Europe launches new AI initiative to begin catch-up mission

This month has seen the launch of the European Commission’s AI4EU project, an initiative to create an AI-on-demand platform for Europe and challenge for leadership in this blossoming segment.

Having been agreed during December, the AI4EU project already has 79 partners in 21 countries across the bloc, firstly focusing on developing eight industry-driven AI pilots which will demonstrate the value of the AI-on-demand platform as a technological innovation tool. Led by Thales, the group will receive €20 million in funding to begin with.

“The European Commission has published its coordinated plan on artificial intelligence, as well as new guidelines on how to deal with the ethical issues relating to AI,” said Roberto Viola, the Director General of DG Connect at the European Commission, in a recent blog post. “Both put humans firmly at the centre of this key technology that has the potential to revolutionise all our lives.”

Looking at the specific work-groups, the first eight will focus on the European citizen, robotics, industry, healthcare, media, agriculture, IOT and cybersecurity, with the work being built on the idea of ‘human centred AI’. As part of AI4EU, an Ethics Observatory will be established to ensure the respect of human centred AI values.

The power and potential of artificial intelligence has certainly been a talking point over recent months, as dreams become reality and new products emerge. Every region around the world is attempting to plant its flag and dominate the area, with AI4EU as the European effort. While the initiative will aim to encourage industry collaboration, it will also draw out a strategic agenda and also aim to fill technology gaps which might emerge should a fragmented approach to development arise.

While this is certainly a good start, the European Commission certainly has some work to do to make sure the bloc isn’t left behind as Silicon Valley and China charge ahead. That said, it does look like AI will get the rightful attention it deserves over the coming years.

“The EU has been supporting artificial intelligence for many years, and for the next seven-year EU budget period, which is due to start in 2021, AI and the wider digital economy will play an even more central role: a new funding programme, Digital Europe, has been proposed, with €9.2 billion potentially available to support the further development of the EU’s digital single market, including €2.5 billion specifically to support AI,” said Viola.

“For all its ambition, the EU is still lagging behind other parts of the world when it comes to investing in AI. This is why the European Commission has already agreed to increase EU research funding for AI to €1.5 billion between now and 2020.”

T-Mobile’s Tele2 acquisition is not a sign of changing attitudes from Europe – Lawyer

While some might view European Commission’s decision for T-Mobile Netherlands acquisition of Tele2’s Dutch business as a softening approach to consolidation, White & Case, one of the law firms working on the deal, warned you shouldn’t get too excited.

With the European Commission historically taking an aggressive view against any acquisition which would take a market from four to three operators, T-Mobile Netherlands acquisition of Tele2 Netherlands looked doomed to failure. However, the European Commission has always stated there is no magic number, and each case would be considered on its own merit. Despite this stance, many believed the Commission secretly held the number four as sacred.

“Looking in the rear-view mirror, you could see that the tone seemed to have gotten harsher in terms of the Commission’s approach to four to three operators,” said Mark Powell, one of White & Case’s Partners who co-led the legal team on the deal.

Unfortunately for the European Commission’s claim of impartiality on market consolidation, the evidence has been stacked against it. In Austria, Ireland and Germany, consolidation was approved though there were increasingly stricter MVNO remedies placed on the deal. In Denmark, Telenor and TeliaSonera ditched their own deal just as the European Commission was set to block it. It did have to intervene in the UK with Three and O2, while in Italy consolidation was approved under the condition spectrum was released to create a fourth player, resulting in Iliad’s entry. As time progressed, the attitude towards consolidation seemed to become more vehemently opposed.

With this in mind, the approval of the deal in the Netherlands might have come as a surprise.

“Things are very different in this case,” said Powell. “If the Commission was prepared to look at the very specific conditions, we felt we would have a favourable decision.”

However, what telcos around Europe should bear in mind is the Netherlands is a unique market. This should not be taken as changing attitudes of the European Commission, or a new era where a free-for-all consolidation battle begins. So what were the favourable conditions in the Netherlands?

