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“Delegations are asked to indicate whether they would be open to include a new obligation to conduct a fundamental rights impact assessment.”
-Spanish presidency’s document in preparation for the AI Act’s trilogue
Story of the week: Some of the least controversial aspects of the AI Act have already been closed at the technical level, namely the obligations for high-risk providers and users, the procedures for the conformity assessment bodies and the provisions on technical standards. While these chapters will only need to be endorsed at the political level in the next trilogue on Tuesday, more substantial discussions are in order for the parts on innovation and the fundamental rights impact assessment. However, the landing zones are, also in this case, largely pre-cooked. The measures favouring innovation were largely discussed at the Telecom Working Party this week, with the main pain points related to the mandatory nature of sandboxes, the presumption of conformity and real-world testing. On the fundamental rights impact assessment, the Spanish EU Council presidency considers it should be accepted in the spirit of compromise, but with some significant changes. Read more.
Don’t miss: Submarine cables have become the playground of international tensions between the United States and China. In Europe, the topic has become hot following the sabotage of Nord Stream, with Commissioner Thierry Breton pushing for diversification of submarine connections and satellite-based communication systems. EURACTIV has obtained the pipeline of the submarine internet cable the European Commission is considering financing, spanning from the EurAfrica Gateway in Western Africa to extending EllaLink in Latin America via connecting the Arctic cable Taiwan. At the same time, the commercial viability and political interests that underpin these expensive projects are not immediately clear. Read more.
Also this week:
- Google has launched Bard in Europe after addressing some privacy hurdles.
- The appointment of an American who previously worked with Big Tech as Chief Competition Economist caused a backlash from France.
- EURACTIV obtained the Council’s semi-final version of the Cyber Resilience Act.
- Amazon joined Zalando in contesting the designation of very large online platform under the Digital Services Act.
- Germany published its first-ever China strategy with a strong focus on technological dependencies.
- Top EU court sent back to the lower tribunal its decision to annul the European Commission’s blockage of the O2-Hutchison merger.
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Artificial Intelligence
Bard’s European launch. Google launched Bard, its response to ChatGPT, in Europe on Thursday, following delays related to compliance with EU data protection rules. Google discussed these privacy concerns with the Irish Data Protection Commissioner and other privacy regulators, introducing features that increase transparency over the use of data, giving choices to users on what can be done with the provided information and the possibility to flag incorrect information. Google presents the AI model as nothing short of a tool for ‘augmented imagination’. Read more.
Join the AI race. Meta is planning to join the generative AI race as it is working on releasing a commercial version of its AI model. To compete with Microsoft-backed OpenAI and Google, Meta is planning to make its AI system open sources, allowing start-ups and businesses to build custom software on top of the technology, the Financial Times reported. Meanwhile, Elon Musk is also set to launch xAI.
AI Convention draft. A new draft by the Council of Europe’s Committee on Artificial Intelligence (CAI), dated 7 July, was published. However, the document leaves out several options still being discussed behind closed doors, including the opt-in opinion, which EURACTIV revealed in June. The Council of Europe’s secretariat has been asked to draft the different options on the question of whether private actors should be included in the AI treaty considering the different legal systems of the countries involved.
FTC probes ChatGPT. The US Federal Trade Commission (FTC) has opened an expansive investigation into ChatGPT ‘s provider OpenAI, about whether it has run afoul of consumer protection laws by putting personal reputations and data at risk. The FTC sent the San Francisco company a 20-page demand for records about how it addresses risks related to its AI models. The agency also called on OpenAI to describe its products making “false, misleading, disparaging or harmful” statements about people.
Make AI accountable. Civil rights organisation European Digital Rights (EDRi) published its statement this week about fundamental rights in connection to the AI Act, counting as many as 150 signatories, calling on EU institutions to ensure that AI development and use is “accountable, publicly transparent and that people are empowered to challenge harms”.
ChatGPT consumer survey. Euroconsumers published a survey on Wednesday to look at the potential impact of ChatGPT on consumers from Belgium, Italy, Spain, and Portugal. The survey reveals, among other findings, that 51% of the consumers have already tried ChatGPT, and most use it to search for information, but the survey points to privacy, safety and reliability concerns.
We did your dirty work. A petition to investigate the alleged exploitation of Kenyans who were paid as little as $2 per hour to clean up ChatGPT’s algorithm has been presented before Kenya’s national assembly.
