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By LAURA KAYALI
With Laurens Cerulus, Janosch Delcker and Mark Scott
| SNEAK PEEK |
— Belgium releases its artificial intelligence strategy today, after Denmark and Finland last week.
— The terrorist attack in New Zealand raises questions about content moderation for Twitter, Facebook and Google.
— A new study finds users of public websites in the EU are tracked online by ad tech companies without their knowledge.
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| DRIVING THE DAY |
IT’S RAINING AI STRATEGIES: After Denmark and Finland published their strategies last week, Belgium is set to release its own plan this morning. Ministers will be joined by Commission Vice President Andrus Ansip in Brussels for the presentation, which — like Europe’s grand plan for AI — asserts that AI will create jobs in high-end industries and manufacturing, with ethics as a guiding idea.
A survey out this morning, seen by POLITICO, shows that Belgians are enthusiastic about the benefits of AI. But it also raises red flags about public support, with 85 percent of respondents saying they were concerned about the privacy implications of AI technology. Belgium still has some convincing to do, just as the rest of Europe does.
Meanwhile the EU’s high-level expert group meets today and tomorrow to finalize non-binding guidelines for “trustworthy” AI to be released in early April. Members will also start to discuss their next report, which focuses on boosting European investment into AI and is due for publication early this summer.
Though it’s non-binding, that second document will set the tone for what sort of regulation, if any, is needed. The group remains deeply divided. Some members argue that Europe should control its urge to regulate and let courts issue rulings as the technology progresses. Other argue that Europe needs to establish rules early in the game so as to influence AI standards worldwide.
Your Morning Tech team will discuss those questions with decisionmakers from across the board tonight and tomorrow at this year’s “AI: Innovation & Governance” Summit here in Brussels. There will be plenty of debate about Europe’s “ethics-first” approach to catching up with China and the United States. Views on Europe’s attitude range from “it’s an act of genius” to “slow suicide.” Click here or scroll down for Janosch Delcker’s dive into how the world views Europe’s principle-based approach to innovation.
| ILLEGAL CONTENT |
TERROR ATTACK PUTS SPOTLIGHT ON PLATFORM MODERATION: Footage of the terrorist attack in New Zealand remained accessible on various social media platforms hours after it was uploaded as hosts struggled to contain its viral spread. The effort started with a live stream and veered to removing a huge number of re-uploads by other users. Facebook said it had removed 1.5 million videos of the attack in the first 24 hours, including 1.2 million that were blocked upon upload.
U.K. Home Secretary Sajid Javid: “Tech companies must do more to stop his messages being broadcast on their platforms … This is the type of illegal behavior that our new Online Harms White Paper will address.”
In Brussels, policymakers pointed to the terrorist content legislation that is currently under discussion and makes platforms legally responsible for removing illegal content within a time limit. Daniel Dalton, the regulation’s rapporteur in the European Parliament, said that “upload filters would have struggled to prevent this sickening content being picked up in time … However, it is completely unacceptable that this video can still be easily accessed on some platforms several hours after the shooting. This only goes to show why this law is needed.”
DALTON FLOATS NEW COMPROMISE AMENDMENTS: The British MEP made proposals, obtained by Morning Tech, on the second half of the terrorist content legislation, which is to be discussed this week with the negotiation team (it’s unclear whether today’s shadow meeting is maintained or postponed to Tuesday). Main changes include new transparency requirements in cases where material was wrongly identified as terrorist content (article 8) and obligations for platforms to inform users about the outcome of their complaints within two weeks (article 10). EU countries would have to designate a single competent authority, which can be of administrative or judicial nature (article 17), and penalties should take into account the size of the company (article 18).
| DATA PROTECTION |
USERS TRACKED ON PUBLIC WEBSITES: EU citizens are unknowingly tracked online by ad tech companies when they visit government and public sector websites, according to a study to be released today. Nearly 90 percent of EU official government websites and 52 percent of landing pages on national health services contain third-party ad tracking, the study reads. On the French government website, users are tracked by 52 different companies, said the study carried out by Cookiebot, a company helping organizations to become GDPR-compliant and supported by Brussels-based digital rights NGO EDRi.
