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“These [allegations] have to be verified, but if it is the case, it is completely unacceptable, against any kind of rules we have in the European Union. The free press is one of the core values of the European Union”
–European Commission President Ursula von der Leyen
Story of the week: This week saw the revelations of the Pegasus Project, which detailed how authoritarian governments have allegedly used the spyware of Israeli security company NSO to hack and monitor the phones of prominent figures including politicians, journalists, activists and others. Following this, the European Commission has confirmed it will look into the matter, notably in relation to the surveillance of EU journalists.
While Hungary is the only member state whose government has been accused of using military technology for these purposes, targets have been spread across the EU, including French President Emmanuel Macron, whose phone number was found on a list of potential targets compiled by the Moroccan government. Hungary’s government has denied any knowledge of the targeting of its journalists, businessmen and politicians and the prosecutor general’s office has launched an investigation. The French government has also launched an investigation into the allegations that Morocco used the Pegasus technology. Morocco denies being a client of NSO but has also been accused of wiretapping the phones of French journalists. Investigative journal Mediapart has filed a complaint with Paris’ public prosecutor on behalf of two journalists who say they have been spied on by Moroccan authorities through the Pegasus software.
Don’t miss: The European Court of Justice (CJEU) is set to consider the third case brought against Facebook by data protection activist Max Schrems. The CJEU has been asked by Austria’s Supreme Court for clarification on the legal basis of Facebook’s personal data processing. The platform could face lawsuits amounting to millions in damages if ruled against by the court. The previous two cases pitting Facebook against Schrems, in 2015 and 2020 respectively, focused on EU-US data transfers and saw the court first declare the Safe Harbour transfer illegal, then that the Privacy Shield agreement was incompatible with the General Data Protection Regulation. Read more.
Before we start: The economic impact of the semiconductor shortage has prompted major industrial players to ramp up their investments, including the EU. Niclas Frederic Poitiers and Pauline Weil have recently published a study assessing the EU semiconductors. In presenting the outcome of their study, the two researchers from the Bruegel think tank made the case that Europe should focus on its competitive advantages rather than trying to replicate what others are doing. They also point to the fact that the semiconductor industry is symptomatic of a broader problem in the EU innovation ecosystem. Listen to the podcast for more.
Where is the EU semiconductor strategy going?
Also this week:
- The US has rallied up the EU and NATO in accusing China of a major hack of Microsoft email servers.
- The racist abuse of England football players following the Euros has ignited a debate around online anonymity.
- The European Commission appealed against the General Court ruling that dismissed the state aid Amazon-Luxembourg case.
- Research finds that anti-refugee content can act as a connection for far-right extremists and mainstream politicians.
- The Digital Euro remains undefined on several critical points and may not be able to catch up with its delay with cryptocurrencies, experts say.
New business is happening on Facebook.
Small businesses across Europe are benefitting from Facebook’s apps and services. Just like Hart voor Wijn, an online wine tasting business who build their brand and customer base by using our Ad products, Messenger and WhatsApp. Find out more.
Cyber accusation. Washington has accused Beijing of being behind the major hack of Microsoft’s email servers, allegations which China has denied. In a rare joint statement, the EU and allies, including NATO, condemned the “malicious” cyber activity, as the US described China’s Ministry of State Security as having “fostered an ecosystem of criminal contract hackers.” In response, China described the US’ claims as “fabricated”, saying that it opposes all forms of cyber-crime. The US also announced that four Chinese citizens had been charged with hacking an array of companies, universities and government institutions around the world between 2011 and 2018. US Secretary of State Anthony Blinken warned that the US would “impose consequences on malicious cyber actors for their irresponsible behaviour in cyberspace.” Read more.
Pegasus fallout. Israel’s government is reportedly establishing a task force to handle the major revelations of the Pegasus project. The government has come under increasing diplomatic pressure to explain why NSO, founded by former Israeli intelligence officers, was granted export licenses for technology that could enable such abuses by authoritarian states. While both Israel and NSO deny that the country’s intelligence services were able to access the information collected by clients using the spyware, EU and US officials were reportedly already wary in terms of their relations with the company and its technology over suspicions that it was sharing with the government details about who was using its tech and the information they were accessing with it.
Apple falls short. Apple has also found itself under pressure to respond to the Pegasus revelations, after Amnesty International, a partner in the investigation, concluded that even the most up-to-date iPhones with the latest operating systems were among the devices successfully accessed by NSO’s spyware. This finding contradicts Apple’s claim that it is keeping up with the surveillance technology being used to attack its devices, and threatens to upend the company’s security claims. Critics have accused Apple of hubris when it comes to security, saying that the tech giant’s desire for secrecy has impeded its ability to stay a step ahead of cyber-adversaries.
