Recently, I had the chance to moderate a panel on industrial cyber-security. That’s right, industries have control systems for all kinds of processes: boilers, turbines, valves… you name it. A lot of them are connected to the internet and many of those are vulnerable to cyber-attacks. According to one of the panelists the business of cyber-attacks is a 500 Billion-dollar business. Cyber-crime is lucrative.

The European Union sees this as a problem, the threat of cyber-attacks make industries hesitate to go digital and therefore opportunities are lost for productivity increase and new revenue streams. Figures vary, but the potential for digitalization of industry is Billions of Euros per year. The Commisson’s conclusion is to make online a safer space for industries and the answer is the NIS Directive – the Network and Information Security Directive – which was adopted by European Parliament on July 6^th this year. The idea is to increase the level of development and coordinate efforts and information sharing among cyber-security authorities. That’s good, let’s hope it works well and makes the internet a safer place for companies.

I can’t help but compare with another digital debate with a similar departure point, but completely different conclusions. That’s right: copyright. Rights-owners who do not give discounts to digital services are called “conservative”. If they are concerned about piracy and illegal commercial-scale distribution, it’s “fear of change”. When they ask for better legal support or help from intermediaries, they need to “update their business models”.

Why doesn’t the EU Commission tell those power grid operators or paper pulp makers or aluminium smelters to “update their business models”? Because the Commission is smart. It understands that no new business model can beat $500 Billion illegal competition. Instead, it brings in legislation and government agencies. Now, apply those smarts to digital content and I promise you growth, jobs, tax revenue, quality culture, better media and soft power for Europe. It should not be difficult, the answer is already there.

The election results from Iceland are final. Contrary to some of the hype prior to the election, the Pirate Party did not “take over an entire island” and will not be part of the ruling coalition. However, with 14,4% of the vote, this is the best result ever for the Pirate Party in any election. Not sure, but I think second best was the Swedish European Parliament Election in 2009 which yielded the Pirates 7,3%. The turn-out at 79.2% was the lowest ever according to the Icelandic public service broadcaster RÚV.

The most surprising result may be that the traditionally strong Social Democratic party only won 5,8% of the votes, bordering on the 5% threshold for Alþingi representation.

http://icelandreview.com/news/2016/10/30/final-election-results

Netopia’s new report Immaterial Value Creation in Europe looks at how much European businesses rely on intellectual property rights. A lot, it turns out. 44% of jobs and 51% of revenue in primary industry sectors rely heavily on IPR, finds Dr Nima Sanandaji who has written the study. Far from being a vested interest for smaller sectors, intellectual property rights are the fundament of the European economy. And the importance increases.

Today, Dr Sanandaji and yours truly discuss these findings in an op-ed at EurActiv. Enjoy!

https://www.euractiv.com/section/innovation-industry/opinion/knowledge-is-capital-for-europes-future/

I went to Iceland but couldn’t find any pirates. The rumours of the Pirate Party’s popularity in the polls for the upcoming Althing* election may be exaggerated. But let’s have a look at the pirate politics in Iceland, all the same. Of course, the Icelandic voters care little about the anti-copyright agenda that is the basic ideology the Pirate Party. Rather, it is a frustration with the established political parties. The same exists in many countries, but Iceland has had more than its fair share of headaches. The financial crisis hit the little Arctic country harder than most places, destroying savings and pensions for many and sending the Icelandic Krona into free fall (currency regulations are still in place). Protests caused the right-wing Independence party-led government to fall. Thousands of people gathered outside the Althing in the winter of 2008/09 banging pots and pans. And earlier this year prime minister Sigmundur David Gunnlaugsson resigned after the Panama Papers showed he had avoided paying taxes. It is easy to sympathise with the Icelanders longing for something new. Enter the pirates.

This is not the only example of recent unorthodoxies in Icelandic politics. In 2010 to 2014, the mayor of Reykjavík was Jón Gnarr: a comedian and self-proclaimed anarchist, regarded by many locals as the best mayor in a long time. I actually met him once, at a reception for the games industry where he gave a speech that was to the point and insightful, but not in the least comic or anarchistic. But NN did use comedy as part of his politics. At the end of his term, there was the question whether he would stand for re-election and the way he announced his decision was unique. Appearing on a radio show, he at the same time dialled in pretending to be an elderly lady and gave a long rant about all Gnarr’s shortcomings as mayor. That’s how Jón Gnarr announced he would not stand for another term.

