Nick Clegg defends Facebook’s business model from EU’s privacy regulation

Facebook’s head of PR reportedly had a series of meetings with EU and UK officials aiming to safeguard the social network’s business model heavily relying on targeted advertising.

Sir Nick Clegg, the former UK Deputy Prime Minister, now Facebook’s VP for Global Affairs and Communications, met three EU commissioners during the World Economic Forum in Davos and shortly after the event in Brussels, according to a report by the Telegraph. These commissioners’ portfolios include Digital Single Market (Andrus Ansip), Justice, Consumers and Gender Equality (Věra Jourová), and Research, Science and Innovation (Carlos Moedas). Clegg’s mission, according to the Telegraph report, was to present Facebook’s case to defend its ads-based business model in the face of new EU legislation related to consumer privacy.

According to a meeting minutes from the Ansip meeting, seen by the Telegraph, “Nick Clegg stated as main Facebook’s concern the fact that the said rules are considered to call into question the Facebook business model, which should not be ‘outlawed’ (e.g. Facebook would like to measure the effectiveness of its ads, which requires data processing). He stated that the General Data Protection Regulation is more flexible (by providing more grounds for processing).”

In response, Ansip defended the proposed ePrivacy Regulation as a complement to GDPR and it is primarily about protecting the confidentiality of consumers’ communications. In addition, the ePrivacy Regulation will be more up to date and will provide more clarity and certainty, compared with the current ePrivacy Directive, which originated in 2002 and last updated in 2009. Member states could interprete and implement the current Directive more restrictively, Ansip warned.

Facebook’s current security setup makes it possible to access users’ communication and able to target them with advertisements based on the communications. Under the proposed Regulation, platforms like Facebook need to get explicit consent from account holders to access the content of their communications, for either advertisement serving, or effectiveness measuring.

There are two issues with Facebook’s case. The first one is, as Ansip put it, companies like Facebook would still be able to monetise data after obtaining the consent of users. They just need to do it in a way more respectful of users’ privacy, which 92% of EU consumers think important, according to the findings of Eurobarometer, a bi-annual EU wide survey.

Another is Facebook’s own strategy announced by Zuckerberg recently. The new plan will make it impossible for Facebook to read users’ private communications with its end-to-end WhatsApp-like encryption. This means, even if consumers are asked and do grant consent, Facebook in the future will not be able to access the content for targeted advertising. Zuckerberg repeatedly talked about trade-offs in his message. This would be one of them.

On the other hand, last November the EU member states’ telecom ministers agreed to delay the vote on ePrivacy Regulations, which means it will be highly unlikely that the bill will be passed and come into effect before the next European Parliament election in May.

The office of Jeremy Wright, the UK’s Secretary of State for Digital, Culture, Media and Sport, did not release much detail related to the meeting with Clegg, other than claiming “We are at a crucial stage in the formulation of our internet safety strategy and as a result we are engaging with many stakeholders to discuss issues pertinent to the policy. This includes discussions with social media companies such as Facebook. It is in these crucial times that ministers, officials and external parties need space in which to develop their thinking and explore different options in a free and frank manner.”

The Telegraph believed Clegg’s objective was to minimise Facebook’s exposure to risks from the impending government proposals that could “place social media firms under a statutory duty of care, which could see them fined or prosecuted” if they fail to protect users, especially children, from online harms.

It is also highly conceivable that the meeting with the UK officials was related to influence post-Brexit regulatory setup in the country, when it will not longer be governed by EU laws. Facebook may want to have its voice heard before the UK starts to make its own privacy and online regulations.

EU set to proceed with controversial new online copyright rules

Inevitably the EU Copyright Directive, complete with its widely despised Articles 11 and 13, is continuing its glacial progress along the European rubber-stamping conveyor belt.

Last month we reported that the directive appeared to have hit a road bump, but this turned out to be a fleeting inconvenience, resolved by the most token of concessions. Yesterday both the European Commission and European Parliament announced a breakthrough in the fraught negotiations, from which a miraculous consensus was reached.

