A digital guide to the year ahead – POLITICO | #socialmedia | #cybersecurity | #infosecurity | #hacker


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By MARK SCOTT

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AND SO IT ENDS. This is the last Digital Bridge of 2021. I’m Mark Scott, POLITICO’s chief tech correspondent, and will be signing off until the New Year. When I started this newsletter back in January, my goal was to connect the dots between Brussels, Washington and other Western capitals on digital policymaking challenges that had popped up repeatedly during my reporting. To the almost 16,000 people who’ve signed up this year: I say thanks for joining in. I hope you’ve found it useful — and will stick around for more to come.

OK, enough of that. What to look out for in 2022?

— For Europe, getting digital rules passed and more blockbuster fines.

— For the U.S.: can regulators succeed with Big Tech investigations while Congress dithers?

— For the transatlantic relationship: privacy headaches and a likely digital tax stand-off.

EUROPEAN UNION: IT’S ALL ABOUT THE RULES

THE FIRST HALF OF 2022 will all be about getting the bloc’s flagship digital rulebook — the Digital Services Act and Digital Markets Act — over the line before the French presidency winds down in June. It’s not going to be easy. Surprisingly, efforts to rewrite antitrust rules (which had been subject to heavy lobbying) are now more likely to be approved than separate plans to hold social media companies and e-commerce giants more accountable for what people post or sell online.

What to watch out for: Fights lie ahead about which companies should be included in the European Union’s digital antitrust revamp. Senior EU officials want to focus squarely on Big Tech firms, but industry (and, weirdly, the United States government) are already crying “protectionism!” and want the scope to be broader. On the Digital Services Act, hard choices await in terms of whether online advertising should fall within the new playbook, and who actually should police the incoming regime.

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My bet is that Europe’s antitrust overhaul will get approved by the summer, while the bloc’s social media/e-commerce proposals will drag into the Czech Republic’s EU presidency slated for the second half of 2022. Reminder: both proposals will likely become law by 2024, so there’s still a long way to go before the rules actually start to bite. But with Washington eager to piggyback on some of these reforms (particularly those related to social media platforms), next year really marks a shift in enforcement.

But these rules aren’t all that’s coming from Europe this year. The European Commission has two separate antitrust investigations into Facebook (related to its use of data) and Apple (linked to its app store) that will trundle into next year. EU countries’ national regulators — particularly those in France, Germany and the United Kingdom — also have their own cases into Google, Facebook, Amazon and Apple, respectively, over claims they unfairly favored their own services over those of rivals.

Brussels’ long-awaited proposals to regulate uses of artificial intelligence aren’t going anywhere fast — even as officials try to get something passed during 2022. The rules would outlaw how AI is deployed in so-called “high-risk” cases (like manipulating people via sophisticated algorithms). But a lot of the detail still needs to be hammered out. Still, others are fast borrowing from the EU’s approach, including the United Nations, which tries to balance innovation with curbs on potential excesses from this emerging technology.

Another fight brewing is a potential re-write of Europe’s privacy rules. There’s a growing chorus of complaints that Ireland — the lead regulator for companies like Facebook, Google and Microsoft — isn’t doing enough to stop these firms from misusing people’s personal information. The reality is far more complex. But expect this battle to be pushed higher up the political agenda as EU countries and the Commission exert more pressure on Dublin to act more swiftly in enforcing arguably the world’s de facto data protection rules.

And the wild card: the U.K. Since leaving the EU officially on December 30, 2020, London has become a testbed for what a hybrid EU-U.S. style approach to digital regulation could look like. Its competition, media and privacy regulators joined forces to work on digital investigations. The antitrust agency is about to get a bunch of new powers, while British politicians want to roll back European-style privacy rules in the hopes of promoting tech innovation akin to that of the U.S. Will it work? That’s an unanswered question for 2022.

UNITED STATES: RELEASE THE ENFORCERS

ALL EYES WILL BE ON WASHINGTON to see if policymakers will match action to rhetoric on Big Tech enforcement. Leading that charge will be the U.S. Federal Trade Commission’s Lina Khan and the U.S. Department of Justice’s Jonathan Kanter, who together have open investigations or likely new cases aimed at Google, Facebook, Amazon and Apple. Added to the mix: multiple linked and separate cases brought by U.S. state attorneys general into potential Big Tech antitrust wrongdoing.

