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Travel startups cry foul over what Google’s doing with their data

As the antitrust drumbeat continues to pound on tech giants, with Reuters reporting comments today from the US Justice Department that it’s moving “full-tilt” on an investigation of platform giants including Google parent Alphabet, startups in Europe’s travel sector are dialling up their allegations of anti-competitive behavior against the search giant.

Google has near complete grip on the search market in Europe, with a regional marketshare in excess of 90% according to Statcounter. Unsurprisingly industry sources say a majority of travel bookings start as a Google search — giving the tech giant huge leverage over the coronavirus-hit sector.

More than half a dozen travel startups in Germany are united in a shared complaint that Google is abusing its search dominance in a number of ways they argue are negatively impacting their businesses.

Complaints we’ve heard from multiple sources in online travel range from Google forcing its own data standards on ad partners to Google unfairly extracting partner data to power its own competing products on the cheap.

Startups are limited in how much detail they can provide about Google’s processes on the record because the company requires advertising partners to sign NDAs to access its ad products. But this week German newspaper Handelsblatt reported on antitrust complaints from a number of local startups — including experience booking platform GetYourGuide and vacation rental search engine HomeToGo — who are accusing the tech giant of stealing content and data.

The group is considering filing a cartel complaint against Google, per its report.

We’ve also heard from multiple sources in the European travel sector that Google has exhibited a pattern of trying to secure the rights to travel partners’ content and data through contracts and service agreements.

One source, who did not wish to be identified for fear of retaliation against their business, told us: “Each travel partner has certain specialities in their business model but overall the strategy of Google has been the same: Grab as much data from your partners and build competing products with that data.”

Not ok, Google

This is now a very familiar complaint against Google. Crowdsourced reviews platform Yelp has been accusing the tech giant of stealing content for years. More recently, Genius got creative with a digital watermark that caught Google redhanded scraping lyrics content from its site which it pays to license (but Google does not). As Lily Allen might put it, it’s really not okay.

Last month’s Congressional antitrust subcommittee hearing kicked off with exactly this accusation too — as chair, David Cicilline, barked at Google and Alphabet CEO, Sundar Pichai: “Why does Google steal content from honest businesses?” Pichai dodged the question by claiming he doesn’t agree with the characterization. But for Google and parent Alphabet there’s no dodging the antitrust drumbeat pounding violently in the company’s backyard.

In Europe, Google’s business already has a clutch of antitrust enforcements against it — starting three years ago, in a case which dated back six years at that point, with a record breaking penalty for anti-competitive behavior in how it operated a product search service called Google Shopping. EU enforcements against Android and AdSense swiftly followed. Google is appealing all three decisions, even as it continues to expand its operations in lucrative verticals like travel.

The Commission’s 2017 finding that Google is dominant in the regional search market carried what lawmakers couch as a “special responsibility” to avoid breaching the bloc’s antitrust rules in any market Google plays in. That finding puts the travel sector squarely in the frame, although not yet under formal probe by EU regulators (although they have opened an active probe of Google’s data collection practices, announced last year).

EU regulators are also examining a range of competition concerns over its proposed acquisition of Fitbit, delaying the merger while they consider whether the deal would further entrench Google’s position in the ad market by giving it access to a trove of Fitbit users’ health data that could be used for increased ad personalization.

But so far, on travel, the Commission has been keeping its powder dry.

Yet for around a decade the tech giant has been building out products that directly compete for travel bookings in growth areas like flight search. More recently it’s added hotels, vacation rentals and experiences — bringing its search tool into direct competition with an increasing range of third party booking platforms which, at least in Europe, have no choice but to advertise on Google’s platform to drive customer acquisition.

One key acquisition underpinning Google’s travel ambitions dates back to 2010 — when it shelled out $700M for ITA, a provider of flight information to airlines, travel agencies and online reservation systems. The same year it also picked up travel guide community, Ruba.

Google beat out a consortium of rivals for ITA, including Microsoft, Kayak, Expedia, and Travelport, who relied upon its data to power their own travel products — and had wanted to prevent Google getting its hands on the data.