Anonymity debate. The onslaught of racial abuse directed towards members of England’s football team by anonymous social media accounts following the Euro 2020 final has ignited a debate over how and whether to end online anonymity. In response to the attacks, which were directed towards three black players who missed penalties in the game, some called for measures to ensure that platforms can determine the real identity of users engaging in abusive behaviour. Opponents, however, have argued that the ability to assume anonymity can be important for the most vulnerable groups and that allowing platforms to access that kind of personal data could be risky in itself. Read more.
Appeal against Amazon. The European Commission has appealed to the EU’s General Court, the second-highest judicial body, against a ruling that has revoked a 2017 order that Amazon had to pay €250 million to Luxembourg. The ruling disputed Brussels’ claim that the company’s tax bill had been artificially reduced through the overpricing of a royalty payment, arguing instead that the court should have considered the profits recorded by Amazon in Luxembourg rather than the US. The case mirrors a previous one last year in which Apple successfully overturned a 2016 Commission ruling that would have seen the company pay the Irish government €13 billion in back taxes. The Amazon case will now proceed to the European Court of Justice.
Big Tech diplomacy. The European External Action Service (EEAS) wants to establish a diplomatic representation in San Francisco, in the heart of the Silicon Valley, to look into the geopolitical consequences of new technologies, according to an internal paper seen by Handelsblatt. The move is intended to define a coordinated approach with the US to counter the rise of China as a ‘cyber superpower, as the technological race with Beijing intensifies over AI, quantum computing and telecommunications. Many EU countries have already established a consulate in the Californian city.
TikTok’s strategy. An investigation by the Wall Street Journal has found that TikTok’s algorithm uses the amount of time a user spends on a video or the number of times they watch it, to determine what topics they’re interested in and return related content to them. As this content becomes more niche, the likelihood that it has been vetted by the platform’s moderation systems decreases, meaning that once a viewer shows an interest in potentially harmful content, it will make up an overwhelming proportion of what they see on the app.
Anti-refugee disinformation. A study by the Institute for Strategic Dialogue has mapped the online networks spreading disinformation and hatred about refugees and the NGOs that work with them, finding that there is overlap between the accounts of far-right extremists and mainstream politicians within these spaces. The report outlines the role that elected officials can play in amplifying this kind of disinformation, often transnationally, which can have dangerous consequences offline. The complexity of these networks and the range of actors within them complicate policymaking when it comes to combatting disinformation. Read more.
Digital euro, what is it? Following the European Central Bank’s announcement last week that it would move to the investigation stage of the digital euro development, experts have criticised the lack of clarity surrounding the lengthy project. Speaking to EURACTIV this week, experts said that the outcome of the process and impact of the project was still unclear and that the time development was taking was impacting the currency’s competitiveness. Critics also point to the years of delay the digital euro would face against the cryptocurrencies, pointing to criticalities such as the role of the banking system and privacy concerns. Read more.
Crypto-regulation. The EU has announced proposals to force companies transferring crypto-assets including Bitcoin to collect details about both the recipient and sender, meaning that such assets would be more traceable. The European Commission says the rules are designed to prevent money-laundering and the financing of terrorism, arguing that crypto-transfers should be subject to the same regulations as their wire counterparts.
Data & Privacy
GDPR review. The Irish legislature’s Joint Committee on Justice has issued a report on General Data Protection Regulation (GDPR) enforcement in the country, voicing concern over the capability of the Data Protection Commission, which it says suffers from funding and training gaps and is extremely slow at processing certain cases. The report outlines a number of recommendations for improvement, which lawmakers have called on the government to urgently implement. GDPR enforcement is especially relevant in Ireland, given how many major tech companies, each with access to the data of millions of EU citizens, are headquartered there.
Bill delayed. The parliamentary debate of a controversial new law proposed by Poland’s ruling Law and Justice (PiS) party has been delayed until August after divisions within the governing coalition over its implications. The law, which could prevent media outlets with owners based outside the European Economic Area from obtaining broadcasting licenses, has been criticised as another attempt to curb media freedom in the country. It is widely seen as targeting TVN24, a US-owned channel often critical of the government. The debate was pushed back after lawmakers from the government’s junior coalition party voiced concern over the bill and suggested that the licensing ban should instead apply only to outlets owned by entities in non-OECD countries. On Thursday, US State Department Counselor Derek Chollet warned that failing to renew the licence to TVN24 might jeopardise future American investments in Poland.
Media pluralism. This week saw the publication of the 2021 Media Pluralism Monitor, which documents the condition of and threats to media freedom in EU member states. The report covers 2020 and documents an increasingly hostile environment for journalists, political independence and social inclusiveness as well as how the COVID-19 pandemic has accelerated the declining trend of the news media. The EU’s 2021 Rule of Law report was also published this week which warned of deteriorating media freedom in Hungary, Poland and Slovenia in particular.