Competition
Chief Economist controversy. Yale Professor Fiona Scott Morton was named the new Chief Competition Economist at the Directorate General for Competition, a highly influential role in assessing the economic impact of competition investigations across the European single market. However, the decision has caused turmoil in France, with several ministers asking the Commission to change its decision given Scott Morton’s previous experience as a consultant for Big Tech companies and the fact she is an American citizen. The presidents of the main political groups of the European Parliament also penned a letter, seen by EURACTIV, to EVP Vestager, asking her to reverse the decision.
Broadcom-VMware cleared. The EU competition department green-lighted the US semiconductor company Broadcom’s proposed $61 billion acquisition of the cloud computing and visualisation company VMware on Wednesday. However, the European Commission put some caveats limited to the Fibre Channel Host Bus Adapters, where Broadcom could have the means and incentives to foreclose VMware’s services to the American company Marvell, which would be their only rival. Read more.
Yon-Courtin on Teams probe. French MEP Stéphanie Yon-Courtin of Renew Europe sent questions to the European Commission on Tuesday (11 July) about Slack’s antitrust complaint against Microsoft Teams, accusing Microsoft of having “illegally tied its Teams product into its market-dominant Office productivity.” According to Yon-Courtin, the case had no meaningful progress, while the company’s position has grown in the market. She would like to know if a decision on this is expected “before the EVP [Margrethe Vestager] leaves for her potential new role” and whether “remedies different than the one used in the past” will be put into place.
Good news for Microsoft. The US Federal Trade Commission (FTC) preliminary injunction to block the $68.7 billion deal between Microsoft and game publisher Activision Blizzard was denied before a federal judge in San Francisco. The FTC is bringing the judge’s decision to the 9th Circuit appeals court. Meanwhile, Microsoft is also challenging the stoppage of the merger in the United Kingdom, where the company is reportedly considering selling parts of its cloud gaming unit to win approval. In May, the European Commission already cleared the acquisition.
Cybersecurity
CRA semi-final text. The Spanish Council presidency circulated a semi-final version of the Cyber Resilience Act, for which EU countries had time to submit comments until last Friday. The compromise text includes hefty reductions in the list under Class I and II, with only a few product categories left. Significant changes were also introduced in the reporting obligations, most remarkably on the ground for a national CSIRT to delay the disclosure of an actively exploited vulnerability. The provisions on the calculation and justification of the product lifetime were also refined. A final iteration of the text is expected ahead of COREPER adoption on 19 July. Read more.
CEOs ask for time. The CEOs of major European companies, such as ASML, Siemens and Airbus, expressed their concerns about the implementation timeline for the Cyber Resilience Act (CRA) in a joint open letter to Internal Market Commissioner Thierry Breton. “There must be sufficient time not only to re-design, test, and manufacture CRA-compliant products but also to integrate them into the respective industrial systems and environments,” the letter reads. The companies call for “a significantly longer transition period of 72 months” and are open to a meeting to provide more information.
Russian hackers’ scam. Hackers suspected of working for Russia’s foreign intelligence agency targeted dozens of diplomats at embassies in Ukraine with a fake used car advert in a bid to break into their computers, according to a cybersecurity firm report published on Wednesday. The wide-reaching espionage activity targeted diplomats working in at least 22 of the roughly 80 foreign missions in Ukraine’s capital, Kyiv, analysts at Palo Alto Networks’ Unit 42 research division said in the report. Read more.
Data & Privacy
US data adequacy decision. The European Commission adopted its new adequacy decision for the EU-US Data Privacy Framework on Monday (10 July), providing a new legal framework for transatlantic data flows after the two previous ones were struck down in court. Although not all the changes of the European Data Protection Board might have been addressed, the most significant amendment from the first draft decision concerns a redress mechanism that would allow an EU resident to file a complaint with the national data protection authority, which is then handled via the EDPB with the American counterparts. Meanwhile, Austrian activist Max Schrems belligerently declared he expects the newest version of the adequacy decision “to be back at the Court of Justice by the beginning of next year”, which then could “even suspend the new deal while it is reviewing the substance of it”. Read more.
ECCG meeting. The European Cybersecurity Certification Group (ECCG) met on Wednesday for another discussion on the controversial European Cloud Services Scheme (EUCS). The draft scheme has not changed since EURACTIV’s leak in May, which the Commission presented as solving the concerns related to the sovereignty requirements, saying US companies would be able to meet the criteria. The Commission stressed again its intention to get the scheme through comitology in autumn, a prospect the Netherlands-led coalition vehemently opposed, stressing that they do not support the draft. Thus, the EU executive committed to providing a new draft before the comitology in the next two months, following which a new ECCG meeting will take place.