Back then travel was already a huge segment of search and online commerce. And it’s continued to grow — worth close to $700BN globally in 2018, per eMarkter (although the coronavirus crisis is likely to impact some recent growth projections, even as the public health crisis accelerates the industry’s transition to digital bookings) — all of which gives Google huge incentive to carve itself a bigger and bigger share of the pie. 

This is what Google is aiming to do by building out ad units that cater to travellers’ searches by offering flights, vacation rentals and trip experiences, searchable without needing to leave Google’s platform. 

Google defends this type of expansion by saying it’s just making life easier for the user by putting sought for information even closer to their search query. But competitors contend the choices it’s making are far more insidious. Simply put, they’re better for Google’s bottom line — and will ultimately result in less choice and innovation for consumers — is the core argument. The key contention is Google is only able to do this because it wields vast monopoly power in search which gives it unfair access to travel rivals’ content and data.

It’s certainly notable that Alphabet hasn’t felt the need to shell out to acquire any of the major travel booking platforms since its ITA acquisition. Instead its market might allows it to repackage and monetize rival travel platforms’ data via an expanding array of its own vertical travel search products. 

One of the German consortia of travel startups with a major beef against Google is Berlin-based HomeToGo. The vacation rentals platform confirmed to TechCrunch it has filed an antitrust complaint against the company with the European Commission.

It told us it’s watched with alarm as Google introduced a new ad unit in search results which promotes a vacation rental search and booking experience — displaying property thumbnails, alongside locations and prices plotted on a map — right from insight Google’s platform.

Screengrab showing Google vacation rental ad unit, populated with content from a range of partners

Discussing the complaint, HomeToGo CEO and co-founder, Dr Patrick Andrae, told us: “Due to the monopoly Google has in horizontal search, just by having this kind of access [to the vast majority of European Internet searchers], they’re so top of the funnel that they theoretically can go into any vertical. And with the power of their monopoly they can turn on products there without doing any prior investment in it.

“Anyone else has to work a lot on SEO strategies and these kind of things to slowly go up in the ranking but Google can just snap its fingers and say, basically, tomorrow I want to have a product.”

The complaint is not just that Google has built a competing ad product in vacation rentals but — following what has become a standard colonizing playbook for seemingly any vertical area Google sees is grabbing traffic — its packaging of the competing product is so fully featured and eye-catching that it results in greater prominence for Google’s ad vs organic search results (or indeed paid ad links) where rivals may appear as plain old blue links.

“They create this giant, colorful super CTA [call-to-action], as we call it — this one-box thing — where everything is clickable and leads you into the Google product,” said Andrae. “They explain that it’s better for the user experience but no one ever said that the user wants to have a one-box there from Google. Or why shouldn’t it be a one-box from HomeToGo? Or why shouldn’t it be a one-box in the flight word from Kayak? Or in the hotel world from Trivago? So why is it just the Google product that’s colorful, nice, and showing up?”

Andrae argues that the design of the unit is intended to give the user the impression that “Google has everything there”, on its platform. So, y’know, why go looking elsewhere for a vertical search engine?

He also points out that the special unit is not available to competitors. “You cannot buy it,” he said. “So even if you would like to have this prominent kind of placement you cannot buy that as a third party company. Even if you would like to pay money for it — I’m not talking about being in the product itself, that’s another topic — but just having the same kind of advertisement, because it is what they do — they advertise their own product there for free — and this is our complaint.”

Pay with your data

In 2017, when the Commission slapped Google with the first record-breaking penalty over its search comparison service — finding it had systematically given prominent placement to its own comparison shopping service over and above rival services in organic search results — competition chief Margrethe Vestager disclosed it had also received complaints about Google’s behavior in the travel sector.

Asked about the sector’s concerns now, some three years later, a Commission spokeswoman told us it’s “monitoring the markets concerned” — but declined to comment on any specific gripes.

Here’s another complaint: GetYourGuide, a Berlin based travel startup that’s created a discovery and booking platform for travel tours and experiences, has similar concerns about Google’s designs on travel experience booking — another travel segment the tech giant is moving into via its own eye-catching ad units flogging experiences.

