry Act, which the Commission plans to adopt in mid-March.
For his analysis on the reform of the EU debt rules, Christoph Roche has obtained a preliminary draft of the conclusions of the meeting of finance ministers. His verdict: The ministers will not continue the debate before the regular EU summit in late March. But the dispute is likely to flare up again when the Commission presents its proposal after the summit.
Commissioner Ylva Johansson wants online and telecommunications service providers to screen their content for depictions of child sexual abuse. In his analysis, Falk Steiner describes how opinions on the CSA proposal are forming in the European Parliament and that criticism of the plans is also coming from unexpected sides.
At the closed meeting in Meseberg, Commission President Ursula von der Leyen presented measures to the German cabinet with which the Commission intends to strengthen industry competitiveness in key technologies of the Green Deal. “It’s about defending the leading position of European companies in the clean-tech sector also in the face of massive US tax breaks through the IRA.” He said that in the case of cars, access to the US market for European manufacturers has already been successfully secured. “For batteries and other components, we still have to work on a solution,” von der Leyen said at a press conference with Olaf Scholz.
Scholz had earlier met with US President Joe Biden. On the sidelines of Scholz’s meeting with Biden, there was talk that an agreement between the EU and the US in the dispute over subsidies under the Inflation Reduction Act (IRA) was close. Officials from the US government and the EU Commission are reportedly working on an agreement that would qualify European battery minerals for tax credits in the US. The deal could be announced as early as Friday when Commission President Ursula von der Leyen visits the White House.
The Commission President also announced a larger package for competitiveness, which the Commission will present in the form of a communication in mid-March. The aim is also to remove hurdles in the single market, strengthen the industrial base and address the shortage of skilled labor. She also referred to trade agreements with Australia, Mexico and Mercosur, which the Commission still wants to conclude by the end of the mandate.
As part of the package, the Commission plans to unveil the Net-Zero Industry Act on March 14. According to a draft of the Net Zero Industry Act our partners at Contexte have received, the Commission wants to promote the ramp-up of strategic future technologies that will secure the EU’s net zero targets for 2050. The relevant technologies are:
The Commission sets targets for the expansion of strategic net zero technologies by 2030. By then, production capacities in the EU should be able to cover at least 40 percent of the annual demand for the necessary technologies to meet the goals of the Green Deal and REPower EU. The overarching target is to be binding, while the concrete production targets for individual sectors are only indicative. The minimum targets, measured against the annual demand in the EU, are:
In order to support the ramp-up of the technologies, the approval procedures are to be accelerated. To this end, criteria for so-called net zero resilience projects are being established. These contribute significantly to achieving the net-zero target. The maximum duration of approval procedures are:
Three months after the act comes into force, there are to be so-called one-stop shops in each member state where investors can obtain all approvals. The Commission wants to create funding opportunities through the Innovation Fund and InvestEU.
The EU states have agreed on draft conclusions on the reform of European debt rules at the technical level, i.e. in the Economic and Financial Committee. The Swedish Presidency plans to present the conclusions, which are available to Table.Media, to the ministers of finance at their meeting on 14 March. EU circles do not expect any further controversy at the meeting. The conclusions should reflect the views of all participants.
However, this does not put an end to the disagreements over the reorientation of the Stability and Growth Pact, especially between the EU Commission and Berlin. Rather, the dispute has merely been postponed and is likely to flare up once the Commission presents its legislative proposals for debt rule reform after the regular EU summit in March. At the last meeting of the ministers of finance in February, it became clear that positions are far apart, especially between Brussels and Berlin.
In the conclusions, all member states now fundamentally support the Commission’s push to streamline the regulatory framework and make national responsibility an essential element of economic governance. They also agree to switch to multi-annual financial planning. They also agree to take into account Member States’ initial budgetary positions and projections as well as economic characteristics in differentiated budgetary paths.
