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By Mark Scott
With Laurens Cerulus, Laura Kayali, Annabelle Dickson and Janosch Delcker
— Europe keeps pumping money into U.K. tech
— Donald Trump both agrees and slams Europe for regulating Big Tech
— Pressure piles on Huawei and its role in 5G
Good morning and welcome to Morning Tech. Next up in the Womens World Cup: New Zealand versus The Netherlands, Chile versus Sweden, and the U.S. versus Thailand.
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|DRIVING THE DAY|
SCOOP — SENIOR BREXIT OFFICIAL TAKES ON INTERNET REGULATION: Susannah Storey is moving to the Department for Digital, Culture, Media and Sport in July to oversee the U.K. governments flagship tech regulation, officials have confirmed to Morning Tech. She takes on the digital and media beat from Matthew Gould, who leaves his role as director general to oversee the digital transformation of the NHS. Its all change at 100 Parliament Street, home of the Department for Digital. Sarah Healey only recently joined as permanent secretary from the Cabinet Office following the retirement of Sue Owen.
Big ticket legislation: Most pressing in Storeys new job will be the governments online harms white paper, which includes proposals to impose a duty of care on tech companies. The consultation for the proposals closes on July 1.
Also in her in-tray: Storey will also be in charge of telecoms policy. The contentious issue of how much access to the U.K.s new 5G network Chinese telecoms supplier Huawei should be given is still likely to be alive when she joins the department. Data protection, digital and cyber skills, broadcasting and media are also in her sphere of influence. Storey joined the U.K. Brexit department from the director of policy job at BEIS and she was strategy director at the Department of Energy and Climate Change.
Experience needed: Storey is widely regarded by those who have dealt with her in her Brexit capacity, according to one tech industry policy chief. While she doesnt have much of a digital policy background, the policy figure said it had been noted how the Department for Exiting the European Union had clicked about the issues of data flows post-Brexit pretty early on, compared to likes of the Department for International Trade.
Disruption expected: Gavin Freeguard, head of data and transparency at the Institute for Government think tank, told Morning Tech the Department for Digital, Culture, Media and Sport had “grown significantly in the last few years.” The number of civil servants there has increased by more than 80 per cent since June 2016, and its added Digital to the name, both reflecting its expanding responsibilities. “Susannah Storey inherits a role focused on really important issues for the future, but the question will be how much that could be disrupted over the next few months: DCMS is one of the departments most affected by Brexit, and a new Prime Minister could well reshuffle their ministerial pack,” he points out.
GDPR ONE YEAR ON: Morning Tech sometimes wonders if European officials can read a calendar. The one-year anniversary of Europes revamped data protection rules was on May 25. But the official stock taking by EU officials will happen on June 13. Heres the full line-up.
NUMBERS, NUMBERS, NUMBERS: Morning Tech is a big fan of figures. Apologies to all the policymakers who may be reading this, but numbers cant lie. They are just what they are. So we were interested to see what exactly was going on with rumors that European venture capitalists have been expanding their footprint in Britain, even as the country heads towards a so-called “No Deal” Brexit.
That would be slightly counterintuitive, particularly as many local techies are warning that reduced access to talent is already starting to hurt local business. So what are the results? According to data from DealRoom, a data firm that has created a U.K. tech database to answer these types of questions, venture capital investment from the EU27 into the U.K. rose 79 percent last year, to $1.26 billion, compared with in 2016 when the figure was $703 million.
Sure, a lot of that came from mega-rounds into well-established British startups in search of so-called growth capital. But the fact that Europeans (ie: the EU 27) continue to put money into Britain, even with all the political standstill, points to one underlying conclusion: Yes, politics matter. But at least for industry, they are banking on lawmakers figuring out a compromise on the Brexit question.
BEWARE THE CHINESE TELECOMS GIANT! Another day, another warning about Huawei. This time it comes from Recorded Future, a U.S. cybersecurity firm, which published a report into the companys alleged geopolitical and supply chain risks. Click here for more or read below.
On top of the agenda is Huaweis presence across various parts of the tech world — from cellphones to mobile infrastructure — and how that could allow (nothing has yet to be proven) the company unfettered access to reams of data that could be shared with the Chinese government. “The enormous range of products and services offered by Huawei generates a nearly unimaginable amount of data for one company to possess,” the analysts said.