“They want to create experience products now directly on Google search itself, with the aim that ultimately people can book these type of things on Google,” said GetYourGuide CEO and co-founder Johannes Reck. “What Google tries to do now is they try to get [travel startups’] content and our data in order to create new competitive products on Google.”

The startup is unhappy, for example, that a ‘Things to do’ ad product Google shows in its search results doesn’t link to GetYourGuide’s own search page — which would be the equivalent and competing third party product.

“Google will not allow us to link them into our search but only into the details page so the customer sees even less of our brand,” he said. “Or in Maps, for instance, if you go to Eiffel Tower and press to book tickets you don’t see any of GetYourGuide despite us fulfilling that order.”

He also rejects Google’s claim against this sort of complaint that it’s simply ‘doing the right thing for the user’ by not linking them out to the rival platform. “We do know from our data that users convert better and spend more time on our site and have higher engagement rates when we link them into our search and then deeper down into the funnel,” he told TechCrunch. “What Google is saying is not that it serves the user — it serves Google and it serves their profits. Because the deeper down the funnel that you link, the user will either buy or they will bounce back to Google and search for the next product. If you link into searches — if you don’t verticalize as much — then the user will end up in a different ecosystem and might not bounce back to Google.”

“As a partner [of Google] you have limited choice to participate [in its ad products]. You do need to give Google that content and then Google will try to move as many of the customers to them,” Reck added. “I don’t think there ever will be a world where booking.com or Expedia or GetYourGuide will disappear — rather our brands will start to disappear.

“That is something that I think ultimately is bad for the customer and only serves Google, again, because the customer will, in the long run, have no other choice and no other visibility on how he can get to choice than to go through Google because our brands will basically be hidden behind a Google wall. That will turn Google firmly away from what their original mission was… to steer people to the most relevant content on the web… Now they are trying to be completely the opposite; they’re trying to be the Amazon or Alibaba of travel and try to keep and contain people in their ecosystem.”

During the congressional antitrust subcommittee hearing last month Pichai claimed Google faces fierce competition in travel. Again, Reck contends that’s simply not true. “In Europe more than 75% of travellers go to Google to search for travel and all those users are free,” he said. “Everyone else in the travel industry pays Google top dollar… for these queries. Which competition exactly is he referring to?”

“[Pichai] then claimed that they’re not leveraging partners’ content — that’s not accurate. If you look at Google if you want to be in the top results these days you either pay or you give them data so that they can build their own products into search.”

“This dates back ten years now when they acquired ITA software, which is the leading data provider for flights,” Reck added. “They’ve just paved their way into travel. I think their intent is very clear at this point that they have no interest in their partners — or their customers for that matter, who like the choice that’s being offered on Google.”

“What they want to morph into, basically, is to turn Google into the Amazon of travel where everyone else maybe a content provider or a fulfilment agent but the consumer has no choice but to go through Google. I think that is the key intent here. They want to limit consumer choice. And they want to monopolise the space. We don’t want that and we will fight that. And if that means we need to go to the EU Commission to protect our and the customers’ interests then we’ll do that and we’re currently reviewing that option.”

The looming harm for consumers around reduced choice could manifest in poorer customer service, which is an area vertical players tend to focus on — whereas Google, as a platform funnel, does not.

Another German travel startup — Munich-based FlixBus — was also willing to go on the record with concerns about the impact of Google’s market power on the sector, despite not being in the same position as its business is not an aggregator.

Nonetheless, FlixBus Jochen Engert, founder and CEO, called on regional lawmakers to act against what he described as Google’s “systematic abuses” of market dominance.

“We call on the politicians in Germany and the EU to now work for fair competition on the Internet. It must be forbidden that monopolistic companies like Google abuse their market power, especially in times of crisis, and prevent competition for the benefit of the customer due to their dominance,” he told us. “Google systematically abuses its dominant market position to seal off access to customers from competitors and gets away with it time and again. It is only a matter of time before other industries and business models, in addition to travel, hotel and flight bookings, are permanently threatened.