What is positive for Germany in the paper is that the annual monitoring cycle within the framework of the European Semester is to be maintained. In addition, the multilateral approach will be preserved; equal treatment, transparency and calculability are important, the paper says.
Specifically, the member states are to submit national medium-term fiscal structural plans after the new debt rules have been passed. These are to include fiscal policy, reforms and investments. The basis for the national budgetary policy path is to be a single operational indicator: net primary expenditure. The national expenditure path is then to be coordinated with the Commission in accordance with the EU authority’s budgetary expectations.
The aim is to achieve a sufficiently declining debt ratio among member states to ensure the sustainability of public finances. But at the same time, reforms and public investment are to be promoted.
In favor of the German position is the fact that for this purpose common safeguards are still to be explored to ensure sufficient debt reduction and to prevent a postponement of the budgetary effort to a later date. Furthermore, the Commission’s budgetary targets “should be based on a common methodology to be agreed that is replicable, predictable and transparent, and should include an analysis of public debt challenges”, the document says.
Furthermore, the national consolidation paths are to be “subject to multilateral scrutiny and endorsement by the Council”. The states do not give any concrete information on the duration of the medium-term budget plans. The Commission had proposed four years and held out the prospect of a potential extension to seven years.
The plans will be extended for those who reform and invest. The Council also supports this. What is meant are reforms and investments “that enhance growth-prospects or resilience, strengthen public finances and thereby their long-term sustainability, and address EU strategic priorities, including public investment challenges for the green and digital transition and the build-up of defense capabilities”. This explicitly takes defense spending into account.
The states also agree to intervene in the event of excessive new debt of a member state. The excessive deficit procedure based on a breach of the 3 percent deficit criterion is to remain unchanged, including the assessment of the relevant factors. Furthermore, procedures are to be initiated for states with excessive debt if they deviate from their target path. To this end, sanctions should also be made more effective: “The initial monetary amount of financial sanctions should be reduced to allow for a more realistic application.”
Furthermore, member states emphasize that the existing macroeconomic imbalances procedure “remains central to the detection, prevention and correction” of imbalances. The procedure should be further developed “to strengthen the dimension of the procedure for the euro area.” Due to German pressure, the explicit demand for further clarifications has likely been added to the text, including the definition of the Commission’s target trajectory, on the definition of the expenditure aggregate as well as on the formulation of common quantitative benchmarks in support of the new debt rules.
In addition, the principles for an extension of the fiscal path, the role of country-specific recommendations, the enforcement of national plans and incentives for reforms and investments would have to be made more concrete. The missing information on the methodology in key areas of the reform on the part of the Commission had been repeatedly criticized by German Finance Minister Christian Lindner recently. The Commission is now called upon by the Member States to present its legislative package for the reform of the Stability and Growth Pact based on these conclusions. The Brussels authority plans to present it by the summer break at the latest. With Till Hoppe
The European Parliament is getting ready for discussion: The deadline for amendment proposals in the IMCO Committee to the report of the Maltese Social Democrat Alex Agius Saliba ends tomorrow, Tuesday. The rapporteur for the Internal Market Committee presented his draft for discussion on 8 February.
The report by Agius Saliba contains several proposed amendments, among others to the scope of the regulation’s targets. For example, only “relevant services of the information society” should be subject to these requirements. Agius Saliba also wants to scrap the age verification requirements of the Johansson proposal. His Amendment 17a, on the other hand, explicitly rejects interventions in IT security and effective encryption. However, the proposed report does not contain a fundamental rejection of obligating providers to monitor user content. But Agius Saliba intends to define them more narrowly.
After disputes over competencies were settled in early February, the LIBE Committee remains the leading committee in the European Parliament. However, the Internal Market Committee is also involved with large parts of the dossier. The Committee on Women’s Rights and Gender Equality FEMM, the Committee on Culture and Education CULT and the Committee on Budgets BUDG are commenting on certain aspects of the project.
