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“During the WP TELECOM meeting on 25 October 2022, the Czech Presidency intends to present the changes made in the fourth compromise proposal and invites the delegations to indicate any outstanding issues with the text.”
-4th compromise proposal on the AI Act
Story of the week: The Czech Presidency is getting close to a general approach based on a new compromise text circulated this week and seen by EURACTIV. The compromise confirmed a broad exemption for defence and national security purposes and enhanced carve-outs for law enforcement. EURACTIV understands some EU countries want to raise the bar on this part as a negotiation tactic ahead of the trilogue – where MEPs are expected to push back hard. Another exemption added to the scope was for non-professional users, except for the transparency requirements. The ‘remote’ adjective for biometric recognition was added, as member states feared fingerprint identification might fall under the scope.
The approach of tasking the Commission with developing an implementing act to tailor the obligations on general-purpose AI was maintained, but an EU diplomat told EURACTIV that not all countries are convinced with this solution, as the way the Commission has carried out these tasks were not always satisfactory in the past. More changes relate to the list of high-risk systems (with insurance added back in), the part on sandboxes, transparency obligations, common specifications and penalties. Significant modifications also applied to the governance aspect, with increasing tasks for the Commission to set up a pool of experts and carry out market evaluations. These additions primarily draw from a non-paper issued by Belgium, Bulgaria, Latvia, Slovakia and Slovenia, seen by EURACTIV. Read more.
Don’t miss: The European Commission presented its work programme, and as anticipated by EURACTIV on Friday, the programme provides more details on the recently announced proposals like the European Critical Raw Material Act (Q1) and the non-legislative initiative on virtual worlds (Q2). While the programme fails to mention the senders-pay, probably because the Commission still has to decide on the legislative or non-legislative nature of the initiative, it refers to a new radio spectrum policy programme (Q3). Rightsholders are bound to be disappointed that the initiative on the piracy of live content will be a mere recommendation (Q2). For sci-fi lovers, the Commission will present a regulatory framework for hyperloop (Q2) and the mobility data space. A last-minute addition to the work programme (as it was absent from the leaked version), the Commission also committed to presenting an initiative to improve the cooperation between national data protection authorities, as recently asked by the EDPB. An intellectual property package, digital euro proposal and EU space strategy for security and defence are also on the agenda.
Also this week:
- The Czech Presidency presented a second compromise on the Chips Act, eyeing a general approach by December.
- Germany’s head of cybersecurity was removed following allegations of links with Russian intelligence.
- Eight countries expressed their dissent towards the direction the platform worker directive has been taking
- A new EU Council’s compromise could significantly enlarge the definition of political advertising.
- Trade associations are mobilising against the Commission’s new approach of excluding non-European companies from expert groups.
- Clearview AI was sanctioned for illegally scraping facial images in France.
Before we start: Supply chain disruptions, information warfare and sabotage of critical infrastructure – technology is acquiring an intrinsic geopolitical value as everything becomes weaponised. We discuss with Fredrik Erixon, Director of the European Centre for International Political Economy, how the current tensions with Russia and likely future ones with China are affecting the tech sector and what this all means for the EU’s digital sovereignty agenda.
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Artificial Intelligence
NGOs mobilise. A group of civil society organisations have written to the Czech Republic’s Deputy Prime Minister for Digitalisation, Ivan Bartoš, to express their concerns over the direction the AI Act has taken under the Czech Presidency regarding fundamental rights. In particular, the coalition calls for further redress mechanisms, meaningful accountability and transparency obligations on public uses of AI systems, broad civil society participation and life-cycle-long accessibility requirements.
Don’t forget us. In another open letter on the AI Act, the European DIGITAL SME Alliance has written to MEPs with a list of suggestions for ensuring the regulation is better aligned with the interests of small businesses. The alliance welcomes the act but calls for measures including guidance on implementation, mandatory sandboxes fine-tuned for SMEs and the inclusion of SMEs in standard-setting, amongst others.