So if not anti-copyright, what is it that the Pirate Party has to offer? The party leader NN says she wants to reform government along the lines of so-called “open policy”. Supposedly, that means to put all parliament decisions to the vote of the people (through online systems). It’s an innovation of form, not content. The Pirate Party has used this method in its internal processes since inception (as far as I can tell). Anyone can check the Pirate Party forums and follow the debate. It’s an interesting concept, some would say it’s giving power to the people. By “opening up” politics and putting all decision’s in parliament to the party’s voters (Or members? Or how should that pie be sliced?), perhaps better decisions can come. Or perhaps not, because politics is not only about pressing the right button or raising your hand at the right time. Some would say it’s about bold visions, compelling proposals and consistent ideology. Some would say it’s about negotiation and building alliances with other parties to get support for your proposals (or block those of others). And what happens before the vote? Somebody has to take the initiative to make a motion or ask a question to a minister. And what if you win the election? What if you’re supposed to form a government? Will this method work for budget negotiations and diplomatic relations with foreign countries? You can argue that all these questions will be answered and that new methods may change politics for the better. You can say: look at the Swiss cantons, the vote all the time! But the main challenge for this flavour of open policy is that (in most countries) being a member of parliament is a full time job. Why? Because the workload is large, the number of documents overwhelming and the issues complex. That’s why we elect people we trust to look after our interests and ideologies, asking them to state their general direction and make promises that we can hold them to, rather than look over their shoulder and give them specific instructions at every juncture. The problem is not getting access to information – as many internet activists would suggest – but to understand it, digest it, turn it into policy proposals and know what strings to pull to make that happen. That cannot be done in an online forum when you have a minute. It’s a full-time commitment. They may be at opposite ends of the political spectrum, but in a way this is not so different from what the Republican US presidential candidate Donald Trump says. His most common answer to policy questions is that he will “hire the best people and work with congress”, rather than articulating a policy suggestion. The content of the policies is a later issue. But how can voters know what they are voting for?

I had this conversation with a former Danish member of parliament. She had a different definition of open policy. She said it was about transparency and accountability. More an attitude of the policy-makers than a method of organising politics. A vision for reforming democratic processes and make them more accessible, perhaps more of an on-going ambition than a quick fix. Making documents available to the public and asking for input. Explaining reasons for voting one way or other, for making this proposal or that. In a way, this is the opposite of the Pirate Party’s definition of open policy. It’s about being more accountable, not less. If a member of parliament merely executes decisions made by online committees, their less accountable not more.

The grassroots are of course the foundation of democracy, but the commitment needs to also to be involved in the long-term work of the political parties and NGOs. It cannot be reduced to the backseat of online clickocracy. If digital engagement can be a way to long-term commitment, great. But don’t tell me democracy can be innovated simply by putting everything online. This is the convenient answer to so many of the digital issues: put everything online. But that’s the easy way out. Not everything can be crowd-sourced. Some things need real work.

The pirates are interesting more for the questions they ask than for the answers they give. If they want to contribute to democracy, they need to come up with a vision of the content of politics, not the form. And that better be something more than copyright reform. Surely, the world has bigger problems than lack of free entertainment.

*) Icelandic Parliament – the oldest in the world, running uninterrupted since 930 AD. Except in those days it was more like the Viking Party.

Google chief economist Hal Varian writes an opinion in the Financial Times explaining why the tech giants of Silicon Valley compete so intensely. It’s hard not to see this as a response to the Economist’s recent criticism of power concentration in business. Varian claims competition helps the consumer. Which is of course easy to agree with. The only problem is: what competition? Silicon Valley may be famous for many things, but competition ain’t one. No coincidence, this is by conscious design. Arch-venture capitalist slash tech ideologist slash Bond-villain Peter Thiel details his investment strategies in his 2015 book from Zero to One. Only startups with the potential to be niche monopolists are worth considering. Already in the 80s, as the editor of a Stanford university paper, Thiel laid out the four-step plan for Silicon Valley’s world domination: 1. No government 2. No tax 3. No copyright 4. No competition. It’s fair to say it worked. Competition may exist in theory, but when one player controls 90+ % of the market, it’s not competition. Yesterday’s disruptors are today’s incumbents.

Professor Varian, if you read this:

Competition would be great. You can lead the way by creating a transparent Adwords-auction. The one Google uses today – of your design – gives the ad-seller an asymmetrical information advantage over the ad-buyer. Next, your company could start acting like a responsible part of the value chain trying to maximize the benefit for everyone in your echo-system, rather than saying things like you’re a technology company, only an intermediary or combatting infringement would be a violation of free speech. Google’s famous mission to “organize the world’s information and make it universally accessible” is like a wet blanket over competition online. What if that information belongs to somebody else? What if that somebody would rather not have Google organize it and make it universally accessible?

Professor Varian, with respect, make the company you work for stop acting like it owns the internet. Then you can talk about competition. For now, such words from Google are nothing short of preposterous.

PS Thank you for signing your book for me when I attended your seminar in Stockholm last year.

Global companies are becoming a problem for the economy. This was the surprising message from The Economist in this week’s issue. Rather than disruption, today’s economy is dominated by entrenchment. Entrepreneurs expect to sell their companies to the incumbents, rather than compete with them. The global internet and freenomics contribute to the concentration of power. The leader reads almost like a Netopia blog post (much better written, of course!). The editor applauds the European Commission’s anti-trust cases against Google, but thinks the Apple tax case is a step too far, worrying that it could spark a tax war.