To be clear: U.S. judges are notoriously skeptical that potential illegal monopolies in the tech and telecommunications sector harm consumers. Case in point: the FTC’s original lawsuit against Facebook was thrown out after a judge ruled the agency had not proved its case that Meta, the parent company of Facebook, held a monopoly position in social networking. Also don’t expect these cases to be resolved any time soon. It’s going to take at least five years, if not longer, for anything to be resolved. Fun.

It’s also worth pointing out the obvious. The main action is with the FTC and Justice Department because Congress is not going to pass any laws. Politicians like Amy Klobuchar, Chris Coons and David Cicilline (there are Republican lawmakers involved, too) have tabled some interesting bills — more here, here and here. But none of these will likely get passed before the mid-terms in November, and there’s no credible federal privacy legislation expected to make it to a vote anytime soon, either.

It’s hard not to get depressed by the lack of action from Congress, although this isn’t just an issue blighting digital rulemaking. But what the myriad of tech bills, from both sides of the aisle, show is that U.S. lawmakers are increasingly taking a European-style view of digital regulation. That includes efforts to open up data to third-party researchers; potential block Big Tech takeovers on competition grounds; and limit what data firms can access to protect people’s privacy.

Still, that has left much of the heavy-lifting on digital policymaking (beyond the federal agencies) to U.S. states. Expect to new spate of privacy bills, often written and/or supported by Big Tech companies, to resurface in places like Washington State and Florida. California’s new privacy regulator, overseen by former FTC official Ashkan Soltani, will also be worth keeping tabs on as it starts to enforce arguably the U.S.’s most aggressive privacy standards.

Before you forget, remember the U.S. mid-term elections are less than a year away, and rampant online political advertising and blatant partisan misinformation are already starting to build ahead of November’s vote. One stat: WorkMoney, a union-affiliated nonprofit that spent big ahead of the 2020 presidential election, has already spent more than $1 million, mostly in swing states, over the last 90 days on social media advertising, according to Facebook’s transparency data.

But don’t expect Russia or China to be the main catalyst for whatever digital skullduggery awaits us in the months ahead. The COVID-19 pandemic and last year’s contested U.S. presidential election have provided fertile ground for domestic extremists views to seep into the mainstream via Facebook groups, Telegram channels and even rival TikTok videos. None of this content is illegal. But it could be extremely dangerous given the tinder box that is U.S. politics in the ongoing era of the coronavirus.

BY THE NUMBERS

Infographic

TRANSATLANTIC TIES: THE BEST OF FRENEMIES

SO LET’S START OFF with the positives. Relations between the U.S. and EU on digital policymaking are the best they’ve been in years, and that’s unlikely to change in 2022. The first meeting of the EU-U.S. Trade and Tech Council (TTC), in September, built personal ties between senior officials, and I’m told there’s an ambitious target of up to 70 “deliverables” to meet ahead of the next get-together, mostly likely somewhere in France (but not Paris) in May, 2022.

One area that surprised me was a shared connection on establishing Western rules for artificial intelligence. A separate sub-working group within the TTC has been created to go deeper on that, and in the communiqué from the first meeting, U.S. and EU officials made a point of highlighting this as a clear priority area. Caveat: Washington (along with Israel) was the only country not to sign UNESCO’s recent AI principles, so it’s definitely a work in progress.

Now, the problem areas. A new transatlantic data-sharing agreement, known as Privacy Shield, still hasn’t been signed — despite Washington’s repeated assurances that “we are close.” The latest intelligence is that both sides are stuck on how U.S. national security agencies will be policed when they access EU data. Brussels is pushing for either new legislation (not going to happen) or some sort of independent tribunal, within the Office of the Director of National Intelligence, to which Europeans can submit complaints directly.

Next up is digital tax. This issue was supposed to be resolved when more than 130 countries agreed to sweeping changes that would force the world’s 100 largest companies to cough up roughly $150 billion in additional yearly tax revenue. Yet the U.S. Senate is unlikely to approve part of that plan, which involves divvying up corporate income between countries, so the entire agreement is again in jeopardy. Washington wants countries like France to scrap unilateral digital taxes. But that’s unlikely if a global deal falls apart.