Competition
The deal is off. Meta must sell the GIF platform Giphy after the UK’s Competition and Markets Authority (CMA) concluded that the acquisition could allow Meta to limit rival platforms’ access to Giphy’s content. The investigation into the merger was launched in 2020, and Meta has already been fined £1.5 million over its conduct. The investigation’s Phase 2 results, published last year, ordered Meta to sell Giphy, but the tech giant appealed the ruling. The CMA’s order, however, has been upheld, confirming the watchdog’s finding that the only way to avoid undue impacts on the digital markets involved is for Giphy to be sold off again.
Anti-merger victory. In a non-binding opinion issued on Thursday, the advocate general of the EU’s Court of Justice (CJEU) recommended the dismissal of the annulment of an EU antitrust veto of CK Hutchinson’s purchase of O2 UK. CK Hutchinson Holdings challenged the EU’s veto of its planned acquisition in 2020, but the EU executive appealed the findings, which had been in the telecom company’s favour. The advocate general’s influential opinion, followed by the court on four cases out of five, supports the Commission’s anti-merger policy in the telecom sector.
Amazon’s business changes. Having fallen short on the first settlement offer put forward by Amazon in July, Brussels is trying once more to close the door on its investigations into the tech giant, Politico reported. EU antitrust authorities are attempting to conclude an inquiry into Amazon by pushing the company to redesign its website to give smaller vendors more of a level playing field. After the first concessions from the e-commerce giant drew criticism, the EU executive circulated a new offer to stakeholders to test the revised terms. Amongst the reported concessions made by Amazon in the latest plan is the addition of a second highlighted “Buy Box”, which had previously been slammed as a tool of self-preferencing.
Metaverse’s walled gardens. Companies are already beginning to reorient their workforces and practices towards the metaverse, but with this reorganisation comes a new focus on potential competition concerns in this emerging sector. The nature of this competition will likely rest on how metaverse platforms are structured and the details of their interoperability, according to a new paper by two enforcers from DG COMP. Much rests, the authors note, on whether the metaverse remains interconnected or whether companies close their domains off into separate “worlds”, which could bring up antitrust issues when allowing access to consumers and other businesses.
Cybersecurity
Top cyber official sacked. The German Interior Ministry has fired the country’s head of cybersecurity and launched an investigation over allegations that he may have been in contact with Russian security services. Arne Schoenbohm was dismissed from his post this week after media reports that a cybersecurity consultancy he founded before he was appointed chief of the German federal information security agency included in its membership a German subsidiary of a Russian company founded by an ex-KGB employee. Read more.
Resilience recommended. The Commission proposed a Council Recommendation that would encourage member states to accelerate their implementation of both the Network and Information Security Directive (NIS2) and the Directive on the Resilience of Critical Entities in response to heightened threats against critical infrastructure. Responding to geopolitical tensions more generally, as well as to the recent attacks on the Nord Stream 2 pipeline more specifically, the Commission’s draft recommendation urges states to conduct risk assessments of their vulnerability and take steps to up their preparedness for a potential attack. Read more.
Team set up. The positions of the MEPs who will follow the Cyber Resilience Act in the leading ITRE committee have been filling up this week. The rapporteur will be the centrist Nicola Danti. For the EPP, Henna Virkkunen will follow the file. The Greens’ shadow will be Ignazio Corao.
More destabilisation attempts. State institutions in Bulgaria were hit by a cyber-attack this week, the origins of which are believed to lie with Moscow. The assault, which began on Saturday, is the latest in a series to hit the region and affected the websites of the Presidency and Constitutional Court and the Ministries of Internal Affairs, Defence and Justice. Sofia said it had located the perpetrator, who was based in Russia but did not expect cooperation from Moscow on the extradition request it intends to submit. Read more.
Data & Privacy
Illegal scraping. There is no legal basis for Clearview AI’s scraping and processing of facial images from websites, the French Data Protection Authority, CNIL, has ruled, handing down a fine of €20 million. The controversial facial recognition company’s practice of indiscriminately collecting images from websites to feed its biometric software is unlawful and violates the GDPR; the watchdog said this week. They added that the company had also breached the subjects’ right to have their images erased from the database and failed to cooperate with the CNIL investigation.
LIBE’s mission to London. Next week, MEPs from the LIBE committee are travelling to the UK to investigate how London’s planned reform of the GDPR might affect the EU’s adequacy decision, as MLex first reported. According to a draft schedule, EU lawmakers will meet with the government’s digital department, the data protection authority, business representatives, NGOs and academics.