“For FlixMobility [FlixBus’ parent company] as an internationally positioned market leader with its own platform, technology and our unique content, the situation is more relaxed than for smaller start-ups or those which also aggregate content such as Google. Nevertheless, in our opinion Google should be obliged to list and market its own products in search results on an equal footing with comparable offers. Here regulation must not stand by and watch for too long, but must react before Google irretrievably controls customer access and excludes competition.”

GetYourGuide’s Reck expressed hope that German lawmakers might be able to offer more expeditious relief to the sector than the European Commission — whose competition investigations typically grind through the details for years.

“The German government is actually very alert at this point in time,” he said. “They’re currently working on a new competition legislation that they will put in place probably within the next six months. It’s already in the making — and that will also be addressed to exactly that type of behavior of global, quasi-monopolistic platforms crossing the demarcation line, moving into other fields and trying to leverage their monopoly in order to create synergies in adjacent fields and crowd out competition.”

Asked what kind of intervention he would like to see regulators make against Google, Reck suggests its business should be regulated akin to a utility — advocating for controls on data, including around the openness of data, to level the playing field.

Though he also told us he would be supportive of more radical measures, such as breaking Google up. (But, again, he says speed of intervention is of the essence.)

“If you look at all of the data that Google collects, whether that’s consumer reviews, availability from its partners, all of the content from its partners, all of the information that they have through Android, whether that’s geo-specific data, whether that is interests, whether that is contextual information, Google is training their algorithms day and night on this data, no one else can. But we all have to provide data to Google,” he said.

“That’s not a level playing field. We need to think about how we can have a more open data architecture, that obviously is compliant with our data privacy laws but where developers from anywhere can build products based on the Google platform… As a developer in travel it’s currently very hard for me to access any data from Google so I can build better products for consumers. And I think that really needs to change — Google needs to open us for us to create a more vibrant and competitive ecosystem.”

“At a national or EU level we need to have an updated legal code that allows for quick interventions,” Reck added, saying competition enforcement simply can’t carry on at the same pace as for the markets of the past. “Things are moving way too quickly for that. You need to take a completely new approach.

“As Google correctly pointed out consumer prices have fallen but falling consumer prices is the weapon in tech; offering products for free allows you to gain marketshare in order to crowd out competition, which again leaves less choice for the customer so I think we need to think about how we think about tech and platforms in new ways.”

The Commission is currently consulting on whether competition regulators need a new tool to be able to intervene more quickly in digital markets. But there’s more than a trace of irony that its adherence to process means further delay as regulators question whether they need more power to intervene in digital markets to prevent tipping, instead of acting on long-standing complaints of market abuse attached to the 800lb gorilla of Internet search — with its “special responsibility” not to trample on other markets.

Reached for comment on the travel startups’ complaints, a Google spokeswoman sent us this statement:

There are now more ways than ever to find information online, and for travel searches, people can easily choose from an array of specialized sites, like TripAdvisor, Kayak, Expedia and many more. With Google Search, we aim to provide the most helpful and relevant results possible to create the best experience for users around the world and deliver valuable traffic to travel companies.

During the pandemic, we’ve been working hard with our partners in the travel industry to help them protect their businesses and look toward recovery. We launched new tools for airlines so they can better predict consumer demand and plan their routes. For hotels, we expanded our ‘pay per stay’ program globally to shift the risk of cancellation from our partners to us. And we’ve updated our search products so consumers can make informed decisions when planning future travel, further reducing the risk of cancellation.

The company did not respond to our request for a response to claims we heard that it seeks to secure rights to partners’ content and data via contracts and service agreements.

No relief

In another sign of the growing rift between Google and its travel partners in Europe, German startups in the sector banded together to press it for better terms during the coronavirus crisis earlier this year — accusing the tech giant of being inflexible over payments for ads they’d runs before the crisis hit. This meant they were left with a huge hole in their balance sheets after making mass refunds for travellers who could no longer take their planned trip. But the gorilla wasn’t sympathetic, demanding full payment immediately.

Asked what happened after TechCrunch reported on their concerns at the end of April, Reck said Google went silent for a few weeks. But as soon as the travel market started picking up in Germany — and GetYourGuide decided it needed to start advertising on Google again — it reissued the demand for full payment.