The e-Privacy angle: EDRi said the study was proof that e-Privacy Regulation needs to be adopted sooner rather than later. The legislation, currently stuck in the Council of the EU, could require companies to obtain users’ consent before tracking them online.
In other e-Privacy news, the European Data Protection Board released an opinion on the interaction between e-Privacy and GDPR.
| EU ELECTION |
RAPID ALERT SYSTEM KICKS OFF TODAY: The alert system is one of the main aspects of the EU action plan against disinformation and aims at ensuring cross-border sharing of information, trends and best practices. A meeting is organized today with contact people in the EU countries, according to an EU official. The European media literacy week also starts today.
High-level platform meeting: Google, Facebook and Twitter will meet with no fewer than four commissioners Tuesday to follow up on the implementation of the code of practice on disinformation. Commission VP Andrus Ansip, Justice Commissioner Vĕra Jourová, Security Commissioner Julian King and Digital Commissioner Mariya Gabriel will be there.
THE EDPB’S WARNINGS: The European Data Protection Board adopted a statement on the use of personal data in the context of the EU election to remind political parties and social media platforms about GDPR principles. Among other warnings, the EDPB said that personal data revealing political opinions can only be processed under strict conditions and that even public personal data are protected by the GDPR.
| COMPETITION |
APPLE STRIKES BACK AT SPOTIFY: “After using the App Store for years to dramatically grow their business, Spotify seeks to keep all the benefits of the App Store ecosystem … without making any contributions to that marketplace,” the iPhone maker wrote in a blog post. Spotify filed a complaint to the European Commission last week arguing Apple unfairly favors its own music services over rivals.
Oh no, they didn’t: Apple sought to paint Spotify as a profiteer. “Underneath the rhetoric, Spotify’s aim is to make more money off others’ work,” the tech giant wrote, referring to Spotify’s legal challenge of the U.S. Copyright Royalty Board decision to raise songwriter pay from streaming services by at least 44 percent. The iPhone maker did not directly refer to Spotify’s “dual role” argument.
Spotify receives support of the publishing industry: The European Publishers Council encounters the same kinds of issues when dealing with Apple and the App Store, the organization said in a statement. “The dominance of the two main app stores of Apple and Google is also harming news media providers,” the lobby said, adding it “fully supports Spotify’s EU competition case which seems set to become a landmark case in an issue that affects all European media players and consumers.”
GOOGLE SHOPPING REMEDIES: Ahead of a likely fine against its separate AdSense service, the search giant is making changes in its “vertical search” remedies. The changes, which are starting to be rolled out across Europe, will allow users to be directed to the websites of comparison shopping sites, and not just to the products shown in Google’s ads, according to a person with direct knowledge of the matter. The changes are aimed at resolving complaints that the current remedies do not help them receive additional web traffic when people click on Google’s advertising.
BENOIT HAMON WANTS TO BREAK UP GOOGLE AND CO.: Elizabeth Warren has a supporter across the Atlantic. Former French Socialist presidential candidate, whose political movement Génération.s will present a list to the EU election, wants the break up of big tech companies to be a campaign issue.
| COPYRIGHT |
IN GERMANY, CDU WORKS ON COPYRIGHT REFORM IMPLEMENTATION: The conservative party, which is torn between support and opposition of the copyright reform text, is already thinking about how to transpose the directive into German law. According to a paper seen by Spiegel, the Christian Democratic Union wants to allow users to upload any content they want, making content recognition technologies — called “upload filters” by critics — unnecessary. Platforms such as Google’s YouTube would then have to compensate right holders with what could be a flat rate.
Greens MEP Julia Reda called the plan a “sham,” arguing such an interpretation of the legislation is not possible under EU law, because the so-called Infosoc directive does not allow it.