Third: how the EU and U.S. frame digital rulemaking. There are many in Washington who still eye Brussels’ tech regulation as a means to hobble American firms in a bid to promote European rivals. Even now, U.S. Commerce and State Department officials rely on mostly industry-driven talking points that claim Europe’s proposals unfairly target Silicon Valley and represent an unfair restriction on people’s freedom of speech. That’s not going to win too many fans in Brussels and EU national capitals.

For their own part, many EU officials continue to frame the U.S. as a threat akin to that of China. There are many things wrong with American policymaking (see above), but Washington is not Beijing by a long shot. Europeans, too, are quick to paper over the issues facing their own companies (many of which have the same bad practices as their U.S. counterparts), all in the name of “technological sovereignty.” If you’re going to throw stones, better make sure you’re not in a glass house.

Last, but certainly not least, is China. Washington successfully convinced European capitals to ditch the likes of Huawei in the local roll-outs of next generation mobile networks. But where the U.S. wants to go further in limiting China’s involvement in global tech standards, as well as creating a Western alliance around things like cybersecurity, so far, the EU has dithered. That’s mostly down to the bloc’s love-hate relationship with Beijing because some EU countries are more willing to partner with China than others.

WONKS OF THE YEAR

FROM BRUSSELS TO WASHINGTONNEW YORK TO BERLIN, we’ve covered a lot of ground this year to highlight the policymakers who you’ve might not heard of, but who are shaping much of the digital rulemaking conversation. For this edition, I wanted to focus on two individuals who deserve special mention. Why? Because their work is central to the transatlantic relationship, and will likely decide how many digital rules pan out in 2022.

I’m talking about the U.S. Commerce Department’s Christopher Hoff and the Commission’s Bruno Gencarelli, the respective lead negotiators of the ongoing Privacy Shield data transfer talks. Both men have been shuttling between Washington and Brussels for much of the year, trying to square the circle about how to ensure EU citizens’ privacy rights are upheld while giving U.S. national security agencies adequate data access to protect Americans.

Both are longstanding officials with their reputations on the line. Gencarelli is Brussels’ point man on international data flows (and not just with the U.S.) and has significant power to determine how Europe’s data is shared with other parts of the world. Hoff, who rejoined the Commerce Department the day Joe Biden became president, is leading Washington’s own efforts to rewrite global data protection standards in line with U.S. policy goals.

Will they succeed in getting a new Privacy Shield over the line? It’s hard to say, although there’s political will on both sides of the Atlantic to get an agreement in place. But their work underpins hundreds of billions of dollars in annual EU-U.S. digital trade — making them arguably two of the most influential digital policymakers of 2021.

THEY SAID WHAT, NOW?

I think there is a sense of urgency on both sides on these issues,” Margrethe Vestager, Europe’s digital chief, told reporters during a recent trip to Washington when asked about the EU-U.S. Trade and Tech Council’s 10 working groups and greater transatlantic cooperation. “Any relationship will entail irritants that will have to be handled. But that should be no reason to terminate the relationship, as such.”

WHAT I’M READING — 2021 EDITION

— Want to know what’s going on in the world of artificial intelligence? In their annual State of AI Report, Nathan Benaich and Ian Hogarth break down what you need to know.

— The U.S. Congressional Research Service outlines the fault lines in the ongoing EU-U.S. data flows talks, including where both sides still disagree. (Disclaimer: POLITICO’s coverage is mentioned throughout.)

— Online targeting isolates individuals, amplifies the harms of advertising and causes damage to the overall public good, argue academics in a paper for Nature Machine Intelligence.

— Beijing passed a major overhaul of the country’s data protection standards. Rogier Creemers and Graham Webster from Stanford University provide a handy translation on arguably one of the world’s most important privacy revamps.

— There’s a growing digital divide on both sides of the Atlantic between companies that are embracing the online world and those that are not, claim experts from the European Investment Bank and KU Leuven.

— Australia’s competition authority wants the power to force Google to open up its mobile operating system to rival search engines after the regulatory raised concerns about the tech giant’s dominance. Read the regulator’s digital platforms report here.

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