“To finally have modern copyright rules for the whole of EU is a major achievement that was long overdue,” said VP for the Digital Single Market Andrus Ansip. “The negotiations were difficult, but what counts in the end is that we have a fair and balanced result that is fit for a digital Europe: the freedoms and rights enjoyed by internet users today will be enhanced, our creators will be better remunerated for their work, and the internet economy will have clearer rules for operating and thriving.”

“This deal is an important step towards correcting a situation which has allowed a few companies to earn huge sums of money without properly remunerating the thousands of creatives and journalists whose work they depend on,” said MEP Axel Voss, who seems to speak for the European Parliament on this stuff.

“At the same time, this deal contains numerous provisions which will guarantee that the internet remains a space for free expression. These provisions were not in themselves necessary because the directive will not be creating any new rights for rights holders. Yet we listened to the concerns raised and chose to doubly guarantee the freedom of expression. The ‘meme’, the ‘gif’, the ‘snippet’ are now more protected than ever before.”

As you can see both spokespeople are doing a heavy sell on the directive because they know it’s unpopular. Not that it really matters because In place of actual democratic accountability, the EU has a self-reinforcing system of largely opaque bodies. This is apparently done to create the impression of rigorous due process but it’s very rare for the real power in Brussels – the European Commission – to receive any significant internal resistance once it has decided on a course of action.

The most unpopular part of the Directive is Article 13, which requires sites to either seek licenses for, or pre-emptively block the upload of, any material that may be copyright protected, or face the consequences of any breach themselves. Close second in terms of public derision is Article 11, which will require a license to reproduce all but the shortest snippets of written content and may apply to things like link previews.

Appropriately enough none of the announcements linked directly to the test of the agreement, but once more we indebted to MEP Julia Reda, who quickly blogged on the matter. “The history of this law is a shameful one,” she wrote. “From the very beginning, the purpose of Articles 11 and 13 was never to solve clearly-defined issues in copyright law with well-assessed measures, but to serve powerful special interests, with hardly any concern for the collateral damage caused.”

The special interests she referred to are big publishers, who she reckons have lobbied the EU to protect their traditional revenue streams. This theory would appear to be supported by the fact that smaller publishers and rights holders seem far less keen on the new rules. Reda, who you can see alongside a small number of other dissenting MEPs in the video below, thinks the Directive can still be stopped if the European Parliament can be persuaded to oppose it but this seems like a forlorn hope.

Zoey Forbes, Technology, Media and Entertainment Associate at law firm Harbottle & Lewis, offers another perspective. “On the surface, the agreed text was an early Valentine’s Day present for creatives and the wider content industry,” she said. “Copyright holders will receive additional revenues from the use of their works online as well as greater protection from online copyright infringement.

“However, as with all things, the devil is in the detail and some stakeholders feel the safeguards offered to the tech industry have not only watered down the EU’s original objectives but will actually leave copyright holders worse off. Conversely, the tech industry and those advocating for freedom of expression are not appeased by these safeguards and continue to oppose the directive on an ideological level.”

The EU is positioning all this as protecting the European little guy from voracious Silicon Valley giants who profit from traffic driven by third party content. There is some merit to that position, but it doesn’t seem to have consulted many little guys, nor thought more deeply about the mechanics of the internet, which rely heavily on the viral sharing of stuff. It’s not at all clear that the stated beneficiaries of this set of rules will, in fact, benefit, but the EU supertanker isn’t about to change course over such minor concerns.

 

Potential return of roaming premiums causes latest Brexit flap

UK parliament has drafted new legislation that would release UK operators from their commitments not to charge extra for roaming in Europe.

The scoop was grabbed by the Huffington Post, which notes that the government will probably release operators from this obligation in the event of a ‘no deal’ Brexit. The apparent rationale is that, since the UK will no longer be able to oblige European operators not to charge UK operators a wholesale premium for roaming, it wouldn’t be fair to prevent them from passing that cost onto their customers.

Those opposed to Brexit have inevitably seized on this latest development as further evidence of what a catastrophe the whole thing will be. Labour MP Tom Watson brought it up in the house of commons and exploited the opportunity for a spot of scripted grandstanding to the fullest, which you can see at the bottom of this piece.

Wholesale carrier service provider BICS reckons it’s unlikely we’ll see a return to the bad old days, however, because operators on both sides of the channel will be aware of how unpopular such a move would be.

