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Sword, Shield and Social Media: Europe’s Digital Dilemma

How do you fix something which is broken, possibly beyond repair? Something which is widely used, but seldom fully understood? You can see the situation deteriorating on a daily basis, and you realise that even your best repair efforts might be futile – they may even backfire. Welcome to Europe’s digital dilemma.

Dimitar Lilkov

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Digital diagnosis: depressing?

The European Union knows there is a problem in the digital realm. European member states were the first to set up comprehensive rules about digital privacy in an attempt to prevent widespread online chaos and increased misuse of personal data. Does the Facebook/Cambridge Analytica data scandal ring a bell?

You might not care about data protection or browser cookies – okay, that’s up to you. But you should be aware that your digital footprint can be used to predict highly sensitive personal attributes such as sexual orientation, political views, overall intelligence or susceptibility to drug use. Silicon Valley digital giants have enabled consumer manipulation, election interference and mass disinformation campaigns on their services – infiltrating your search results, your Facebook news feed, even your Instagram profile. After an 18-month investigation, a parliamentary committee went so far as to compare Facebook and its executives to ‘digital gangsters’ in the online world, alluding to their conscious disregard for privacy and competition law.  

If you think the allegations against Big Tech businesses and coordinated EU attack against US companies are exaggerated, think again. The UK Competition and Markets Authority recognises that the advertising market is completely dominated by Facebook and Google, making the majority of online businesses and news publishers dependent on these two digital behemoths. Even worse, the core model of electronic advertisement is built around the illegal exploitation of intimate personal data in order to show users ads that are most appealing to them. We are talking about billions of daily micro-auctions which obtain your personal details every time you visit a website, exploiting consumer psychology methods to engage potential customers. Most people have no idea if this data is safely stored or sold to secret third party buyers.

Even US authorities are struggling to repair some of the damage already dealt. The recent investigation by the US House of Representatives Subcommittee on Antitrust paints a bleak picture –  Apple, Amazon, Facebook and Google are digital monopolies which function as gatekeepers to the entire online economy. The American Department of Justice has just started proceedings against Google for the exploitation of its dominant position and its unfair practices which kill off potential competition. 

Enough about reports and investigations; just take a look around yourself.

You are most likely using an Android (Google) or iOS (Apple) operational system on your smartphone, your social media channel and messenger platform of choice are probably managed by Facebook (WhatsApp and Insta are owned by them too) and your search engine is set to Google, perhaps even by default. Add in the likes of Amazon and their related services and it becomes apparent that four American platforms are completely dominating the online market.

Nobody can blame users for relying on these services or products – they are useful, popular and efficient and many truly benefit from them. The problem is that in their current state they represent monopolies which own the online playing field, buying up or directly killing competition as they see fit. If drastic action isn’t taken a handful of private companies will likely hold sway over the online communications and information industries in the upcoming decade and beyond.

Add in the challenge coming from the East and you’ll see how the EU is becoming more and more pressured on the digital front. China’s ruling Communist Party is pursuing an aggressive agenda which aims to move the country closer to technological self-sufficiency and maximise the penetration of its technological giants on the global stage. The majority of these companies have been nurtured by generous public subsidies, benefited from intellectual property theft and successfully shielded from international competition. Chinese surveillance technology has reached more than 80 countries in Asia, Africa and the EU. The digital authoritarianism of China’s oppressive government is well under way, and increasing in appeal internationally. The digital dilemma may well extend beyond European shores.

The current predicament is partly the fault of the EU. Europe was the home of some of the leaders of information and communications technology in the late 20th century which now find themselves sidelined. If you look at the top digital companies globally you’ll find only American or Chinese names on the top list. From Apple to Baidu, you won’t see a European business in the frontrunners. What’s more, the US and China are poised to dominate key sectors such as Fintech, Artificial intelligence (AI) and biotechnology. Innovation funding, venture capital and retaining human talent are ever-growing concerns across the EU. Europe’s Digital Single Market provides much promise but remains incomplete, as businesses and entrepreneurs across the continent struggle to overcome national legislation, market or language barriers. In the long run, this means less employment opportunities for Europeans in cutting-edge tech companies, a smaller chance for businesses to truly scale across the continent and an ever-growing individual dependence on third country digital products and services.