GetYourGuide says it was left with no choice but pay, given it needed to be able to run Google ads.

Reck describes the recovery package Google offered after it made the payment as “a Google recovery package” — as it was tied to GetYourGuide spending a large amount on YouTube ads in order to get a small discount.

The offer would recoup only “fraction” of GetYourGuide’s original losses on Google ads during the peak of the COVID-19 crisis, per Reck. “YouTube obviously is not where we lost the money. We lost the money in search where we had high intent customers, Google customers that wanted to come and shop. So that to us was [another] slap in the face,” he added.

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Europe asks for views on platform governance and competition tools

The European Commission is asking for views on how online platforms should be regulated in future, launching a public consultation today on the forthcoming Digital Services Act (DSA).

This pan-EU legislative proposal, due before the end of the year, is slated to rework the regional rulebook for digital services, including tackling controversial issues such as liability for user-generated content and online disinformation.

Modernising and updating rules related to ecommerce and online marketplaces to foster competitive by ensuring a level playing field in digital markets is another stated aim. 

Whether the DSA will prove as divisive as the EU’s copyright reform remains to be seen — but the stakes are high indeed.  

In parallel today, the Commission is soliciting views on possible updates to pan-EU competition regulation, asking whether a new tool is needed to beef up enforcement powers in the digital era.

Rebooting Europe’s digital regulation

The DSA consultation, which runs until September 8, covers issues including safety online, freedom of expression, fairness and a level-playing field in the digital economy, per the Commission, which says it’s seeking input from people, businesses, online platforms, academics, civil society and “all interested parties” to shape the planned governance framework for digital services.

Of course it’s already heard plenty on this topic from tech giant lobbyists.

Facebook CEO Mark Zuckerberg even sat down for a livestreamed discussion alongside European commissioner Thierry Breton last month — only to be lectured on the need for digital giants to pay their fair share of taxes.

But the Commission wants businesses of all stripes and sizes to chip into the consultation. After all, the most dominant platforms have the most to lose from any change of pan-EU rules.

And perhaps especially from changes that result in defining a specific set of “responsibilities” for the largest platforms.

Commenting in a statement, Commission EVP, Margrethe Vestager, said: The Internet presents citizens and businesses with great opportunities, which they balance against risks that come with working and interacting online. At this time, we are asking for the views of interested citizens and stakeholders on how to make a modern regulatory framework for digital services and online platforms in the EU. Many of these questions impact the day-to-day lives of citizens and we are committing to build a safe and innovative digital future with purpose for them.”

“Online platforms have taken a central role in our life, our economy and our democracy. With such a role comes greater responsibility, but this can happen only against the backdrop of a modern rulebook for digital services,” said Breton in another statement. “We will listen to all views and reflect together to find the right balance between a safe Internet for all, protecting freedom of expression and ensuring space to innovate in the EU single market.”

The DSA package will contain a number of strands, with one set of rules focused on updating the EU’s existing eCommerce Directive — which dates back two decades at this point.

“Building on these principles, we aim to establish clearer and modern rules concerning the role and obligations of online intermediaries, including non-EU ones active in the EU, as well as a more effective governance system to ensure that such rules are correctly enforced across the EU single Market while guaranteeing the respect of fundamental rights,” the Commission said today.

A second component is aimed at ensuring fairness in European digital markets which have become dominated by a few large online platforms that act as gatekeepers.

EU institutions have already adopted one legislative measure aimed at platform marketplace fairness — due to come into force next month. But the Commission believes more is needed and is now exploring building on that foundation with additional rules to foster competition — potentially around (non-personal) data sharing.

“We will explore rules to address these market imbalances, to ensure that consumers have the widest choice and that the EU single market for digital services remains competitive and open to innovation. This could be through additional general rules for all platforms of a certain scale, such as rules on self-preferencing, and/or through tailored regulatory obligations for specific gatekeepers, such as non-personal data access obligations, specific requirements regarding personal data portability, or interoperability requirements,” it said today.

The consultation is also asking for views on other “emergent” issues related to online platforms — including working conditions for platform workers who are providing a service via these marketplaces.