RIGHTS HOLDERS WRITE TO YOUTUBE CEO: Europe for Creators, an umbrella organization of rights holders, wants to run ads on the Google-owned platform this week and be granted access to YouTubers who have taken part in the debate in response to YouTube’s Save the Internet campaign, conducted on the platform itself. “YouTube has been actively using its own services to influence public opinion, often with misleading or false information,” the letter reads.
| AROUND THE BLOC |
FRENCH LABOR COURT WON’T DECIDE ON UBER CASE: The Lyon labor court — Conseil de Prud’hommes — will not rule on a case asking for an Uber driver’s qualification as an employee. It will instead be referred to a commercial court, according to the ruling seen by Morning Tech. The driver, who has his own company, signed a partnership agreement with Uber and therefore cannot be considered as an employee. “Drivers can decide to connect in realtime and with no exclusivity condition. This new decision by the Lyon labor court confirms this freedom of choice is possible,” a spokesperson for Uber said in a statement.
GERMAN 5G SPECTRUM AUCTION WILL START THIS WEEK AS PLANNED: A German court dismissed Deutsche Telekom, Telefónica and Vodafone’s challenge against the coverage obligations attached to the auction, the Financial Times reported. The auction will kick off on March 19.
| BEST OF THE REST |
How the digital tax spat opened the door to a global showdown over changing corporate taxation rules, with the U.S. and China on one side, and France and Germany on the other, by POLITICO’s Bjarke Smith-Meyer.
Facebook’s crisis management algorithm runs on outrage, on Bloomberg, and also Facebook’s announcement about its new AI tool to fight revenge porn, on the Verge.
This report by the Mercator Institute for China Studies is doing the rounds with national policymakers focused on strategic autonomy and 5G security, and sets out a case for caution in allowing Huawei and other Chinese tech firms access to key parts of the European market.
| POLITICO PRO ARTICLES |
Europe’s silver bullet in global AI battle: ethics
— By Janosch Delcker
BERLIN — An act of genius, or slow suicide.
That’s the range of opinions on Europe’s plan for catching up with the United States and China in the global artificial intelligence race.
As American and Chinese companies dominate the AI battlefield, the EU has pinned its hopes on becoming a world leader in what it calls “trustworthy” artificial intelligence.
By ensuring AI applications follow ethical guidelines and base decisions on transparent criteria, policymakers believe they can boost consumer confidence in European AI, providing the bloc with a silver bullet against competitors in Silicon Valley and Shenzhen.
“Ethics and competitiveness are intertwined, they’re dovetailed,” said Pekka Ala-Pietilä, who chairs the EU’s high-level expert group on AI. “We need to create an environment where the use of AI is felt and seen as trustworthy.”
“If that kind of sustainably leveled playing field is established, that gives a great incentive for companies to create products or services where ethics is part of their competitive advantage,” he added.
Ala-Pietilä’s group of 52 experts is set to release the final version of its broad guidelines for the ethical use of AI in April. Later this year, a second document will follow, listing recommendations for boosting European investment in AI. Its release was originally scheduled for May but will likely be pushed back to the early summer.
The two documents won’t be binding, but they will provide lawmakers with a roadmap for regulating the emerging technology. The next European Commission, which takes office at the end of the year, is expected to make a priority of tackling AI.
The EU’s AI experts remain divided about what rules are needed, according to conversations with nine members of the group — but they’re united in their belief that an ethics-first approach will eventually allow Europe to set global standards for AI.
The political leaders at the European Commission agree.
“I am personally convinced that ethical guidelines will be enablers of innovation for artificial intelligence,” said Digital Commissioner Mariya Gabriel. “History will tell us we were right,” is how her colleague, Justice Commissioner Věra Jourová, put it.
Not everybody is so sure.
The EU’s “softball” approach to AI is “naive” and will cause the bloc to lose out to the U.S. and China, said Daniel Castro, vice president of the Information Technology and Innovation Foundation (ITIF), a think tank whose board includes members from U.S. tech giants including Amazon, Apple, Google and Microsoft.
Consumers care primarily about effectiveness — and an ethics-first approach will prevent Europe from coming up with competitive products, he said. “It’s like any other race: You can have the more ethical race car driver, but if his car is not faster, you are going to lose,” Castro said.
Ethics vs. price
There’s no denying the potential for AI to transform entire industries. The technology’s transformative power is often compared to breakthroughs like widespread electrification. Artificial intelligence is set to change the way people work, communicate, treat diseases and conduct wars.
The trouble is that potential comes with significant risks. The “deep learning” underlying many of today’s cutting-edge applications, for example, essentially trains AI systems by seeking out patterns in vast troves of data.