In the 14-page special report, the Schumpeterian theory of temporary monopolies is discussed, the idea that companies that spend on research and get an edge on the competition should be allowed to reap the advantages of such a position until the rest of the pack catches up. Legislators have to be cautious not to upset this balance, but should use competition rules to battle concentration. This paragraph captures it well:

Antitrust authorities need to start setting the agenda by examining the way that digital companies are using network effects to crowd out potential competitors, or invent new ways of extracting rent by repackaging other people’s content.

Great to see an influential publication such as The Economist take a position like this. The network effects of the digital economies tend to produce very powerful niche monopolists that put normal competition out of play. Tech pundits will argue that disruption deals with the problem, not via head-on competition but by offering a different way to access data. Google fears Facebook more than Bing in this logic. The problem with that approach (a sort of wishful thinking that the market will solve the problem if politicians will only leave it alone) is that every cycle creates even more concentration. Perhaps Google will eventually be brought to its knees by some company, but that company will be even more powerful than the last. Some may have seen Twitter as a potential disruptor of how information travels, now rumours say Google is set to buy it. The answer is instead just what The Economist points out: regulation. Except Netopia would add that regular, after-the-fact competition regulation is probably not enough to achieve this. In addition, an “upstream” approach to competition is needed. Competition needs to be built into the system. The network effects need to be curbed. When government research funds invest in the next cool technology, be it 5G mobile communication or smart cities or additive manufacturing, competition impact assessment needs to be part of the package. Technology is ideology and so it can be designed to do what we want. Next, the freenomics that power the monopolists must be challenged, ideally by making it possible to charge for content online. The first step would be for the EU to make internet platforms license content published on their platforms. Further on, blockchain and content protection technologies can support business models for paid content. Free services and big data business is a big driver of concentration.

The Economist points to something important. But in order to make a real difference, regulation needs to be on the inside of technology – not years after.

So I was trolling vice-president Ansip on Twitter… no, really – when the news of 30/90 days of free roaming broke earlier this week, I could not resist to ask the vice-president if the same would apply to cross-border portability of content services.

The answer came fast and clear:

And then the tail of Digital Single Market-believers jumped on the opportunity to explain that the idea of the DSM is to make it possible for consumers to bring their content services with them when they travel. Which of course is completely superfluous information for anyone who has followed this conversation for more than ten seconds. Yes, I know that is the idea! But the question remains what temporary residence means in practice and previously the vice-president has refused to give a definition. But the problem for telecoms that somebody may get a SIM-card in a cheaper place and use it across Europe, which in turn may force the subscription charges up rather than down, is very similar to that of content providers. Why sign up in your high-purchasing power home country when less fortunate member states provide same content at bottom-Euro? And to vice-president Ansip’s tweet-reply, it’s not about the cost but about the price. Of course there is a consumer interest in bringing content services on the road, but that is not the only consumer interests. Consumers also want tailored, localized content in their own language with access to a customer service in their own language, marketed in a way that works in their own country at a price point that is reasonable to the income level in their country. All of those things are important, but with no limit on cross-border portability, they may become difficult or impossible. So does portability trump everything else? Of course not, and the Commission knows this. That is why it says temporary residence. Which again begs the question of what temporary residence means…

If you thought this was fun, all of it was turned on its head today when President Juncker in a surprise move withdrew the proposal to almost end roaming, telling his Commissioners to come back with a “better text”. (Surely, he’s not talking about the spelling…)

To paraphrase a great man:

Now this is not the end (of roaming). It is not even the beginning of the end (of roaming). But it is, perhaps, the end of the beginning (of roaming).

On Thursday, the European Court of Justice gave its ruling on the GS Media v Sanoma-case regarding hyperlinking to infringing content. The digital world has held its breath in anticipation – would the ruling upset the way we link from websites and blogs? Would it make commercial-scale pirate services legal? The Attorney General’s opinion from this spring pointed to the latter. An expert speculated about the outcomes the other day to Netopia.

In the end, the CJEU found a middle ground saying that linking to illegal content is illegal… sometimes. If there is intent – such as with commercial-scale piracy – or in case of knowledge – for example a notice-and-take-down-request – or if it’s obvious that the content is infringing – free versions of movies still playing in cinemas, anyone? In such cases linking is illegal. Students and bloggers can still claim ignorance, Popcorn Time not so much.

While this may seem like a fair balance, the big question is if all the courts around Europe can interpret this in a coherent way. The CJEU must provide something that others can use for guidance, otherwise each and every case would have to go to Luxemburg (perhaps useful as the CJEU judges “pray” for more cases to try, but probably not a great recipe for rights-holders and online services…).

Confusion remains, but at least lawyers will be busy.