Firstly, the combined market share of the newly merged business would only be 25%, keeping it in third place. Tele2’s Dutch business was a relatively minor player, only controlling around 5% market share, but is also a pureplay 4G telco. The Commission did not have to worry about 2G or 3G. Another consideration is the aggressive MVNO segment in the country, perhaps compensating for any reduction in competition.

“You could say common sense prevailed, but the fact pattern was recognised by the Commission, so they should be credited for standing by what they say when they said they would look at specific cases and make a decision accordingly,” said Powell.

Another underlying point for the successful merger was the attitude of the regulator. The Dutch regulator was generally receptive to the idea of consolidation, which was perhaps taken into consideration by the Commission. In many of the cases which have gone against consolidation, the regulator has been against the deal. This was certainly the case in the UK Three/O2 merger, where the UK watchdog was publicly hostile to consolidation, as Powell put it.

The final point which Powell believes contributed to the success was the fact the case was heard verbally in court over the course of a single day. These are scenarios which are very fact intensive, resulting in a lot of paper. Simple sending opinions and evidence back and forth creates a mountain of information, perhaps confusing and convoluting opinions. By hearing the case verbally, the court was able to consider and crystallise a decision more effectively.

“At the end of the day, this confirms that if you think you have a strong case, then there is,” said Powell.

This is what should be taken away from this deal. This is not a changing of policy from the European Commission, but conveniently proving it will consider market consolidation in the right circumstances. There isn’t another market in Europe which mirrors the conditions here, but there are markets which could be successful in the same way T-Mobile Netherlands has been here in acquiring Tele2 Netherlands.

Interestingly enough, 5G did not factor into the equation much here. The Dutch 5G auction has not taken place yet, therefore the European Commission was taking into consideration the evidence which was put in front of it. Whether market consolidation is necessary in the 5G world still remains a valid question, and this decision should not be viewed as evidence for either side.

5G will require huge investment by the telcos, significantly more than previous generations, though how to ensure these investments are made in a timely fashion is an interesting question. Should consolidation be preventing to encourage competition and the fear of another eating a telcos lunch, or should it be allowed to ensure scale of customers and confidence in ROI? The debate rages on with pros and cons on either side.

While Powell warned against believing this is a sign the European Commission is softening its approach to market consolidation, it is evidence it can stick to its word that there is no magic number to make competition work.

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.

DT/Tele2 tie up could smooth path to industry consolidation

For years the telco industry has condemned the EU’s approach to competition, though green-lighting DT’s acquisition of Tele2’s Dutch business could indicate a loosening grip on the idea of four operators.

According to the European Commission, each market should ideally have four operators to ensure the consumer has choice, though this has been challenged in recent years due to market economics. In short, the telcos do not feel they are making enough money to continue network investments and challenge the OTTs in capturing the digital economy fortunes. One way to balance the equation is consolidation, but regulators have consistently resisted. This might be changed according to reports in Reuters.

DT has been attempting to swallow up Tele2’s Dutch business to create a more competitive threat to the number one and two in the market, KPN and VodafoneZiggo. However, such an acquisition would decrease the number of national telcos from four to three, sacrilege in the eyes of the Brussels bureaucrats, though this vice-like persistence with four telcos might be loosening.

The decision is due on November 30, though rumours are circulating that a decision has been made and it will be in favour of the Germans. DT’s argument has been combined company would only have a 25% market share, still a way off KPN and VodafoneZiggo, therefore it would still have to challenge on price, and it seems the European Commission is buying the stance.

For rest of the telcos around Europe, executives are bound to be eagerly awaiting the official decision. Precedent is everything when it comes to regulations, competition and acquisitions. Merging these two players will give lawyers something to point to and ammunition to fight for market consolidation.