“The prospect of a ‘no deal’ in March has fuelled speculation about whether we’ll see the return of roaming charges, and post-holiday ‘bill shock’,” said Mikaël Schachne, VP of Mobility Solutions and IoT Business at BICS. “But with LTE/4G data roaming traffic in Europe surging by 600-800% after the implementation of Roam Like at Home, it would be exceptionally unwise for operators to go against such clear demand.

“In its abolition of roaming charges, the EU set a major precedent, and motivated other operators to offer competitive international tariffs. Most of us have now grown accustomed to using our mobile phones – and all of those data-intensive apps and services – when we’re abroad, to a similar degree as when we’re in the UK. In taking that away, operators risk alienating their customer base, and risk haemorrhaging subscribers to those offering more cost-efficient roaming packages.

“In the event that all UK operators decide to opt out of Roam Like at Home following a no-deal, we’re still unlikely to see the high tariffs that once existed. Roaming packages promote and drive subscriber loyalty, and encourage the use of all manner of mobile services and apps, helping operators to market and deliver additional services, making it in service providers’ best interests to stay competitive.”

Last summer UK operators indicated they have no intention of bringing back roaming, but as the prospect of ‘no deal’ grows only Three seems to be categorically ruling out any kind of hike. That could get interesting for Three if their wholesale roaming partners start getting funny ideas and our advice would be to publicly name and shame any such opportunistic European operators.

There will certainly be all sorts of bureaucratic chaos when Brexit finally happens, but you can’t undo decades of co-dependence overnight. Still, on the plus side, thanks to anticipated shortages of Mars bars, McDonald’s and Magnums we’ll probably all lose loads of weight and look great on the beach. Shame we won’t be able to afford to show off about it on social media, but you can’t have everything can you?

 

Europe set to impose upload filters on nearly all websites

After a brief interruption it’s business as usual for the EU Copyright Directive, with Article 13 set to go ahead and oblige websites to adopt burdensome content filters.

Last month we reported that Article 13 of the directive, which seeks to block the upload of any content that could possibly infringe copyright, was being held up by disagreement among some members of one of the many layers of eurocracy required to rubber-stamp new trans-continental laws.

Well as is so often the case in Brussels, a token compromise was reached that allowed everyone to do what they’re told while offering what minimal face-saving they needed to salve their capitulation. Once more the best information and analysis on this latest development comes from Pirate Party MEP Julia Reda.

Reda reports that everyone was pretty much in favour of insisting on the use of algorithmic upload filters intended to prevent copyrighted material even being uploaded in the first place without a license fee first being paid. The only sticking point concerned exemptions for smaller websites, to stop innovation being suffocated by the cost of all this fresh red tape.

The solution that apparently placated even the most fervent SMB champion was to spare websites this extra hassle so long as they’ve been going for less than three years, have an annual turnover of less than €10 million and have fewer than five million monthly unique visitors. To be clear if any single one of these apply then it’s upload filter time, so since nearly all websites are older than three that means pretty much all of them. Nice exemption.

As Reda concludes, this is EU corporatism being imposed on the internet by favouring the largest websites, for whom the additional bureaucratic burden is much less significant, and thus discouraging innovation. It will probably result in blanket blocks on European users by non-European sites that don’t feel like installing upload filters.

She calls on people to pressure their local candidates in the forthcoming European elections to oppose this move but we fear she’s being naïve. The European Union considers the democratic will of its constituents to be at best irrelevant and at worst antagonistic to its corporate interests and prospective members of European parliament know it.

Europe pats US internet giants on the head for being good censors

In just the third year of the EU’s Orwellian online speech purge it looks like the major platforms are largely submitting to its will.

The EU Code of Conduct on countering illegal hatespeech online has been going since 2016 as “an effort to respond to the proliferation of racist and xenophobic hate speech online.” The EU seemed to have decided that if you stop people saying horrid things online then you’ll also stop them having horrid thoughts and doing horrid things.

To implement this theory the EU needed the cooperation of the major platforms run by Facebook, Microsoft, Twitter and Google. It will have done the usual thing of threatening vindictive regulatory action if they didn’t comply so sensibly they have. They are now assessing 89% of content flagged as hatespeech within 24 hours and removing 72% of it.