On 14 April 2023, the rapporteur of the lead LIBE Committee, Javier Zarzalejos (EPP), will also present his report. The Spanish Christian Democrat is then likely to debate mainly with German LIBE members.
Because they have largely rejected Johansson’s initiative from the beginning. “Beyond Germany and Austria, there is almost no critical public debate,” complains Pirate MEP Patrick Breyer (Greens/EFA Group). The FDP MEP Moritz Körnernevertheless expects an intensive debate: “I expect that great pressure will be exerted to try and quickly conclude the negotiations and reach a result before the European elections”. But how quickly a result can be achieved also depends on the member states.
Negotiating circles say that the Spanish Council Presidency wants to urgently reach a result. Spain takes over from Sweden on 1 July. Meanwhile, the German government in Berlin is still struggling to find a common position. After initial enthusiasm of the Social Democratic Interior Minister Nancy Faeser (SPD) for the initiative of her EU colleague, and disputes between the SPD-led Interior and the FDP-led justice and digital ministries, a common position is now being sought.
The procedure called client-side scanning does not seem to be an option for the federal government. This would oblige providers of communication services to screen users’ devices even before transmission encryption. “In the view of the Federal Government, the design of the draft regulation in this area raises considerable concerns. This particularly concerns the end-to-end protection of encrypted communication,” reads a text from the German Federal Ministry of the Interior (BMI). According to ministry circles, the positioning proposal is still under discussion.
And this may well be necessary: The BMI proposal still lacks any specifics regarding automated content control on servers. Should, for example, image recognition procedures on platforms and at hosters try to recognize possible new depictions of sexual child abuse? Should the search for already identified content of this kind become mandatory for providers? Neither is clearly answered in the BMI paper.
At an expert hearing by the Digital Committee on the EU project in the German Bundestag last week, the experts did not hold back with criticism.
Apart from many expectedly negative positions – among other things, due to concerns about IT security and fundamental rights – Markus Hartmann, Senior Public Prosecutor, has now also voiced criticism. “In its accentuation, the Commission distances itself considerably from the reality of prosecution practice, at least with regard to end-to-end encrypted communication,” said Markus Hartmann, head of the Central and Contact Point Cybercrime North Rhine-Westphalia, the Commission and especially the DG Home in his written statement.
Their main obstacle is not a lack of undetected crimes due to encryption, crime-relevant platforms or specific offense-specific distribution channels. “Rather, there is a structural lack of action due to insufficient technical and staffing resources in the law enforcement agencies“.
A lack of resources is not specific to his agency but is “a fundamental problem” both nationally and internationally. From the crime-fighting perspective, the Commission’s proposal would also have massive side effects: In particular, client-side scanning and the associated encryption circumvention would introduce “a predetermined breaking point for encryption technology, the risk and abuse potentials of which are evident”. Translated: What can be good for fighting crime can also be good for criminals.
Pirate MP Breyer, who previously worked as a judge, fears that the CSA regulation would be passed with exemptions for surveillance on end-user devices. “Everyone is for child protection. Some are willing to introduce total surveillance of all communication devices for this, others see it as disproportionate,” says FDP MP Körner, summarizing the debate on the Johansson regulation. In light of the problems with the regulation, he demands, “The fastest way to close the dossier would be for the EU Commission to withdraw its proposal. Otherwise, the European Court of Justice will have to overturn the finished law after the fact.”
Handing over your own data to your competitor? What sounds like a socialist utopia or a digital dystopia will soon become a regulatory reality in the EU. All data generated through the use of networked products, such as cars, smart consumer electronics or household appliances, will soon have to be made accessible.
The Commission wants to require manufacturers of networked products and providers of connected services to share data. What does that mean in practice? As a manufacturer, you must provide your data to business partners and customers, as well as to third-party companies commissioned by them. Through this regulatory intervention, the EU wants to advance the European data economy and digital competition by facilitating the exchange and use of this data. Incidentally, this also applies to non-EU companies that sell their networked products in the EU – such as voice assistants or smartwatches. Thus, for the first time, these providers will be legally obligated to provide comprehensive transparency of the data generated by their products.
