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To protect or collect? Germany’s big data divide


Amid talks on forming a government, Chancellor Angela Merkel’s conservative bloc and the Social Democrats are hammering out the country’s digital strategy for the next four years.

Both sides agree that e-government, big data and expanded fast internet will be crucial for Germany’s economic future. But they are miles apart on this central question: How should the millions of terabytes of data generated each day in a digitized economy be regulated?

The answer will shape how German industry approaches the next decades: by seeking to dominate the Internet of Things by hoovering up as much data as possible or using high privacy standards as an argument to Buy German.

Merkel’s center-right CDU party likes Option 1.

“There’s no other country where it’s more difficult [for companies] to work with data,” said Thomas Jarzombek, digital affairs spokesman for the CDU in parliament. “Artificial intelligence, for example, won’t work without massively analyzing data. And at some point, we have to tell people this.”

If Germany industry is going to compete against foreign rivals in the coming decade, he argued, it cannot be hamstrung by rigid rules on data collection.

But for the Social Democrats (SPD), it’s the other way around.

Privacy rules are a competitive advantage, they argue. Instead of deregulating, the government should press local manufacturers to promote German products as data-safe alternatives to those from the U.S., China and other trade rivals.

Ulrich Kelber, the deputy acting justice minister and SPD member, said privacy is a selling point, not a problem.

“The question, really, is when will European companies decide to push forward with advertising that they can offer applications — messenger services, social networks, cloud services — whose customers don’t get screened and ripped off?” he told POLITICO.

Kelber noted that some firms, like their American or Chinese counterparts, wanted a free hand to collect as much data as possible and then see how they could make money from derived applications.

“But this is not the European approach,” he said. “Things will have to work differently here.”

Fast internet for all

Lawmakers on both sides of the digital divide know they need to reach some sort of consensus quickly.

After decades of thriving thanks to quality engineering and price competitiveness, German manufacturers now see their business models changing radically.

One major shift is that their devices need to become interconnected.

An elevator manufacturer may previously have been able to sell a product based on the promise that it would get people safely from one floor to another. In the near future, customers will expect elevators to alert them weeks in advance of an imminent breakdown.

This means that all manufacturers, large and small, will require access to fast internet connections, even if the factory is located far from an urban center.

Thankfully for them, there is hope that Germany will move fast to upgrade its grid.

While bureaucratic battles between ministries controlled by different parties stymied efforts to upgrade the grid under Merkel’s last government, all parties in the talks told POLITICO that they were determined to do things differently.

Hurray for German internet.

But then there is the issue of data.

Data protection thicket

Across Germany, a total of 16 separate entities are in charge of overseeing the data protection practices of private companies.

That number alone — one for each German federal state — is enough to intimidate potential investors, argued the CDU’s Jarzombek.

“We have different data protection agencies in all 16 federal states, some of whom don’t like each other and scare away their customers,” he said.

While advocates of the current system argue it guarantees firms access to advisers, opponents say it’s led to a hodge-podge of different interpretations of privacy laws.

The sheer variety of interpretations means that companies cannot grasp all the rules.

And while European Union will soon roll out sweeping changes to privacy rules across the bloc as part of a reform known as the General Data Protection Regulation (GDPR), critics fear the GDPR will not fundamentally change the situation in Germany.

Not so says the SPD’s Kelber, who dismissed criticism of the 16 agencies.

“Some of those allegations, if you’re honest, are actually a demand to scale down data protection in general,” he said.

The Gretchenfrage of German politics

The question, therefore, is quasi-philosophical: How do Germans really feel about data protection?

Some observers say that has become a Gretchenfrage — a question as momentous as the one Johann Wolfgang von Goethe had his protagonist Gretchen ask her lover in his tragedy “Faust 1”: “What is your take on religion?”

The Christian Democrats’ answer: Data should not be regulated too closely.

Although U.S. giants have “a great advantage” on technological development because of the troves of data they collect via consumer applications, it is not late for Germany to enter the race as the “internet of machines” is still in its infancy, said the CDU’s Jarzombek.

“It will come down to the question of whether German manufacturers will just include the systems of U.S. giants like Google in their products to collect data — or will they develop the necessary sensors themselves?” he said.

The Social Democrats say Germany should remain known as a haven for privacy protection.

“There are developments that have led to popular applications, programs or companies in the United States or China, which we don’t want to have here in their form — since questions of data protection have not been answered to a sufficient degree,” Kelber said.

Instead, Germany and Europe should encourage firms to provide services that truly “serves their benefit and not the benefit of a third party,” he said.

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