Digital Markets Act
Google Shopping’s vengeance. Forty-three of Google’s rivals have written to EU antitrust authorities urging them to adhere to DMA rules on self-preferencing to enforce Google’s pledge to address competition concerns about its shopping service, Shopping Units. Following a major fine in 2017, the tech giant committed to refrain from disadvantaging its rivals, but the 43 companies now say the promise is insufficient and Brussels should take action to guarantee that the issue is addressed.
First workshop. Self-preferencing will be precisely the topic of the first technical workshop on 6 December, announced by Vestager. DG COMP’s officials will collect the stakeholders’ feedback to define how future gatekeepers should comply with the relevant obligation under the DMA. Representatives from companies involved in existing or past antitrust cases (such as Google Shopping) are set to attend.
Digital Services Act
Signature. The DSA was officially signed by the Czech Minister for European affairs, Mikuláš Bek, and the President of the European Parliament, Roberta Metsola, on Wednesday, and it is now ready to enter into force.
Disinformation
What can you do? A cross-party group of MEPs have written to the Commission asking what options the EU executive has when dealing with pro-Russian disinformation on social media platforms, according to a list of questions seen by EURACTIV. The questions come in response to a recent investigation that exposed foreign influence operations run by Moscow in which major news outlets were impersonated to spread disinformation. The lawmakers have now asked the Commission what it can do, using the Code of Practice on Disinformation and the Digital Services Act, to intervene in the platform operations that allow for the spread of polarising content and clamp down on disinformation.
Gig economy
Mind the minority. Nine European ministers have written to Nicolas Schmit, Commissioner for Employment and Social Rights, and Marian Jurecka, the Czech Republic’s labour minister, calling for an “effective and strong, but rebuttable” legal presumption to be included in the platform workers directive. In a letter seen by EURACTIV, ministers from the countries expressed concerns about the Czech Presidency’s approach to derogating the rebuttable presumption on the workers’ status under certain conditions. The question now is if the coalition grows to form a blocking minority. To do that, they only need to swing a country with a population equalling 1.5% of the EU total. At the same time, it is unclear whether Italy, part of this coalition, will maintain this position on the file once the right-wing government takes over. Read more.
Talks disruptions. Persistent divisions within the centre-right over the platform worker’s directive were on full display this week at an event interrupted by former Uber drivers seeking to criticise lobbying by platforms. The workers accused the event’s speakers, a right-wing lawmaker and industry members, of seeking to “water down workers’ rights” and criticised the fact that no workers’ representatives had been included on the panel. Read more.
Industrial strategy
Closing in. A second compromise text on the Chips Act was circulated by the EU Council’s Czech Presidency, marking a significant step towards a general approach, which the presidency aims to reach by the beginning of December. The document, which the Council on Wednesday discussed, covers aspects of the regulation’s scope, measures to ensure the initiative does not only benefit the largest member states and provides national authorities with a more significant role in market oversight as part of the regulation’s provisions to anticipate supply chain disruption. Read more.
No EU sanctions on China. The new export control measures by the US Department of Commerce to hit China’s semiconductor and supercomputing capacities have prompted concerns in the investors’ world that the EU may adopt similar measures. “The European position on China has not yet evolved to a point where the EU would impose such direct sanctions, but I could see some smaller export restrictions like in the case of ASML if there is US pressure to do so,” said Niclas Frederic Poitiers, a research fellow at Bruegel. His reading seems confirmed by a Commission spokesperson who, asked by EURACTIV on the matter, pointed out the unilateral nature of these sanctions, which runs counter to the commitment to a multilateral approach Washington signed into with the TTC joint statement last year. “Contacts with the US Administration are ongoing as we analyse the new controls and continue cooperation in the context of the Trade and Technology Council,” the spokesperson added.
More candidates de confiance. Amazon and French tech company Atos are joining forces to enter the cloud services market and obtain a coveted “trusted cloud” label, additional criteria for which were recently added under French legislation. The partnership would be the third one between a major US tech company and its French counterpart in this market, following the 2021 union of Capgemini and Orange and this year’s link between Thalès and Google Cloud.