The result is often highly effective, but it can also turn programs into black boxes, making it difficult — or even impossible — to discern the logic behind their decisions. What’s more, because AI algorithms “learn” from real-world data, they are vulnerable to incorporating often unconscious biases against minorities and other vulnerable groups.
Amazon had to scrap an AI-powered recruiting tool that discriminated against women, according to Reuters. ProPublica revealed that predictive policing software used by U.S. authorities is biased against black people. And Google issued an apology after Motherboard reported that one of its machine-learning applications labeled being Jewish or being gay as negative.
Developments like these are what the EU wants to counter with what it calls “trustworthy” artificial intelligence.
The EU’s pitch: AI technology that respects European values and is engineered in a way that prevents it from causing intentional or unintentional harm — even when it’s operated by people with little or no technical background.
It’s less about moralist finger-pointing than about what’s best for consumers, said Virginia Dignum, a professor of social and ethical artificial intelligence at Sweden’s Umeå University and a member of EU’s high-level expert group.
“In a sense, ‘ethics’ isn’t the goal,” she said. “We want [AI] to be ethical and socially responsible because we want AI systems to be trusted, and useful for people.”
Critics like the ITIF’s Castro remain doubtful.
“This idea of ethics-by-design, it undercuts the idea that at the end of the day, this is still a market-based economy,” he said. “You have to create something of … more value than your competitors.”
“The European Commission itself has not provided any evidence that consumers are actually willing to pay for that,” he added.
Confronted with his position, Dignum answered that the EU has not been able to provide such evidence because, so far, there are no “trustworthy products in the way we propose to build them.” She said she is convinced that just as some consumers are willing to pay more for organic products, there will be consumer demand for “trustworthy AI” once it hits the market.
Data desert
There’s one area where European principles have already hobbled the bloc’s AI.
The Continent has some of the strictest rules in the world for the use of personal data, reflecting widespread concerns over privacy.
The more information a deep learning system is given, the better it becomes — and European tech firms say that a lack of access to data is putting them at a disadvantage to global competitors.
Although the EU introduced its General Data Protection Regulation, or GDPR, last year to harmonize data protection rules across the bloc, there remains a patchwork of different interpretations on to what extent companies can process private and public data.
Loubna Bouarfa, the CEO of health care firm OKRA Technologies and a member of the high-level expert group, said that data barriers between European countries “are making it very hard” for entrepreneurs to fully exploit the potential of AI technology.
European leaders such as Commission Vice President Andrus Ansip have been signaling to the industry that they’re aware of the situation. Ansip announced in December a plan to create “common data spaces in areas such as health, energy or manufacturing, to aggregate data for public sector and for business-to-business.” His colleague, Competition Commissioner Margrethe Vestager, added last month that “it is not enough that you want to do [AI] in a way that corresponds to our basic values — you also need the raw material.”
The bloc needs to act fast, and it needs to act now, Bouarfa said. Time is running out, she warned: “Europe is falling behind on AI, and we do really need to act quickly.”
Companies like her startup compete against, on the one side, American companies, which U.S. President Donald Trump’s administration has signaled don’t have much to fear from government regulation.
On the other side, they are up against growing competition from China, where companies have access to an internal market of 1.4 billion people protected by scant privacy rights.
That’s the reality European companies are confronted with as they seek to incorporate ethics — and incoming regulation — into their AI strategies.
Ulrike Franke, a policy fellow at the European Council on Foreign Relations, quoted an analyst in Brussels who recently joked that in the EU, “ethical AI is the new Green” — something everyone can gather behind.
But she added that Europe will only be able to push its AI standards globally if its ethical ambitions are accompanied by efforts to boost a top-notch AI industry across the bloc.
“It’s absurd to believe that you can become world leader in ethical AI before becoming world leader in AI first,” Franke said.
***
‘Digital tax’ spat spurs global battle over corporate tax
— By Bjarke Smith-Meyer
Move over, digital tax.
The looming headache for multinationals is a reform of global corporate taxation — and Washington and Beijing are for once largely on the same page.