Gig economy platforms continue to face legal challenges in Europe over their classification of platform workers as ‘self employed’, a status that reduces the benefits they are entitled to as a result of their labor.

On competition policy, the Commission has today published an inception impact assessment and opened up another public consultation — inviting comments on whether EU regulators need a new competition tool to allow them to address structural competition problems in a timely and effective manner.

The pace of competition enforcement vs the speed of Internet-enabled disruption has led to criticism that current remedies applied to problematic digital business practices come far too late to be effective.

Commenting on this in another supporting statement, Vestager, who also heads up EU competition policy, said: “The world is changing fast and it is important that the competition rules are fit for that change. Our rules have an inbuilt flexibility which allows us to deal with a broad range of anti-competitive conduct across markets. We see, however, that there are certain structural risks for competition, such as tipping markets, which are not addressed by the current rules. We are seeking the views of stakeholders to explore the need for a possible new competition tool that would allow addressing such structural competition problems, in a timely and effective manner ensuring fair and competitive markets across the economy.”

The Commission says it has concluded that ensuring the “contestability” and “fair functioning” of markets is likely to require a “holistic and comprehensive approach” — emphasizing that this should involve continued vigorous enforcement of existing EU rules (including the use of so-called ‘interim measures’, where appropriate; an old tool Vestager has recently dusted off and unboxed).

But — additionally — it’s considering supplementing existing antitrust rules with ex-ante regulation of digital platforms (“including additional requirements for those that play a gatekeeper role”); and the aforementioned possible new competition tool for dealing with structural competition problems that have proven tricky to tackle with current measures (such as preventing markets from tipping).

“The new competition tool should enable the Commission to address gaps in the current competition rules and to intervene against structural competition problems across markets in a timely and effective manner,” it writes.

“After establishing a structural competition problem through a rigorous market investigation during which rights of defence are fully respected, the new tool should allow the Commission to impose behavioural and where appropriate, structural remedies. However, there would be no finding of an infringement, nor would any fines be imposed on the market participants.”

Stakeholders have until June 30 to submit views on the Commission’s inception impact assessment, while the public consultation on the potential new competition tool is taking submissions until September 8.

Subject to the outcome of the impact assessment the Commission adds that a legislative proposal is scheduled for Q4.

Interestingly, for Commission watchers, the consultation on the possibility of ex-ante regulation of digital platforms — which is clearly forming part of Vestager’s thinking on ensuring functionally competitive markets, given it’s included in the competition reform discussion — has not been included in the competition consultation — but rather slotted into the DSA consultation, which is being led by Breton.

The two commissioners not only have very different personal styles but appear opposed on policy substance, with Vestager being comfortable voicing support for regulating digital technologies while Breton continues to express reluctance to do so, preferring to court industry engagement — and couching regulation as a last, unwelcome resort.

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Call for EU state aid rules to flex for startups

European startups are calling for more flexibility in EU state aid rules to allow national governments to provide liquidity for the region’s fledgling digital businesses during the COVID-19 crisis.

In a joint letter addressed to Commission EVP Margrethe Vestager, more than a dozen startup associations from across the bloc have called for rules to be adapted to ensure digital businesses are not blocked from receiving any emergency state aid.

In March the Commission applied an update to EU state aid rules clarifying how Member States can provide support to homegrown businesses during the coronavirus emergency.

However the startup association representatives co-signing the latter — which include reps from Coadec in the UK, France Digitale, Germany’s Bundesverband Deutsche Startups, Startup Poland and several others  are concerned the framework is being too narrowly drawn where digital upstarts are concerned.

They point out that startups may be intentionally operating at a loss as a calculated bet on gaining scale down the line, making the current rules a poor fit.

Startups across Europe report that the Temporary Framework for State Aid is not yet giving enough flexibility to Member States to support startup ecosystems,” they write. “The definition of an ‘undertaking in difficulty’ is intended to apply to loss-making businesses. Such a definition will often be enough to deny support being given to such a business. However many startups are loss-making by design in their first years, as they are taking a calculated bet on exponential growth and associated job growth that will emerge in the following years.