What does this mean for a company that wants to be compliant in the future? You must provide data in a structured and readable form. Your product and its use will thus become transparent, even for your competitors, and you will no longer have sole and exclusive control over “your” data. This loss of control may initially sound ominous to many companies. In fact, however, it also offers enormous opportunities for new business areas and innovative business strategies. To illustrate this, consider an example from the household appliance industry:
Manufacturer A, our “passive subject“, decides to generate as little data as possible (e.g. operating hours) due to the Data Act, in order to give competitors as little insight as possible into its product, design and properties. Manufacturer B, our “innovative designer“, on the other hand, now collects even more detailed operating data and makes it available in accordance with the Data Act.
It is not difficult to guess which of the two manufacturers will be more attractive to customers, sales and service partners, and even its own development department in a future data economy. Not the one that retreats into its digital shell, but the one that openly offers itself for data partnerships. Here are just a few possible advantages and new business fields for manufacturers and their trading partners:
The digitization process will give rise to new ecosystems involving hybrid forms of data competition and data cooperation. The Data Act is accelerating this development. Rhetorical question: What role do you want to play in this new environment – the one of a passive tag-along as a mere data supplier, the active shaper, or perhaps even a strategic investor who becomes a key player in data-based ecosystems? The intuitive reaction to the Data Act is therefore fundamentally wrong: Instead of being stingy with data, it is much better to use the opportunities of the Data Act head-on.
German Chancellor Olaf Scholz was asked at the cabinet meeting in Meseberg whether Ursula von der Leyen had his support for a second term in office. The Commission President was standing right next to him. She reportedly has not yet decided whether she wants to do the back-breaking job for another five years. But she may well have taken the Chancellor’s words as encouragement to throw her hat into the ring for the post of top candidate in the Christian Democratic party family EPP: “I think,” Scholz said with regard to the EPP, “they’re sticking to the top candidate principle,” he said with his mischievous Scholz smile.
Very specific was von der Leyen toward the German cabinet: She presented what measures Brussels has up its sleeve to keep clean-tech industries in Europe and boost the competitiveness of European businesses. For my analysis, I was able to take a look at the draft of the Net-Zero Industry Act, which the Commission plans to adopt in mid-March.
For his analysis on the reform of the EU debt rules, Christoph Roche has obtained a preliminary draft of the conclusions of the meeting of finance ministers. His verdict: The ministers will not continue the debate before the regular EU summit in late March. But the dispute is likely to flare up again when the Commission presents its proposal after the summit.
Commissioner Ylva Johansson wants online and telecommunications service providers to screen their content for depictions of child sexual abuse. In his analysis, Falk Steiner describes how opinions on the CSA proposal are forming in the European Parliament and that criticism of the plans is also coming from unexpected sides.
At the closed meeting in Meseberg, Commission President Ursula von der Leyen presented measures to the German cabinet with which the Commission intends to strengthen industry competitiveness in key technologies of the Green Deal. “It’s about defending the leading position of European companies in the clean-tech sector also in the face of massive US tax breaks through the IRA.” He said that in the case of cars, access to the US market for European manufacturers has already been successfully secured. “For batteries and other components, we still have to work on a solution,” von der Leyen said at a press conference with Olaf Scholz.
Scholz had earlier met with US President Joe Biden. On the sidelines of Scholz’s meeting with Biden, there was talk that an agreement between the EU and the US in the dispute over subsidies under the Inflation Reduction Act (IRA) was close. Officials from the US government and the EU Commission are reportedly working on an agreement that would qualify European battery minerals for tax credits in the US. The deal could be announced as early as Friday when Commission President Ursula von der Leyen visits the White House.