Its a legitimate point that Huawei has fingers in many pies (as do Ericsson, Nokia and Samsung, but whos counting?) But with the next generation of mobile networks and smartphones now being built, policymakers must weigh up the security risks of including the worlds largest telecoms equipment maker with the additional cost involved in keeping them out of 5G. And how much could that moratorium cost Europe? Well, according to a report by the GSMA (a trade body for legacy carriers that has interests in keeping Huawei inside the tent), the price tag could reach €55 billion. Ouch.
HUAWEI VERSUS THE UK PARLIAMENT: Huaweis Global Cyber Security and Privacy Officer John Suffolk got a rough ride from U.K. MPs when he gave evidence to a science and technology committee probe into whether the company should be allowed to supply the U.K.s 5G network on Monday. MPs focused on allegations the company supplies and assists the public security bureau in Chinas Xinjiang province, which has in turn been accused of surveillance and of human rights abuses.
On the attack: Julian Lewis, the chairman of parliaments defense select committee who has been a vocal opponent to the Chinese telecoms suppliers involvement in the U.K. 5G network, was invited to ask questions at the session. He asked how Suffolk would feel about equipment supplied by his company being used to enable a similar exercise in suppression as that of the Tiananmen Square protests 30 years ago — the student-led demonstrations where hundreds are believed to have died. Suffolk, the U.K. governments former chief information officer, responded: “I dont think were complicit in anything, I believe that our objective is to understand the law and comply with the law, its for others to make judgments.” Lewis did not let it rest, responding: “Like the people who manufactured the gas chambers no doubt in Nazi Germany.”
THE EUS COSTLY 5G AUCTIONS: Policymakers are eager to get the next generation of mobile networks up and running. But they are also keen to pocket fees for spectrum auction — maybe a little too keen, according to Arun Bansal, head of Ericssons business in Europe and Latin America. Talking to Light Reading, he said that charging overpriced fees to access spectrum had slowed down the deployment of the regions networks, hampering local entrepreneurs. “We have industrialized companies, but I cannot name a single billion-dollar market-cap digital startup in central Europe because Europe is lagging in digital infrastructure,” he said. Morning Tech could name several, but we get his point.
FORGET ANTITRUST, THE REAL CONCERN IS FRAUD: Taking on Big Tech over competition concerns is the new hipster cause célèbre. After years of the European Commission taking the lead, now U.S. authorities are mulling their own plans, though they have yet to pull the trigger on possible investigations. But dig a little deeper, and industry watchers say a bigger (and more immediate threat) awaits the likes of Google, Facebook and Amazon: fraud.
According to a new report, annual digital advertising fraud (when the euros that companies spend on online campaigns doesnt result in consumers seeing their ads) may hit $23 billion this year. Yes, thats billion with a b.” Why does this matter? Well, Big Tech dominates that industry, and if companies dont think theyre getting value for money (or are being swindled), then they could take their business elsewhere — or, even worse for tech giants, sue or file complaints with regulators.
This isnt just a question for brands that target consumers online. Political groups, many of which spend hefty sums on Facebook to reach potential voters, are also starting to ask questions about the veracity of their social media ad-buys. And with companies not exactly open to criticism, some lawmakers are mulling the potential nuclear option of taking social media firms to court (watch this space, folks) in an effort to get greater transparency on possible online advertising fraud.
TRUMP WEIGHS IN: Things are heating up in Washington for Big Tech. So when Donald Trump called into CNBC yesterday, Morning Tech was all ears. Surprisingly, the leader of the free world both claimed that “there is something going on in terms of monopoly,” while also slamming Europes attack (mostly on Apple, which isnt a competition case, but we dont want to quibble) because “they just think this is easy money.” For more, click here or read below.
|DIGITAL SINGLE MARKET|
SUPERCOMPUTERS, FOR EVERYONE! Eight sites across the EU have been selected to host the regions first European supercomputers, to support local researchers and businesses, alike. The locations range from Bulgaria and Slovenia to Finland and Portugal. Next steps: to actually buy the supercomputers.
|GLOBAL TECH CORNER|
G20 finance ministers and central bankers said they will “remain vigilant to risks” linked to crypto-assets in their communiqué after meeting in Japan. They reaffirmed their commitment to applying recently updated standards to combat money laundering or terrorist financing.
Who said megatech deals were dead? Salesforce said it would buy Tableau, a data analytics firm, for $15.7 billion.