“Only taking the current cash flow into account belittles the economic potential of these startups and prevents them from receiving much-needed support. In doing so it can undermine the post COVID-19 recovery, as it is today’s loss making startups which will be the driver for economic and job growth in the future.”

The letter goes on to call for startups to “receive the support that other economic actors are also receiving”.

“Startups provide a key opportunity for our economies and societies to recover as we come out of COVID,” they suggest, adding: “They will play a central part in re-growing our economy and crucially in doing so on a more carbon-neutral footing.”

We reached out to the Commission for a request for comment but at the time of writing it had not responded.

While it might a bit of a contradiction for VC-backed tech businesses which may choose to operate at a loss during ‘normal’ times to be calling for liquidity help now, Benedikt Blomeyer, EU policy director at Allied for Startups — one of a number of startup associations signing the letter — told us the argument is simply that Europe’s startups should be able to expect the same kind of support that is being extended to other types of businesses.

A number of EU Member States have laid out major support programs for startups to date — such as France’s $4.3BN liquidity support plan, announced in March; and a match fund revealed last month in the UK (which remains an EU member until the end of this year).

But the contention appears to be that liquidity isn’t flowing to all the European startups that need it, nor arriving in a timely enough way.

“For startups, loss-making doesn’t mean that it is necessarily a failing business,” Blomeyer told TechCrunch. “The bigger picture is that we are looking at startup ecosystems as key providers of jobs and economic growth coming out of the crisis. Some startups will fail, just like other businesses. But the question is whether startups should be able to access the same kind of support that other companies can to help them survive this crisis. We believe they should.”

Commenting on the issue in a statement, Paolo Palmigiano, head of competition, EU & trade for law firm Taylor Wessing, agreed the EU state aid rules may struggle to accommodate Internet businesses.

“The criteria introduced by the Commission in the Framework that a company must be viable as of 31 Dec 2019 makes sense in the old brick and mortar world. A company which would have gone in any case bankrupt, even without the current crisis, should not receive aid. The criteria start to be more complex and causes difficulties for tech companies which might not be profitable at the time although they could be in the future,” he said.

“The state aid rules were created in the 60s at a time when the single market did not exist and Europe had a lot of old-style industries (like steel). We need to see how the Commission react but I can see them struggling – how do you distinguish a loss making tech company which in any case would have gone bankrupt from a loss making company that will become profitable in the short term?”

Asked how it believes the Commission should replace the current viability criteria and assess which startups merit help and which don’t, Allied for Startups’ Blomeyer called for a blanket exemption for startups founded over the last half decade or more.

“There could be a clear exemption from the UID test for companies that have been set up in the last 5-7 years,” he suggested. “We need to underline that this is an unprecedented crisis that requires extraordinary measures. So while in normal times a regular process of assessing whether/how to assess startups might have worked, now the ecosystems that built them are melting away before our eyes because of the barriers. The basic conundrum is that it is unclear whether a loss-making startup is indeed not a viable business. This needs resolving.”

In what now feels like an earlier age late last year — as European Commission president Ursula von der Leyen was taking up her five-year mandate — tech-driven change was identified as one of her key policy priorities, with digitization and a green deal taking center stage, alongside a push for European tech sovereignty and support for homegrown startups to scale up.

So if Europe’s startups are feeling overlooked now, in the middle of an unprecedented economic shock, that hardly reflects well on the Commission’s claimed high tech policy goals.

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Facebook pushes EU for dilute and fuzzy internet content rules

Facebook founder Mark Zuckerberg is in Europe this week — attending a security conference in Germany over the weekend where he spoke about the kind of regulation he’d like applied to his platform ahead of a slate of planned meetings with digital heavyweights at the European Commission.

“I do think that there should be regulation on harmful content,” said Zuckerberg during a Q&A session at the Munich Security Conference, per Reuters, making a pitch for bespoke regulation.

He went on to suggest “there’s a question about which framework you use”, telling delegates: “Right now there are two frameworks that I think people have for existing industries — there’s like newspapers and existing media, and then there’s the telco-type model, which is ‘the data just flows through you’, but you’re not going to hold a telco responsible if someone says something harmful on a phone line.”