Europe has offense and defense, but it needs a new game plan

In the last decade or so, the EU has tried to emphasise that enough is enough. The digital dilemma merited active intervention. Brussels has relied on two parallel tactics to this end – strategic offense and active defense. The sword comes in the form of novel legislation such as the now-famous General Data Protection Regulation (GDPR) which came into force in 2018, as well as upcoming proposals for specific regulation of Artificial Intelligence and new rules outlining the responsibilities of digital companies (the Digital Services Act).  These new frameworks aim to update outdated legal provisions in fields such as privacy, consumer rights and e-commerce. In a nutshell, the EU is trying to lead the global push for adaptable, modern and digital-ready legislation.

The EU’s active defense has involved applying existing rigorous competition rules to Big Tech companies taking advantage of their dominant online position. The European Commission has led several landmark antitrust investigations against Google for abusive practices in online advertising, manipulation of search results, as well as unlawful actions to maintain the dominant position of the Android operating system. As a result, the search engine company has been fined more than €8 billion (!) in cumulative charges.

In 2020, antitrust proceedings have been launched against Apple regarding its App Store rules, which might breach EU competition law. Facebook hasn’t been spared either – the social media company was fined by the European executive for providing misleading information about the acquisition of the WhatsApp messaging platform in 2014.1In 2017 the European Commission fined Facebook more than 100 million euros because the social media company falsely informed the Commission that it would be unable to establish reliable automated matching between Facebook users’ accounts and WhatsApp users’ accounts. The European Commission found that there was a pre-existing technical possibility of automatically matching Facebook and WhatsApp users’ identities even before the merger of the two companies took place.

Unfortunately, both Europe’s sword and shield have cracks. Successful competition investigations make headlines for a day or two, but long-term effects are less discernible. The punitive fines are a slap on the wrist compared to the companies’ annual profits.

True, the aim of these cases is to correct the unlawful behaviour but by the time the situation is remedied, half a dozen news concerns have arisen due to the market dominance, information asymmetry, and access to user data Big Tech companies enjoy. It is almost impossible to restore competition to an online environment that has already ‘tipped’ under the control of a few technological companies. Addressing such complex issues with rules drafted in a time when pagers were considered revolutionary is a difficult task.

There are concerns with Europe’s legislative offensive, as well. New rules, such as the GDPR, take substantial time to be negotiated between the member states while suffering from a barrage of lobbying efforts – the draft of the EU’s privacy regulation received almost 4000 amendments in the European Parliament. The result, of course, is a watered down version of what was intended.

Implementation isn’t easy either. While the GDPR set important new data standards, underbudgeted and understaffed national data protection administrations, responsible for applying the rules on the ground, struggle to apply it successfully. The inability of the Irish Data Protection Commission to cope with all the ongoing investigations into multinational tech firms is a case in point.

Silicon Valley’s digital giants have the budgets and staff to ensure compliance or go into lengthy legal proceedings, while smaller digital businesses struggle to ensure they are following the new privacy rules properly. Moreover, an army of government affairs advisors are on an aggressive offensive to ensure any new proposals coming from Brussels are not too damaging to the interest of the US tech giants. Google’s latest efforts to ‘reset the political narrative’ and push back against the European Commissioner in charge of drafting new tech rules across the EU is just the tip of the lobbying iceberg.

Repairing the sword and shield

While Europe’s quest against the monopolistic practices and the negative societal impact2The negative societal impact explored in this text is related with the exploitation of personal data online, unlawful citizen surveillance or user profiling for commercial purposes, as well as malicious disinformation campaigns. The text doesn’t focus on social media addiction, mental health problems or other psychological issues potentially caused by some of these services which are an extremely important concern but one which should be studied separately. of the digital giants has been a noble one, it hasn’t been fully successful.

Both sword and shield are still rusty and in need of a comprehensive upgrade. In the next several years the EU should move from a patchwork of legislative initiatives to a comprehensive legal framework which can be truly used as the global standard. This would entail finalising the long-expected Regulation on Privacy and Electronic Communications which should reinforce the GDPR and provide updated privacy rules.