The Commission President also announced a larger package for competitiveness, which the Commission will present in the form of a communication in mid-March. The aim is also to remove hurdles in the single market, strengthen the industrial base and address the shortage of skilled labor. She also referred to trade agreements with Australia, Mexico and Mercosur, which the Commission still wants to conclude by the end of the mandate.
As part of the package, the Commission plans to unveil the Net-Zero Industry Act on March 14. According to a draft of the Net Zero Industry Act our partners at Contexte have received, the Commission wants to promote the ramp-up of strategic future technologies that will secure the EU’s net zero targets for 2050. The relevant technologies are:
The Commission sets targets for the expansion of strategic net zero technologies by 2030. By then, production capacities in the EU should be able to cover at least 40 percent of the annual demand for the necessary technologies to meet the goals of the Green Deal and REPower EU. The overarching target is to be binding, while the concrete production targets for individual sectors are only indicative. The minimum targets, measured against the annual demand in the EU, are:
In order to support the ramp-up of the technologies, the approval procedures are to be accelerated. To this end, criteria for so-called net zero resilience projects are being established. These contribute significantly to achieving the net-zero target. The maximum duration of approval procedures are:
Three months after the act comes into force, there are to be so-called one-stop shops in each member state where investors can obtain all approvals. The Commission wants to create funding opportunities through the Innovation Fund and InvestEU.
The EU states have agreed on draft conclusions on the reform of European debt rules at the technical level, i.e. in the Economic and Financial Committee. The Swedish Presidency plans to present the conclusions, which are available to Table.Media, to the ministers of finance at their meeting on 14 March. EU circles do not expect any further controversy at the meeting. The conclusions should reflect the views of all participants.
However, this does not put an end to the disagreements over the reorientation of the Stability and Growth Pact, especially between the EU Commission and Berlin. Rather, the dispute has merely been postponed and is likely to flare up once the Commission presents its legislative proposals for debt rule reform after the regular EU summit in March. At the last meeting of the ministers of finance in February, it became clear that positions are far apart, especially between Brussels and Berlin.
In the conclusions, all member states now fundamentally support the Commission’s push to streamline the regulatory framework and make national responsibility an essential element of economic governance. They also agree to switch to multi-annual financial planning. They also agree to take into account Member States’ initial budgetary positions and projections as well as economic characteristics in differentiated budgetary paths.
What is positive for Germany in the paper is that the annual monitoring cycle within the framework of the European Semester is to be maintained. In addition, the multilateral approach will be preserved; equal treatment, transparency and calculability are important, the paper says.
Specifically, the member states are to submit national medium-term fiscal structural plans after the new debt rules have been passed. These are to include fiscal policy, reforms and investments. The basis for the national budgetary policy path is to be a single operational indicator: net primary expenditure. The national expenditure path is then to be coordinated with the Commission in accordance with the EU authority’s budgetary expectations.
The aim is to achieve a sufficiently declining debt ratio among member states to ensure the sustainability of public finances. But at the same time, reforms and public investment are to be promoted.
In favor of the German position is the fact that for this purpose common safeguards are still to be explored to ensure sufficient debt reduction and to prevent a postponement of the budgetary effort to a later date. Furthermore, the Commission’s budgetary targets “should be based on a common methodology to be agreed that is replicable, predictable and transparent, and should include an analysis of public debt challenges”, the document says.
Furthermore, the national consolidation paths are to be “subject to multilateral scrutiny and endorsement by the Council”. The states do not give any concrete information on the duration of the medium-term budget plans. The Commission had proposed four years and held out the prospect of a potential extension to seven years.
The plans will be extended for those who reform and invest. The Council also supports this. What is meant are reforms and investments “that enhance growth-prospects or resilience, strengthen public finances and thereby their long-term sustainability, and address EU strategic priorities, including public investment challenges for the green and digital transition and the build-up of defense capabilities”. This explicitly takes defense spending into account.