Alliances forged. The European Commission has launched two Industrial Alliances, one focused on processors and semiconductors, and the other on industrial data, edge and cloud technologies. The EU is hoping that the latter alliance will help to strengthen its technological sovereignty by boosting cloud and edge capabilities, and the former comes in the midst of a global semiconductor chip shortage which the CEO of carmaker Stellantis this week warned could last well into 2022.
Chip upgrade. UK chip designer Arm says it has developed a processor that can be attached to, and collect, process and transmit data from everyday objects such as vegetables or clothes. Potential applications could range from wearable health patches to monitoring the freshness of food. Unlike circuits that have come before, the Arm processor’s components could be printed straight onto paper, cardboard or cloth for significantly less than chips are currently being manufactured for, opening up a vast number of possibilities for its use.
IP for trade. Companies with intellectual property rights have on average 20% more revenues than companies that do not, a difference in revenue that reaches 68% per employee in the case of SMEs. At the same time, slightly less than 6% of all EU imports are fake, leading to an estimated loss of €83bn in sales revenues and 670,000 jobs lost per year. Most counterfeit products come from China. In this context, the European Union Intellectual Property Office (EUIPO) after eight years of negotiations reached an historical agreement with its Chinese counterpart to mutually recognise trademarks, one of the main forms of intellectual property rights. As a result, China’s trademarks have been included in the EU repository TMView, which now includes 95 million entries from 76 countries. “Suppliers are getting more and more pressure from consumers into not selling counterfeited goods. With this database, we are giving them data in real-time from official sources,” a EUIPO spokesperson told EURACTIV.
Right to repair upheld. The US Federal Trade Commission (FTC) has voted to issue a policy statement requiring that users be able to repair their devices. Earlier this year the FTC found that manufacturers have used a range of approaches that effectively restrict consumers’ right-to-repair, despite being prohibited from doing so. The FTC pledged to devote more resources to enforcing the rule and ensuring that consumers are able to repair devices rather than having to needlessly buy new ones. The move was supported by both the Democratic and Republican commissioners on the five-person panel.
5G bidding. Spain has raised €1.1bn in an auction for 5G-suitable frequencies within the 700MHz band. The end total was around €15 million above the starting price, according to the Ministry of Economic Affairs, with the Spanish branches of Orange, Telefonica and Vodafone each contributing over €300 million. The auction marked the country’s second sale of 5G-suitable spectrum and the licenses bid for will each last 20 years, with a maximum extension to 40.
5G on the road. A van with continuous 5G connectivity, even in remote areas, is being tested in Cornwall, UK. The vehicle will switch between 5G and satellite networks as needed and will be able to support connections in areas where mobile networks are unavailable. As long as it has a clear line of sight to the sky, satellite connection will be possible, a fact that the technology’s developers hope means the vehicle will be able to deliver connectivity in the areas of Cornwall currently missing mobile coverage.
Victory for Nokia. The Finnish company has won its first 5G contract in China, securing a 10% share in one of three contracts issued. While Chinese company Huawei won the majority in each contract, Nokia beat Swedish rival Ericsson, which came away with 9.6% of a different deal after being caught up in a political dispute arising from Sweden’s ban on Huawei participating in its 5G networks announced late last year. Nokia has also announced a deal with Taiwan Star Telecom to extend its 5G footprint in the country.
Bezos takes to the sky. Jeff Bezos has become the second billionaire in recent weeks to launch himself into space and make it safely back to earth. Bezos travelled almost 70 miles from Earth in the New Shepard launch vehicle built by his company Blue Origin. Bezos was joined by his brother, an 82-year-old and an 18-year-old just nine days after Richard Branson took a similar journey. Blue Origin plans to launch more passenger flights on the New Shepard later this year and has larger plans to develop a fleet of reusable spacecraft.
Autonomous weaponry. A report by the US Department of Defense has identified over 150 AI-enabled, autonomous weapon systems that are being developed by Russia. While not currently an AI leader, the country is taking steps to develop its research and development capabilities and intends to establish a specialized department to develop AI. Autonomous weaponry has been in use for years already, and AI is creeping into the application of military systems. While some countries have called for a global ban on autonomous weapons, others have resisted, including the US, which earlier this year was urged by a panel headed by a former Google boss not to ban weapons powered by AI.
What else I’m reading this week:
The EU semiconductor strategy is raising several questions on what Europe is actually trying to achieve. (Financial Times)
Increasing attention is being paid to the military application of AI, but when the tech’s ethics are so murky, is it any wonder that defence ministries are hesitating? (Asia Times)
[Edited by Benjamin Fox]