This has been a bugbear of the European telcos for some time; scale means investment. The larger the subscription bases of the telcos, the safer they will feel in terms of splashing the cash and upgrading networks. It might of course be nothing but a rouse to make more money and realise operational efficiencies, but when you look at the size of telcos on other continents you can see the argument; European telcos simply cannot compete with those in North America or Asia.

Of course what is worth noting is this is nothing more than a report for the moment. The official decision will emerge over the next few days, though the telco industry might finally be getting some ammunition to fight back against the OTTs.

New Euro Android charges could be $40 per device

Google announced earlier this week that it was going to start charging Android smartphone makers for its apps but didn’t say how much.

Tech site The Verge, however, reckons it has got hold of some documents that detail the tariffs Google intends to impose on its blameless OEM partners to make sure it doesn’t lose a single euro of profit while it wrestles with the European Commission’s trust busters. According to this ‘confidential fee schedule’ Google could demand as much as $40 per device, it’s alleged.

But these monetary considerations could just end up being bargaining chips in a process through which Google forgoes the cash so long as OEMs play ball by preinstalling all the stuff it wants. In other words Google seems to be saying “We won’t insist our stuff is bundled with Android but we will fine anyone who doesn’t.”

In that context the actual amounts involved seem irrelevant, since Google may well write them off in exchange for docile compliance, but we’ve only done three paragraphs so we might as well have a look at how they will be calculated. Essentially OEMs will have to pay more for larger screens and for exporting to richer countries. So a top-end device into the UK could be stung for $40, while a rubbish phone into Greece might only cost an extra couple of bucks.

Google seems to be somewhat sulkily throwing down the gauntlet to the EC by saying “OK, two can play at that game – if you won’t let us bundle then we’ll punish OEMs. How do you like them apples?” The EC will presumably have a bit of a think about whether this new tactic still represents an abuse of Google’s market dominance and then act accordingly.

Google ups the ante with Europe by charging Android manufacturers for its mobile products

Under pressure to be seen to comply with an EU antitrust ruling, Google has indicated that the only way to do so is to start charging for what was previously given away.

Earlier this year Europe fined Google €4.3 billion for abusing its dominance in the smartphone OS market to force the bundling of its commercial products such as search onto every Android phone. The EC found this practice to be anticompetitive since it made it harder for any other apps to compete and this reduced consumer choice.

Accompanying its inevitable decision to appeal the fine, Google CEO Sundar Pichai insisted that the existence of Android has in fact led to more consumer choice, not less – an assertion proven by all the great Android devices you can buy. Regardless Google was given 90 days to comply with the ruling or face further fines, and we now know the nature of that compliance.

In a blog post Google VP of Platforms and Ecosystems Hiroshi Lockheimer detailed the concessions Google will be making in Europe while the appeals process is underway. In essence Google will now start charging any Android device OEM that ships into the EU for the use of its mobile apps. Furthermore it will charge separately for search and Chrome, since they’re the apps that seemed to upset the EC and, as a consequence, OEMs are free to muck about with Android itself if they want.

The justification given for this move is simple: Google needs to make up for the revenue it will lose by not being able to bundle its mobile apps with Android. “Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA. Android will remain free and open source,” said the blog.

An underlying strategy, however, may be to illustrate Google’s point about all the benefits consumers have derived from Android. By charging what it previously gave away for ‘free’ (while making loads of money via the traffic through its mobile apps, of course), Google is saying that the consequence of the EU’s ruling will be for everything to become more expensive.

This is ultimately a fight over Google’s underlying business model of given stuff away and then monetising its users. But the EC does have a point the use of a dominant position to stifle competition via forced bundling and, as the former head of Internet Explorer and Windows at Microsoft notes in the tweet below, has a strong tradition of challenging this sort of thing.

One final thing to consider against Google’s claim that, if it can’t insist all its other stuff comes bundled with Android, it has to seek direct compensation is the matter of China. Google apps have been unbundled from Android there for some time and Google doesn’t seem to be getting any compensation there. If it can do that in China, why can’t it do it elsewhere?