The states also agree to intervene in the event of excessive new debt of a member state. The excessive deficit procedure based on a breach of the 3 percent deficit criterion is to remain unchanged, including the assessment of the relevant factors. Furthermore, procedures are to be initiated for states with excessive debt if they deviate from their target path. To this end, sanctions should also be made more effective: “The initial monetary amount of financial sanctions should be reduced to allow for a more realistic application.”
Furthermore, member states emphasize that the existing macroeconomic imbalances procedure “remains central to the detection, prevention and correction” of imbalances. The procedure should be further developed “to strengthen the dimension of the procedure for the euro area.” Due to German pressure, the explicit demand for further clarifications has likely been added to the text, including the definition of the Commission’s target trajectory, on the definition of the expenditure aggregate as well as on the formulation of common quantitative benchmarks in support of the new debt rules.
In addition, the principles for an extension of the fiscal path, the role of country-specific recommendations, the enforcement of national plans and incentives for reforms and investments would have to be made more concrete. The missing information on the methodology in key areas of the reform on the part of the Commission had been repeatedly criticized by German Finance Minister Christian Lindner recently. The Commission is now called upon by the Member States to present its legislative package for the reform of the Stability and Growth Pact based on these conclusions. The Brussels authority plans to present it by the summer break at the latest. With Till Hoppe
The European Parliament is getting ready for discussion: The deadline for amendment proposals in the IMCO Committee to the report of the Maltese Social Democrat Alex Agius Saliba ends tomorrow, Tuesday. The rapporteur for the Internal Market Committee presented his draft for discussion on 8 February.
The report by Agius Saliba contains several proposed amendments, among others to the scope of the regulation’s targets. For example, only “relevant services of the information society” should be subject to these requirements. Agius Saliba also wants to scrap the age verification requirements of the Johansson proposal. His Amendment 17a, on the other hand, explicitly rejects interventions in IT security and effective encryption. However, the proposed report does not contain a fundamental rejection of obligating providers to monitor user content. But Agius Saliba intends to define them more narrowly.
After disputes over competencies were settled in early February, the LIBE Committee remains the leading committee in the European Parliament. However, the Internal Market Committee is also involved with large parts of the dossier. The Committee on Women’s Rights and Gender Equality FEMM, the Committee on Culture and Education CULT and the Committee on Budgets BUDG are commenting on certain aspects of the project.
On 14 April 2023, the rapporteur of the lead LIBE Committee, Javier Zarzalejos (EPP), will also present his report. The Spanish Christian Democrat is then likely to debate mainly with German LIBE members.
Because they have largely rejected Johansson’s initiative from the beginning. “Beyond Germany and Austria, there is almost no critical public debate,” complains Pirate MEP Patrick Breyer (Greens/EFA Group). The FDP MEP Moritz Körnernevertheless expects an intensive debate: “I expect that great pressure will be exerted to try and quickly conclude the negotiations and reach a result before the European elections”. But how quickly a result can be achieved also depends on the member states.
Negotiating circles say that the Spanish Council Presidency wants to urgently reach a result. Spain takes over from Sweden on 1 July. Meanwhile, the German government in Berlin is still struggling to find a common position. After initial enthusiasm of the Social Democratic Interior Minister Nancy Faeser (SPD) for the initiative of her EU colleague, and disputes between the SPD-led Interior and the FDP-led justice and digital ministries, a common position is now being sought.
The procedure called client-side scanning does not seem to be an option for the federal government. This would oblige providers of communication services to screen users’ devices even before transmission encryption. “In the view of the Federal Government, the design of the draft regulation in this area raises considerable concerns. This particularly concerns the end-to-end protection of encrypted communication,” reads a text from the German Federal Ministry of the Interior (BMI). According to ministry circles, the positioning proposal is still under discussion.
And this may well be necessary: The BMI proposal still lacks any specifics regarding automated content control on servers. Should, for example, image recognition procedures on platforms and at hosters try to recognize possible new depictions of sexual child abuse? Should the search for already identified content of this kind become mandatory for providers? Neither is clearly answered in the BMI paper.