Definitions of hatespeech seem to be pretty consistent across the EU, which is presumably no coincidence. Here’s the European Commission’s one:

Certain forms of conduct as outlined below, are punishable as criminal offences:

  • public incitement to violence or hatred directed against a group of persons or a member of such a group defined on the basis of race, colour, descent, religion or belief, or national or ethnic origin;
  • the above-mentioned offence when carried out by the public dissemination or distribution of tracts, pictures or other material;
  • publicly condoning, denying or grossly trivialising crimes of genocide, crimes against humanity and war crimes as defined in the Statute of the International Criminal Court (Articles 6, 7 and 8) and crimes defined in Article 6 of the Charter of the International Military Tribunal, when the conduct is carried out in a manner likely to incite violence or hatred against such a group or a member of such a group.

Instigating, aiding or abetting in the commission of the above offences is also punishable.

With regard to these offences listed, EU countries must ensure that they are punishable by:

  • effective, proportionate and dissuasive penalties;
  • a term of imprisonment of a maximum of at least one year.

With regard to legal persons, the penalties must be effective, proportionate and dissuasive and must consist of criminal or non-criminal fines. In addition, legal persons may be punished by:

  • exclusion from entitlement to public benefits or aid;
  • temporary or permanent disqualification from the practice or commercial activities;
  • being placed under judicial supervision;
  • a judicial winding-up order.

The initiation of investigations or prosecutions of racist and xenophobic offences must not depend on a victim’s report or accusation.

Hate crime

In all cases, racist or xenophobic motivation shall be considered to be an aggravating circumstance or, alternatively, the courts must be empowered to take such motivation into consideration when determining the penalties to be applied.

If you couldn’t be bothered to read all that, the TL;DR is that you can’t say horrid things online if race, nationality, belief, etc comes into it, or even join in if someone else does. If you do all sorts of punishments will be inflicted on you, including a year in prison (as maximum of at least one year? That doesn’t make sense). The victim of such hatespeech doesn’t even need to have accused you of anything and the court reserves the right to determine your motivation for doing stuff.

“Today’s evaluation shows that cooperation with companies and civil society brings results,” said Andrus Ansip, Vice-President for the Digital Single Market. “Companies are now assessing 89% of flagged content within 24 hours, and promptly act to remove it when necessary. This is more than twice as much as compared to 2016. More importantly, the Code works because it respects freedom of expression. The internet is a place people go to share their views and find out information at the click of a button. Nobody should feel unsafe or threatened due to illegal hateful content remaining online.”

“Illegal hate speech online is not only a crime, it represents a threat to free speech and democratic engagement,” said Vĕra Jourová, Commissioner for Justice, Consumers and Gender Equality. “In May 2016, I initiated the Code of conduct on online hatespeech, because we urgently needed to do something about this phenomenon. Today, after two and a half years, we can say that we found the right approach and established a standard throughout Europe on how to tackle this serious issue, while fully protecting freedom of speech.”

Those statements are perfectly Orwellian, insisting as they do that censorship is free speech. The really chilling thing is that they clearly believe that imposing broad and vague restrictions on online speech is vital to protect the freedom of nice, compliant non-hateful people. The EC even had the gall to berate the platforms for not offering enough feedback to those it censors. This could easily be resolved with a blanket statement along the lines of “We’re just following orders.”

As you can see from the tweet below extracted from the full report, the types of things that qualify as hatespeech have increased since the above definition was written. This kind of mission creep is made all the more inevitable by the complicity of Silicon Valley and complete absence of dissenting media, so there’s every reason to assume the definition of hatespeech will continue to expand indefinitely.

 

Europe struggles to get support for Article 13 digital copyright laws

The most controversial part of the EU Copyright Directive, known as Article 13, is struggling to pass through Europe’s Byzantine bureaucracy.

German MEP Julia Reda recently reported that the process of passing Article 13, which seeks to block the uploaded of content that may infringe copyright, as well as Article 11, which seeks to make people pay when they even share a link, had stalled.