Europe approves merger of Tele2 and Com Hem, Kirkby will move to TDC

The merger of Swedish MNO Tele2 with Swedish cableco Com Hem has been approved but Tele2’s CEO Allison Kirkby isn’t hanging around.

Europe had a look at the merger, as it invariably does with any telecoms M&A on the continent, and concluded it raises no competition concerns. The resulting creation of a multiplay operator doesn’t take any players out of either the mobile or fixed markets and therefore there’s still enough competition to allow the EC to sleep soundly at night. It has also concluded a general investigation into the Swedish telecoms market with not further action required.

“We are nearing the closing of this merger and my ambition to create a leading integrated connectivity provider in the Baltic Sea region will soon be realized,” said Kirkby. “I am immensely proud of the Tele2 team’s efforts throughout this process, as well as our incredible achievements the past years.”

“I will leave a Tele2 that is stronger and better positioned to act as an integrated customer champion in an ever more digitalized world. Once the merger is closed, I feel confident that the Tele2 team, including its new colleagues from Com Hem, will continue to challenge the status quo and fearlessly liberate people to live a more connected life.”

Scandinavia seems to have left a strong impression on Kirkby, who has been poached by Danish telco TDC Group to be its new CEO. Right now TDC seems only to have made the announcement via a Danish press release, but we trust Google Translate enough to run with it. Kirkby will start her new gig in December, right after the merger closes.

The CEO of the merged company, which looks like it will be called Tele2, will be the current CEO of Com Hem, Anders Nilsson. “As one company, we will be able to offer a portfolio of truly integrated services, with significant benefits for Swedish individuals, households, businesses and our shareholders as a result,” he said.

“My main focus now is our preparations for a rapid and efficient integration, to the benefit of both our employees and customers. Together with the new Leadership Team, I will also make sure to draw from the strength, knowledge and spirit of both the Tele2 and Com Hem organizations, as well as the Tele2 Board of Directors. When closing comes, we will be ready to kick off the integration.”

The only other thing worth noting is that Kirkby had been one of the people thought likely to be in the running for the BT CEO job. The search continues.

Europe gets tech and ad giants to play ball on ‘online disinformation’

The European Commission’s drive to control what takes place online took one more step forward with the unveiling of a code of practice on online disinformation.

This code has apparently been signed up to by unnamed internet and advertising giants, but in its current form it appears to be nothing more than a set of vague aspirations designed to placate the EC for now. However it will probably be used as the thin end of the wedge to extract further concessions down the line.

It is an important step in tackling a problem which has become increasingly pervasive and threatens Europeans’ trust in democratic processes and institutions,” said Commissioner for Digital Economy and Society Mariya Gabriel. “This is the first time that the industry has agreed on a set of self-regulatory standards to fight disinformation worldwide, on a voluntary basis.

“The industry is committing to a wide range of actions, from transparency in political advertising to the closure of fake accounts and demonetisation of purveyors of disinformation, and we welcome this. These actions should contribute to a fast and measurable reduction of online disinformation. To this end, the Commission will pay particular attention to its effective implementation.”

Voluntary. That’s a good one. You can find out more about this voluntary code on this European Commission site. Disinformation is defined as ‘verifiably false or misleading information’. One good example of this could be describing something as ‘voluntary’ when in fact it was subject to duress. The EC and signatories will presumably argue the toss over what qualifies as ‘misleading’ for a while before everyone moves on.

Europe approves tough new digital copyright position

The European Parliament has voted to adopt a position on copyright rules that opponents inevitably fear will break the internet.

This is an incremental, but significant step towards Europe implementing laws that will impose new conditions on internet companies to compensate rights holders when they share their copyrighted material. The position was initially rejected back in July but in true EU style they decided to keep voting on it again until it went the right way.

“I am very glad that despite the very strong lobbying campaign by the internet giants, there is now a majority in the full house backing the need to protect the principle of fair pay for European creatives,” said Eurocrat Axel Voss.