The EU failed this week to agree on a so-called “Google tax” that would apply to tech giants across the bloc. Several opponents including Ireland and the United States repeatedly stated their preference for a global process led via the Organisation for Economic Co-operation and Development (OECD) in Paris.
Now that debate is under way, and it’s producing some unlikely bedfellows. China and the United States, for example, are largely on the same page about what to do, pushing for a switch to taxation at the point of sale, rather than the current system under which taxes are levied where profits are booked, according to a top official at the OECD.
The duo is pitted against Paris and Berlin, which would prefer a tax that targets tech firms and a global minimum corporate levy. At stake is nothing less than the future of the global tax system, which allows companies to stash billions of dollars in tax havens, infuriating voters and piling pressure on leaders to change the rules.
“China is on the same line as the U.S.,”said Pascal Saint-Amans, the OECD’s director of the Center for Tax Policy and Administration.“The U.S. is happy to negotiate but doesn’t want to limit the talks to digital companies.”
On the same line
The Washington-Beijing alignment is bad news for France and Germany due to their prize exports. Both countries want to avoid a global sales levy that could hit popular sellers abroad, like Louis Vuitton handbags for France and premium cars like Mercedes-Benz for Germany.
“The French and Germans aren’t too happy about [the China-U.S. position],” added Saint-Amans. “But they realize that when you have the U.S. and China aligning, it’s difficult to say [no].”
The OECD, whose guidelines are non-binding, has given itself until 2020 to forge a consensus. In June, the organization will publish a detailed roadmap of how it plans to marry positions that, for now, are far apart. An initial hearing to assess positions was held in Paris on Thursday.
European officials who watched debates on the digital tax are pessimistic. Negotiations at the OECD “won’t be plain sailing,” Pierre Moscovici, the EU’s tax czar, said on Tuesday following the failure of EU discussions on a digital tax at a gathering of finance ministers in Brussels.
Several European Commission and Council officials shared Moscovici’s view. But French Finance Minister Bruno Le Maire is more upbeat, pointing to talks hosted by France between the group of seven nations — Canada, Germany, Italy, Japan, the U.K. and the U.S. — as a reason to be optimistic.
“[U.S. Treasury Secretary Steve] Mnuchin is favorable towards the principle a digital tax and a minimum tax,” Le Maire told reporters on Tuesday, adding that global reform would be a “priority for France amid its next G7 leadership.”
Le Maire’s optimism stems from landmark initiatives that the OECD has already delivered.
In June 2017, countries ranging from EU members to China and Australia officially announced their support for the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (or Base Erosion and Profit Shifting). Their support is supposed to trigger amendments of over a thousand tax treaties.
The U.S. refused to sign the accord, leaving some EU officials close to the digital tax talks mistrustful of Mnuchin’s reassurances to Le Maire.
Profits or sales?
Most European countries agree on a broad diagnosis of what is wrong with the current corporate tax system. Because companies are taxed based on where they book profits, they can funnel revenue toward centers with ultra-low corporation taxes, depriving tax authorities in places where the revenue is generated.
Many also see an issue with digital companies, which can more easily displace revenues than companies that deal in hard goods.
Two successive European proposals for a digital tax failed to win unanimous support, largely due to opposition from Denmark, Ireland, Finland and Sweden.
Those countries opposed the Commission’s interim tax, which Danish Finance Minister Kristian Jensen called “very complicated” and “too short-sighted.”
That opposition could continue despite the four countries’ support for OECD talks, especially if the U.S. and China get their way.
“It’s crucial to find a global solution that doesn’t disturb our competitiveness,” Finland’s finance minister in the caretaker government, Petteri Orpo, told POLITICO. “That’s why for Finland and for many other countries in the EU, it is so important to tax the companies in our own countries, not there where the consumers are.”
A senior French official dismissed any potential future threats that could emerge from the four protesting countries, which are also OECD members. “The countries you just mentioned wouldn’t be in a position to block the decision,” he said, adding that OECD deals are driven by consensus.
Smaller EU countries that don’t have a seat at the OECD could also get a say if the Commission gets a mandate to represent them during the upcoming tax talks — a proposal that Moscovici made on Tuesday.
“We must find the best possible solution for the EU,” Orpo said.
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