This roadblock was thrown up by the European Council, in which several countries rejected a compromise recently proposed to the wording of all this stuff. Last September the directive was approved by the European Parliament, having previously been rejected. It also looks like pretty much everyone else hates it too, including the content producers it claims to be trying to protect.

“This surprising turn of events does not mean the end of Link Tax or censorship machines, but it does make an adoption of the copyright directive before the European elections in May less likely,” wrote Reda. “The Romanian Council presidency will have the chance to come up with a new text to try to find a qualified majority, but with opposition mounting on both sides of the debate, this is going to be a difficult task indeed.

“The outcome of today’s Council vote also shows that public attention to the copyright reform is having an effect. Keeping up the pressure in the coming weeks will be more important than ever to make sure that the most dangerous elements of the new copyright proposal will be rejected.”

Reda is quite rightly anticipating the standard MO of the EU, which is to keep putting decisions to the vote until it gets the result it wanted from the beginning. Usually there is presumably some degree of horse-trading behind the scenes followed by just enough of a cosmetic tweak to the issue to allow those who change their mind to save face. Let’s see if it’s any different this time.

EU passed new telecom rules to promote 5G

The telecom ministers gave final approval to the new European Electronic Communications Code to encourage competition, promote new technologies, as well as protect consumer interests.

It has been a busy couple of weeks in Brussels. The telecom configuration of the Council of the European Union, composed of the government ministers whose portfolios cover telecom, gave the final seal of approval to the European Electronic Communications Code. This came after the European Parliament (composed of elected MEPs) voted in favour of the Code in mid-November, and after a year after the European Council (composed of heads of governments) reached an agreement on the rules.

More than two years in the making, the Code covers mainly four areas: the ubiquitous and unconstrained connectivity; the harmonisation of the competences of national regulatory authorities (NRAs); the harmonisation of spectrum-related issues, and revised rules on services. While harmonisation is the key to regulator operations and the rules governing radio frequencies across all member states, a few specific points stood out:

  • When it comes to 5G, the Code advocates for “binding and enforceable rules for enhancing coordination of spectrum management in the EU with greater focus on adapting spectrum rules to the future 5G challenges”. The European Commission (the executive branch responsible for the day-to-day operation of the EU) and NRAs will “review elements of individual Member States’ planned national assignment procedures which have more impact on market and business developments. Moreover, this option will place greater emphasis on the investment environment for dense 5G networks.”
  • On services, all member states will set up a public warning system to further strengthen the protection of residents. A ‘reverse 112′ system will be put into place send alerts to people’s mobile phones in the event of a natural disaster, terrorist attack or other major emergency in their area. It needs to be in operation within three-and-a-half years of the Code entering into force (see below).
  • On consumer rights protection, the Code will extend the same applicability of the rules to services provided over the internet, for example mobile apps. “Member States will also have to establish rules for compensation in case of misconduct by providers of electronic communications networks or services.”

The Council also approved the new remit of the Body of European Regulators for Electronic Communications (BEREC), the EU-wide telecom regulator. The office is tasked to create “an investment-friendly and pro-competitive framework which will lay the groundwork for the development of 5G across Europe.” New rules on cross-country calls and messages were also passed: the retail price of intra-EU mobile or fixed calls from the consumer’s home country to another EU country will be capped at 19 cents per minute. The cap for intra-EU text messages will be 6 cents per message.

Both regulations approved by the council of ministers are to be signed by the European Council and the European Parliament on 12 December and published in the EU Official Journal on 17 December. Both acts will enter into force 3 days after publication. Member states will have two years’ transition period before the Code needs to be transposed into national laws.

The Council also reviewed the progress of the ePrivacy Regulation. The proposal is aimed to aligned with GDPR and to cover applications such as instant messaging, VoIP, and other web-based communication tools. In November the telecom ministers agreed to delay the vote on the bill, which means the regulation is unlikely to be adopted before the next European election in May 2019.

Netherlands falls to three MNOs as Europe approves T-Mobile/Tele2 deal

The European Commission has officially approved Deutsche Telekom’s acquisition of Tele2’s Dutch business, reducing the number of MNOs in the country from four to three.