At an expert hearing by the Digital Committee on the EU project in the German Bundestag last week, the experts did not hold back with criticism.
Apart from many expectedly negative positions – among other things, due to concerns about IT security and fundamental rights – Markus Hartmann, Senior Public Prosecutor, has now also voiced criticism. “In its accentuation, the Commission distances itself considerably from the reality of prosecution practice, at least with regard to end-to-end encrypted communication,” said Markus Hartmann, head of the Central and Contact Point Cybercrime North Rhine-Westphalia, the Commission and especially the DG Home in his written statement.
Their main obstacle is not a lack of undetected crimes due to encryption, crime-relevant platforms or specific offense-specific distribution channels. “Rather, there is a structural lack of action due to insufficient technical and staffing resources in the law enforcement agencies“.
A lack of resources is not specific to his agency but is “a fundamental problem” both nationally and internationally. From the crime-fighting perspective, the Commission’s proposal would also have massive side effects: In particular, client-side scanning and the associated encryption circumvention would introduce “a predetermined breaking point for encryption technology, the risk and abuse potentials of which are evident”. Translated: What can be good for fighting crime can also be good for criminals.
Pirate MP Breyer, who previously worked as a judge, fears that the CSA regulation would be passed with exemptions for surveillance on end-user devices. “Everyone is for child protection. Some are willing to introduce total surveillance of all communication devices for this, others see it as disproportionate,” says FDP MP Körner, summarizing the debate on the Johansson regulation. In light of the problems with the regulation, he demands, “The fastest way to close the dossier would be for the EU Commission to withdraw its proposal. Otherwise, the European Court of Justice will have to overturn the finished law after the fact.”
Handing over your own data to your competitor? What sounds like a socialist utopia or a digital dystopia will soon become a regulatory reality in the EU. All data generated through the use of networked products, such as cars, smart consumer electronics or household appliances, will soon have to be made accessible.
The Commission wants to require manufacturers of networked products and providers of connected services to share data. What does that mean in practice? As a manufacturer, you must provide your data to business partners and customers, as well as to third-party companies commissioned by them. Through this regulatory intervention, the EU wants to advance the European data economy and digital competition by facilitating the exchange and use of this data. Incidentally, this also applies to non-EU companies that sell their networked products in the EU – such as voice assistants or smartwatches. Thus, for the first time, these providers will be legally obligated to provide comprehensive transparency of the data generated by their products.
What does this mean for a company that wants to be compliant in the future? You must provide data in a structured and readable form. Your product and its use will thus become transparent, even for your competitors, and you will no longer have sole and exclusive control over “your” data. This loss of control may initially sound ominous to many companies. In fact, however, it also offers enormous opportunities for new business areas and innovative business strategies. To illustrate this, consider an example from the household appliance industry:
Manufacturer A, our “passive subject“, decides to generate as little data as possible (e.g. operating hours) due to the Data Act, in order to give competitors as little insight as possible into its product, design and properties. Manufacturer B, our “innovative designer“, on the other hand, now collects even more detailed operating data and makes it available in accordance with the Data Act.
It is not difficult to guess which of the two manufacturers will be more attractive to customers, sales and service partners, and even its own development department in a future data economy. Not the one that retreats into its digital shell, but the one that openly offers itself for data partnerships. Here are just a few possible advantages and new business fields for manufacturers and their trading partners:
The digitization process will give rise to new ecosystems involving hybrid forms of data competition and data cooperation. The Data Act is accelerating this development. Rhetorical question: What role do you want to play in this new environment – the one of a passive tag-along as a mere data supplier, the active shaper, or perhaps even a strategic investor who becomes a key player in data-based ecosystems? The intuitive reaction to the Data Act is therefore fundamentally wrong: Instead of being stingy with data, it is much better to use the opportunities of the Data Act head-on.