EDPB’s schedule. Since she took over the role of chair of the EDPB, Anu Talus has been mostly working on the handover of high-profile cases, such as the one on TikTok, for which a binding decision is expected in August. The Board will also provide opinions on the GDPR harmonisation regulation in September and the Digital Euro in October. Next week, the data protection authorities will adopt Frequently Asked Questions regarding the new EU-US Data Privacy Framework. Talus is expected to present her strategy in autumn.
Will you apologise for that? Schrems also published an open letter requesting an official “rectification and apology” from Justice Commission Didier Reynders for repeatedly spreading “highly disrespectful and false allegations,” namely the accusations that Schrems is bringing cases before the Court of Justice of the European Union because it is part of his “business model.”
EDPS restructuring. The European Data Protection Supervisor (EDPS) is making organisational changes to adapt to data protection challenges, including appointing the organisation’s first secretary-general, Leonardo Cervera Navas, and setting up specific thematic areas such as security and justice, complaint handling and policy advice.
Digital Services Act
None wants to be a VLOP. Amazon has initiated proceedings to contest the European Commission’s decision to designate it as a very large online platform under the Digital Services Act, joining Zalando and replicating some of the German company’s argument that it is mostly a retailer rather than an online marketplace. Amazon notes that no other large retailer across the EU has been designated under the DSA’s stricter due diligence regime, which would put it on the backfoot vis-à-vis competitors. Read more.
Digital skills
The talent shortage is real. With complex technologies and evolving internet usage, businesses demand information and communication technology (ICT) specialists, Eurostat reported. EU companies, however, face difficulties in hiring ICT experts. In 2021, for example, 62.8 % of the enterprises trying to recruit such specialists had difficulties filling those vacancies.
eGovernance
Pilot project launched. The POTENTIAL consortium headed by France and Germany has begun work on a large-scale pilot project to create a European Digital Identity wallet, with deployment excepted by 2025, it was announced at the launch event in Paris on Monday. POTENTIAL is one of the four pilots implementing the EU’s Digital Identity. It focuses on digital public services, from opening a bank account online to medical prescriptions and paperless driving licenses. The consortium is due to publish a status report by September, which will be used to draw up a roadmap for developing the six projects by 2025. Read more.
Gig economy
Commission’s negotiating position. As inter-institutional negotiations kick off on the Platform Workers Directive, EURACTIV has learnt that the European Commission will endeavour to get the final text closer to its initial proposal, expecting most of the pushback to come from the Council. Following a first introductory trilogue on Tuesday, the EU executive plans to push back on the carve-outs, suspensive effect, and keeping the criteria for the rebuttable presumption of employment. Read more.
Spain is a question mark. While Tuesday’s trilogue was only the first exchange of views, uncertainty looms over the negotiations as Spain might drift significantly to the right following the national elections on 23 July. The Social Questions Working Party is due to meet via videoconference on Monday to prepare for the negotiations. Still, according to a steering note seen by EURACTIV, the legal presumption and its suspensive clauses are left out and are not among the topics on which Madrid requested input. Delegations are expected to indicate orally “which of the proposals of the Parliament they might be in favour of or the extent to which they could show flexibility”, the note reads.
Industrial strategy
Germany’s China strategy. Germany’s first-ever China strategy puts technology at the heart of its efforts to lessen dependence on Beijing, from raw materials supplies, critical infrastructure protection, and cybersecurity, to counter-espionage and fighting disinformation. Presenting the strategy on Thursday, Foreign Minister Annalena Baerbock said that “key technologies such as semiconductors, Artificial Intelligence, and green technologies are becoming ever more crucial for prosperity and security.” Read more.
Law enforcement
Spyware connections. An article by Inside Story revealed connections between Intellexa, a consortium founded by Tal Dilian, a former Israel Defence Forces Unit 81 commander, who became a major entrepreneur in the high-tech domain, and the Greek secret services and the Greek prime minister’s office. As EURACTIV reported, the administration of Greek Prime Minister Kyriakos Mitsotakis facilitated the proliferation of Intellexa’s Predator spyware to several countries. Still, Mitsotakis said publicly he was not aware of the surveillance.