For many through the continent this will be seen as progress, as the European Commission has previously viewed reducing the number of MNOs in a single market below four as sacrilege. With telcos across Europe looking for ways to justify the vast expenditures expected for 5G and the full-fibre diets demanding by governments in the fixed space, the prospect of market consolidation is an interesting one.

What is worth noting is this is a relatively minor acquisition. Merging DT’s Dutch business and Tele2’s only adds a relatively small increment, roughly 5%, to the newly merged business. T-Mobile NL would still remain in third position with a market share of 25%, while the European Commission has also questioned Tele2 NL’s role as an important competitive force in the Dutch market. Despite these conditions, this will certainly be viewed as progress for those who sit in the pro-consolidation camp.

“Access to affordable and good quality mobile telecom services is essential in a modern society,” said Commissioner Margrethe Vestager. “After thoroughly analysing the specific role of T-Mobile NL and the smaller Tele2 NL in the Dutch retail mobile market, our investigation found that the proposed acquisition would not significantly change the prices or quality of mobile services for Dutch consumers.”

Through the five month investigation, Vestager and her team decided the proposed merger was unlikely to lead to significant price increases due to the limited incremental impact Tele2 would have on the T-Mobile NL business, the transaction would not increase the likelihood of coordinated behaviour between mobile network operators as there is sufficient enough difference between and the business models, and finally, conditions for virtual mobile network operators due to the proposed merger would not have a serious impact on the level of competition. In short, dropping from four to three operators would not negatively impact the consumer.

Here is the question though; will this decision have any material impact on consolidation decisions elsewhere? Perhaps it might, but we suspect the European Commission will stick to the three operator rule where competition is more intense.

In listing its reasons for approving the deal, Vestager effectively said that Tele2’s Dutch business was small and irrelevant enough to the other players that it being swallowed up by one of them would not make any material impact on competition. In most other markets around Europe the fourth players have much more of a foothold in the market.

Take the UK for instance. Here, Three is the smallest of the MNOs, controlling roughly a 15% market share. On its own it can provide suitable competition to the three larger players, though if it was acquired the gain in total subscribers would have a material impact on market share. This alteration in the status quo could lead to the anti-competition doomsday scenario, or at least this is what the European Commission might believe.

Despite consolidation being a positive for the industry, scale means confidence to invest, operational efficiencies, notable procurement benefits and greater ability to generate ROI, we suspect the European Commission will stick to its four operator rule for most markets. The only exceptions will be in cases like this one, where the fourth player controls a minor market share which would have no material impact on a competitors standing in the market.

That said, this is a step forward for the stubborn European Commission.

Privacy International lines up US firms for GDPR breaches

UK data protection and privacy advocacy group Privacy International has submitted complaints to European watchdogs suggesting GDPR violations at several US firms including Oracle, Equifax and Experian.

The complaints have been submitted to regulators in the UK, Ireland and France, bringing the data broker activities of Oracle and Acxiom into question, as well as ad-tech companies Criteo, Quantcast and Tapad, and credit referencing agencies Equifax and Experian. The complaints are specifically focused on the depth of personal data processing, which Privacy International believes violates Articles five and six of the General Data Protection Regulation (GDPR).

“It’s been more than five months since the EU’s General Data Protection Regulation (GDPR) came into effect,” a Privacy International statement read. “Fundamentally, the GDPR strengthens rights of individuals with regard to the protection of their data, imposes more stringent obligations on those processing personal data, and provides for stronger regulatory enforcement powers – in theory. In practice, the real test for GDPR will be in its enforcement.

“Nowhere is this more evident than for data broker and ad-tech industries that are premised on exploiting people’s data. Despite exploiting the data of millions of people, are on the whole non-consumer facing and therefore rarely have their practices challenged.”

The GDPR Articles in question relate to the collection and processing of information. Article Five dictates a company has to be completely transparent in how it collects and processes information, but also the reasons for doing so. Reasonable steps must be taken to ensure data is erased once the purpose has been fulfilled, this is known as data minimisation. Article Six states a company must seek consent from the individual to collect and process information for an explicit purpose; broad brush collection, storage and continued exploitation of data is being tackled here.