Chips’ amendments. ITRE’s deadline for amendments passed last Thursday. The Greens is pushing for a more substantial alignment with the objectives of the Green deal with several proposals. The liberal shadow Bart Groothuis emphasised ‘chip diplomacy’ and business-friendly measures like IP rights safeguards and streamlining administrative requirements.
Law enforcement
Data retention strikes again. For over a decade, Ireland’s police have been unlawfully retaining information about potential child sexual abuse material (CSAM), including of those related to content that was confirmed as false flags, according to information obtained by the Irish Council of Civil Liberties (ICCL). More than 11% of the information forwarded to the Garda by the US National Centre for Missing and Exploited Children since 2010 has been verified as innocuous. Still, the law enforcement agency retained all content metadata, even after the suspected wrongdoings were cleared.
Platforms
Conceptualising political ads. The Czech Presidency issued a compromise text on the political advertising regulation this week, but stakeholders have raised concerns about the potential implications of the definition of advertising. Obtained by EURACTIV, the text deploys two conceptualisations of political advertising, one which sees it as a service and another which could encompass political preferences expressed by citizens and civil society organisations, an outcome about which some stakeholders have raised the alarm. Read more.
Space
Starlink’s subsidies. The Pentagon is considering funding the provision of Starlink satellites to Ukraine after billionaire Elon Musk last week said his company could not continue to provide them indefinitely. The US Department of Defence is now mulling whether or not to take over the initiative’s funding, which has provided connectivity to the country as much of its communications infrastructure has been disabled by the war. The Financial Times this week also revealed that Brussels is also considering whether to pay for the programme’s extension. Meanwhile, Musk, in another U-turn, said that Starlink would keep funding the Ukrainian government for free. Read more.
Standardisation
Expert groups’ cut off. Six interest groups are pushing back against the Commission’s recent move to restrict the players eligible to join its Expert Group on Radio Equipment to exclude those based outside the EU or EEA. In a letter to Internal Market Commissioner Thierry Breton, obtained by EURACTIV, the coalition argues that the changes, which will come into effect next year, will negatively impact EU values and the goal of international cooperation and contest the fact that the decision was made without consultation. The shift agreed in May would mean trade organisations could lose their ability to participate in the advisory group if non-European companies controlled a majority share of their votes, potentially incentivising groups to restrict their membership. This new approach was also applied to the call for applications for membership of the High-Level Forum on European Standardisation published earlier this week. Business representatives warn that, while the matter has been kept to the technical level until now, it might escalate and lead to retaliations. Read more.
Telecom
Don’t you worry. This week, Commissioners Vestager and Breton replied to the MEPs, led by Patrick Breyer, who voiced their concerns that the upcoming proposal based on the senders-pay would undermine the net neutrality principle. While acknowledging some of the lawmakers’ concerns, the top EU executive rules out any implication for net neutrality while insisting on the “promotion of better investment incentives for the roll-out of gigabit connectivity, through the creation of a virtuous cycle that creates a mutually beneficial environment to all players in the ecosystem,” the reply reads. The letter also references the revision of the Broadband Cost Reduction Directive, somewhat confirming that the revision, due in July, is being delayed because the Commission is looking at it together with the senders-pay initiative.
Twin transitions
The smart cities’ path. The world’s population is an increasingly urban one, and the trend is only set to continue. Many cities have already begun to incorporate digital technologies into all aspects of their functioning. Still, as pressure increases to digitalise, some of the key obstacles to any practical implementation of these technological solutions are becoming clear, spanning regulatory, financial and social complexities. Read more.
Tell us what’s wrong. The Right to Repair proposal, announced on 30 November, has been postponed due to a negative assessment by the Regulatory Scrutiny Board. MEPs René Repasi and Anna Cavazzini have written to the Commission requesting access to documents related to the Regulatory Scrutiny Board’s (RSB) negative opinion on the proposal’s impact assessment. For the lawmakers, releasing these documents is in the public interest.
What else we’re reading this week:
TikTok users evade safety filters to share suicide and self-harm posts (The Times)
A bias bounty for AI will help to catch unfair algorithms faster (MIT Technology Review)
State Department Urges Silicon Valley to Aid National Security Effort (The Wall Street Journal)
[Edited by Alice Taylor]