You are not welcome. EURACTIV learned that during the shadows’ meeting for the regulation to prevent child sexual abuse regulation on Wednesday, Renew MEP Hilde Vautmans brought the coordinator of the Child’s Rights Intergroup as her assistant. This is despite the decision of the European Parliament’s Committee on Civil Liberties coordinators that such intergroup coordinators cannot join technical or political meetings on legislation. However, there are no legal grounds in the Staff Rules excluding the possibility for MEPs to bring their assistants who are part of a grouping of MEPs. The meeting ended quickly without any political discussions. The intergroup issue is now with Parliament President Roberta Metsola.
Media
Anti-SLAPP trilogues. The EU directive against strategic lawsuits against public participation (SLAPPs) entered inter-institutional negotiations on Wednesday with key provisions remaining in the balance after the European Parliament voted to approve the text with a broad majority. The most contentious points include the definition of ‘cross-border’ cases, a prerequisite for the EU directive to apply; the notion of early dismissal of “obviously illegal” lawsuits; and the possibility for a defendant to claim damages. Read more.
LIBE on spyware protection. LIBE committee MEPs want to introduce an obligation for EU governments to inform journalists that are being spied on by security services and other people whose communications were accessed in the Media Freedom Act, according to compromise amendments obtained by POLITICO. The amendments were agreed at a meeting of a group of leading lawmakers on Thursday and are set to be voted in committee next week. Another technical meeting is taking place today to finetune the compromise. LIBE is responsible for the regulation’s part related to the surveillance of reporters, while the Committee on Culture and Education (CULT) leads the rest of the file.
Music streaming market. CULT published research on cultural diversity and the conditions for authors in the European music streaming market, pointing to the implications of recommender systems on the sector and the way music is consumed. Meanwhile, Spanish lawmaker Iban García del Blanco called on the Commission to look into “quotas” for European songs on Spotify and other music streaming platforms.
Metaverse
Official metaverse strategy. The European Commission shared its new communication on virtual worlds and Web 4.0 on Tuesday. While there were many significant changes to the version leaked by EURACTIV last week, the new document added a reference to cohesion funds, saying they are available for “innovation and creative industries, including start-ups and scaling up businesses” in the EU. This means equity-only support for non-bankable SMEs and small mid-caps with investment needs in the range of €15 to 50 million for such deep tech sectors as virtual realities.
Telecom
O2-Hutchison merger reset. The Court of Justice of the European Union released its judgement on Thursday, asking the General Court to reassess its annulment of the European Commission stoppage of the O2-Hutchison merger worth £13 billion. The ruling was welcomed with a sigh of relief from the EU competition department, as the General Court had invalidated the key arguments of competition chief Margrethe Vestager’s doctrine of preventing the reduction of mobile operators from four to three. On the other hand, the EU top court’s decision reinstates the status quo and is bound to disappoint those who have been arguing in favour of consolidation in the telecom sector. Read more.
Council’s GIA path. The Spanish presidency circulated its first iteration of the Gigabit Infrastructure Act, enhancing the discretion of EU countries, making the conditions for accessing physical infrastructure more descriptive, expanding the minimum information networks deployers can ask for, and extending deadlines across the board. While Madrid wants to pursue minimum harmonisation, maintaining the legal instrument of regulation, the result might be to have a directive in all but name. The other major point of contention that emerged at the Telecom Working Party on Tuesday is the tacit approval principle, which the presidency considers ‘the most significant improvement’ of the draft law but faces opposition from up to 10 countries.
Investment gap estimated. The European Commission published on Thursday the results of a study it commissioned to WIK-Consult to assess the investments needed to reach the Digital Decade targets for digital infrastructure. €114 billion is estimated to be missing for fibre networks, €33.5 bn for 5G, plus an additional €26 to €79 bn depending on the deployment mode. As a result, the overall investment gap is estimated to be at least €174 bn.
Senders-pay consultation. EURACTIV got a hint at the initial results of the senders-pay consultation, expected to be officially published next week. What emerged is that the picture is rather blurred for cloud services because it might be difficult to determine who is generating traffic, the service provider or the user. The need to incentivise more efficient data handling, including new technologies that might help reduce the environmental impact, was largely recognised. Still, some inputs stress that Internet Service Providers have so far managed the increase in traffic without raising energy consumption.
Théophane Hartmann and Theo Bourgery-Gonse contributed to the reporting.
What else we’re reading this week:
A global subsidy war? Keeping up with the Americans (FT)
China just fought back in the semiconductor exports war. Here’s what you need to know. (MIT Technology Review)
[Edited by Zoran Radosavljevic]