In both articles, the objective is to ensure companies are being specific in their collection of personal information, and that it is utilised in a timely manner before being deleted once it has served its purpose. These are two of the articles which will hit the data-sharing economy the hardest, and it will be interesting to see how stringently GDPR will be enforced if there is any evidence of wrong-doing.

This is where Privacy International is finding issue with the firms. The advocacy group is challenging the business practises on the principles of transparency, fairness, lawfulness, purpose limitation,

data minimisation, accuracy and integrity and confidentiality. It is also requesting further investigations into Articles 13 and 14 (the right to information), Article 15 (the right of access), Article 22 (automated decision making and profiling), Article 25 (data protection and by design and default) and Article 35 (data protection impact assessments).

While GDPR sounds very scary, the reality is no-one has been punished to the full extent of the regulation yet. This might be because every company has taken the guidance on effectively and is operating entirely within the legal parameters, though we doubt this is the case. It is probably a case of no-one being caught yet.

The threat of a €20 million fine, or one which is up to 3% of a business’ total revenues, is nothing more than a piece of paper at the moment. If there is no evidence or fear authorities will punish to the full extent of the law, GDPR doesn’t act as much of a protection mechanism or a deterrent. When a genuine violation of GDPR is uncovered, Europe needs to bear its teeth and demonstrate there will be no breathing room.

This has been the problem for years in the technology industry; fines have been dished out, though there has been no material impact on the business. The staggering growth of revenues in the industry has far exceeded the ability of regulators to act as judge and executioner. Take the recent fines for Apple and Samsung over planned obsolescence in Italy. The $10 million and $5 million fines for Apple and Samsung would have taken 20 and 16 minutes respectively to pay off. This is not good enough.

Regulators now have the authority to hold the suspect characters in the industry accountable for nefarious actions concerning data protection and privacy, but it has to prove itself capable of wielding the axe. Until Europe shows it has a menacing side, nothing will change for the better.

EU divided on digital tax

Fears over a reaction from the US has sent Finance Ministers from Ireland, Sweden and Denmark cowering back to their spreadsheets as the EU digital tax hits an early stumbling block.

While the collective bargaining power and protection afforded by the European Union is certainly useful, the cumbersome nature of the bureaucratic beast and unanimous decision making ensures it is anything but. As with many proposed rule changes in the past, objections from a handful of member states have slammed the emergency brakes on the digital tax, aimed at holding the internet giants accountable.

According to the Guardian, the Finance Ministers of Ireland, Sweden and Denmark have all aired their criticism not on the concept of the tax, but fears over what President Trump might suggest as a retaliation. There’s a pragmatic approach to business and there’s spineless appeasement to a bully, we’ll let you decide which one this is.

Of course, it would be unfair to herd all of the EU member states into the same cowardly-corner as Ireland, Sweden and Denmark. 12 member states are already moving ahead with their own plans to create a localised digital tax, including the UK as was announced during the Autumn Budget, and some are acting somewhat hawkish about it. The French Government has suggested it would like the tax rates on the playing field by the end of 2018, though Germany seems to be favouring a more watered-down version of the rules.

The EU wide tax on those taking advantage of creative tax regimes, would be the best solution however. A united front against the slippery Silicon Valley internet giants, as well as those from other nations around the world, would of course be the best way to claim that 3% of local revenues, but it is becoming more difficult to imagine that a reality.

The fainthearted trio do of course have something to worry about. Despite Trump slapping tariffs on Chinese goods, and threatening to revamp tax laws so Amazon cannot take advantage of the US tax havens, he would most likely take the US tax as an attack on American values and a threat to the borders. The President is a man or rarely recognises consistency and before too long will probably be describing Jeff Bezos as a close family friend who have been relentlessly pursued by the penny-pinching Europeans.

Ireland also has a lot to lose. After proving it was incapable of managing its finances in a responsible way, the technology giants could be seen as somewhat of a saviour to the economy. Apple, Facebook and Google are just a few names who house a considerable base in the country. Ireland certainly has its own interests to protect.

It’s disappointing to see such weak behaviour in the face of an orange-hued, bullying politician, but at least there are some nations who are prepared to go it alone and hold the internet giants accountable to fair taxation.