“There has been much heated debate around this directive and I believe that Parliament has listened carefully to the concerns raised. Thus, we have addressed concerns raised about innovation by excluding small and micro platforms or aggregators from the scope.

“I am convinced that once the dust has settled, the internet will be as free as it is today, creators and journalists will be earning a fairer share of the revenues generated by their works, and we will be wondering what all the fuss was about.”

“Discussions between the co-legislators can now start on a legislative proposal which is a key element of the Digital Single Market strategy and one of the priorities for the European Commission,” said Eurocrats Andrus Ansip and Mariya Gabriel in a joint statement.

“Our aim for this reform is to bring tangible benefits for EU citizens, researchers, educators, writers, artists, press and cultural heritage institutions and to open up the potential for more creativity and content by clarifying the rules and making them fit for the digital world. At the same time, we aim to safeguard free speech and ensure that online platforms – including 7,000 European online platforms – can develop new and innovative offers and business models.

“The Commission stands ready to start working with the European Parliament and the Council of the EU, so that the directive can be approved as soon as possible, ideally by the end of 2018. We are fully committed to working with the co-legislators in order to achieve a balanced and positive outcome enabling a true modernisation of the copyright legislation that Europe needs.”

The usual suspects are appalled at this development with the saveyourinternet.eu site featuring the following statement: “The European Parliament blatantly disregarded your thousands of emails, calls and messages and adopted a horrible version of Article 13 on 12 September. But the battle against Article 13 isn’t over: we must now ask the EU governments to stand up for our rights!”

At its core this seems to be about sharing stuff on the internet and to what extent the owner of the stuff being shared should get some kind of royalty payment every time it’s done. On one hand the internet has wrecked industries like music and journalism by making it so difficult for them to charge people for consuming their products, but on the other the genie is out of the bottle and such sharing is endemic. Either way this debate seems likely to rage for some time yet.

EU set to impose tough new rules on social media companies

The European Commission is reportedly planning to bring in new laws that will punish social media companies if they don’t remove terrorist content within an hour of it being flagged.

The news comes courtesy of the FT, which spoke to the EU commissioner for security, Julian King, on the matter of terrorists spreading their message over social media. “We cannot afford to relax or become complacent in the face of such a shadowy and destructive phenomenon,” he said, after reflecting that he doesn’t think enough progress had been made in this area.

Earlier this year the EU took the somewhat self-contradictory step of imposing some voluntary guidelines on social media companies to take down material that promotes terrorism within an hour of it being flagged. In hindsight that move seems to have been made in order to lay the ground for full legislation, with Europe now being able to claim its hand has been reluctantly forced by the failure of social media companies to do the job themselves.

So long as the legal stipulation if for content to be taken down when explicitly flagged as terrorist by police authorities it should be pretty easy to enforce – indeed it could probably be automated. But legislation such as this does pose broader questions around censorship. How is ‘terrorist’ defined? Will there be a right of appeal? Will other organisations be given the power to demand content be taken down? Will this law be extended to other types of contentious content?

At the end of the FT piece it is noted that, while the EU still allows self-regulation on more subjective areas like ‘hate speech’ and ‘fake news’, Germany is a lot more authoritarian on the matter. Given the considerable influence Germany has over the European bureaucracy it’s not unreasonable to anticipate a time when the EU follows Germany’s lead on this matter.

Meanwhile US President Donald Trump – avid user of Twitter but loather of much of the mainstream media – got involved in the social media censorship debate via his favoured medium. You can see the tweets in question below and, while he appears to be motivated by concern that his own supporters are being selectively censored, his broader point is that censorship is bad, full stop.

Lastly Twitter CEO Jack Dorsey continues to publicly agonise about the topic of censorship and specifically how, if at all, he should apply it to his own platform. In an interview with CNN he conceded Twitter as a company has a left-leaning bias, but stressed the platform is policed according to user behaviour rather than perceived ideology. He also noted that transparency is the only answer to allegations of bias.