Even though a lot has been said about the damage of disinformation, illegal content and hate speech online, there is still much to be done with regard to the responsibility of social media companies in limiting illicit content and cooperating more effectively with researchers and governments.3Not to mention the thorny issue of digital taxation and the fact that there is still no agreement on how to make sure that digital companies are adequately taxed on their revenues which are accumulated across the EU.

Lastly, European policy-makers should find a sensible solution to the troubling situation of several tech platforms becoming gatekeepers to the online ecosystem. A promising sign in this regard is the upcoming European Digital Markets Act and a New Competition Tool which are expected to be unveiled by the European Commission by the end of 2020.

Fighting for the future

Implementing new rules will be important in the struggle against Big Tech, but the EU would be wrong to assume that legislation will solve the digital dilemma by itself. There are a number of points which must be considered if the EU is to make this a fair fight.   

1. Due to rapid technological advancement, regulation alone will not hold unless our continent improves its own global position in terms of digital infrastructure, breakthrough innovation and the strength of technological companies.

2. Our continent requires a forward-looking industrial strategy which can create the conditions conducive to globally competitive European goods and services. Serious efforts and extensive funding are required in developing 5G infrastructure, artificial intelligence, advanced battery cells, internal cybersecurity and effective cyber capabilities against external malign operations.

3. Europe needs to reduce its dependence on other actors for raw materials and critical technological components as these will be the steel and iron of the near future. The EU has to urgently revive its drive for technological leadership and industrial strength by effectively pooling its resources and strengths to avoid  being dwarfed by North America and Asia. Essentially, the EU should have the will to project technological power and stay geopolitically relevant in the 21st century.

4. The European Union must make a strategic choice regarding its digital relationship with the US and China. For the time being, Brussels has signaled its intent to pursue its own way when it comes to data, privacy and rule-making in the digital Wild West. European policy-makers see the clear threat of Beijing’s signature model for digital oppression and citizen surveillance but remain concerned about Washington’s self-interest – specifically in dominating key technologies and tapping into global information flows.

Going global

The EU should find a way to align itself better with the new US administration and keep a united front against China’s aggressive alternative model for digital governance.

The shared democratic values and societal beliefs that keep the transatlantic bond intact should also cover the digital domain. That means convincing the Americans to improve their own standards for privacy and data management, and overcoming several thorny issues which plagued transatlantic relations during the Trump presidency.

Differences between Silicon Valley companies and Brussels regulators should not cause bonds between international partners to disintegrate. Strategic Allies should come before Tech Bros.

A Transatlantic Digital Pact will be a difficult but much needed endeavour for the upcoming unpredictable decade. This initiative should also be open to key international partners such as the UK, Canada, Australia and Japan, thereby reinforcing a digital democratic front against systemic rivals and authoritarian competitors pursuing technological dominance. The EU needs additional allies to influence global tech policy and prevent a race to the bottom when it comes to AI-enhanced surveillance, the unrestricted exporting of dual use technological items or the proliferation of lethal autonomous weapons. Such a downward spiral would directly endanger the well-being of Europeans and further exacerbate societal pressures. The European Union must not only solve its digital dilemma at home but be at the core of an international effort to protect fundamental values and the rights of EU citizens both in the offline and online world. Technological strength is becoming essential for both the economic prosperity and the personal security of European citizens.

Dimitar Lilkov

Ironically, there is nothing Accidental about me being European. For many of the Slav kids born and raised in Bulgaria in the late XXth century the West was always the goal and ‘European’ always the standard. What comes next, though? What`s the next societal aim for a nation which finally sits around the table and is part of the wealthiest club in history? Will you become narcissistic about small cultural differences and petty squabbles about regional funds or will you rise up to the global challenges of our times? The question applies to all 27 member states, East and West. Riddles like these interest me and are even part of my work. I'm a researcher in a political think-tank where we make efforts to overcome Eurobubble navel gazing and try to inspire politicians and partners to focus on the issues that matter. I live in Brussels but I try to spend as much time as possible in Sofia.