“I actually think where we should be is somewhere in between,” he added, making his plea for Internet platforms to be a special case.

At the conference he also said Facebook now employs 35,000 people to review content on its platform and implement security measures — including suspending around 1 million fake accounts per day, a stat he professed himself “proud” of.

The Facebook chief is due to meet with key commissioners covering the digital sphere this week, including competition chief and digital EVP Margrethe Vestager, internal market commissioner Thierry Breton and Věra Jourová, who is leading policymaking around online disinformation.

The timing of his trip is clearly linked to digital policymaking in Brussels — with the Commission due to set out its thinking around the regulation of artificial intelligence this week. (A leaked draft last month suggested policymaker are eyeing risk-based rules to wrap around AI.)

More widely, the Commission is wrestling with how to respond to a range of problematic online content — from terrorism to disinformation and election interference — which also puts Facebook’s 2BN+ social media empire squarely in regulators’ sights.

Another policymaking plan — a forthcoming Digital Service Act (DSA) — is slated to upgrade liability rules around Internet platforms.

The detail of the DSA has yet to be publicly laid out but any move to rethink platform liabilities could present a disruptive risk for a content distributing giant such as Facebook.

Going into meetings with key commissioners Zuckerberg made his preference for being considered a ‘special’ case clear — saying he wants his platform to be regulated not like the media businesses which his empire has financially disrupted; nor like a dumbpipe telco.

On the latter it’s clear — even to Facebook — that the days of Zuckerberg being able to trot out his erstwhile mantra that ‘we’re just a technology platform’, and wash his hands of tricky content stuff, are long gone.

Russia’s 2016 foray into digital campaigning in the US elections and sundry content horrors/scandals before and since have put paid to that — from nation-state backed fake news campaigns to livestreamed suicides and mass murder.

Facebook has been forced to increase its investment in content moderation. Meanwhile it announced a News section launch last year — saying it would hand pick publishers content to show in a dedicated tab.

The ‘we’re just a platform’ line hasn’t been working for years. And EU policymakers are preparing to do something about that.

With regulation looming Facebook is now directing its lobbying energies onto trying to shape a policymaking debate — calling for what it dubs “the ‘right’ regulation”.

Here the Facebook chief looks to be applying a similar playbook as the Google’s CEO, Sundar Pichai — who recently tripped to Brussels to push for AI rules so dilute they’d act as a tech enabler.

In a blog post published today Facebook pulls its latest policy lever: Putting out a white paper which poses a series of questions intended to frame the debate at a key moment of public discussion around digital policymaking.

Top of this list is a push to foreground focus on free speech, with Facebook questioning “how can content regulation best achieve the goal of reducing harmful speech while preserving free expression?” — before suggesting more of the same: (Free, to its business) user-generated policing of its platform.

Another suggestion it sets out which aligns with existing Facebook moves to steer regulation in a direction it’s comfortable with is for an appeals channel to be created for users to appeal content removal or non-removal. Which of course entirely aligns with a content decision review body Facebook is in the process of setting up — but which is not in fact independent of Facebook.

Facebook is also lobbying in the white paper to be able to throw platform levers to meet a threshold of ‘acceptable vileness’ — i.e. it wants a proportion of law-violating content to be sanctioned by regulators — with the tech giant suggesting: “Companies could be incentivized to meet specific targets such as keeping the prevalence of violating content below some agreed threshold.”

It’s also pushing for the fuzziest and most dilute definition of “harmful content” possible. On this Facebook argues that existing (national) speech laws — such as, presumably, Germany’s Network Enforcement Act (aka the NetzDG law) which already covers online hate speech in that market — should not apply to Internet content platforms, as it claims moderating this type of content is “fundamentally different”.

“Governments should create rules to address this complexity — that recognize user preferences and the variation among internet services, can be enforced at scale, and allow for flexibility across language, trends and context,” it writes — lobbying for maximum possible leeway to be baked into the coming rules.

“The development of regulatory solutions should involve not just lawmakers, private companies and civil society, but also those who use online platforms,” Facebook’s VP of content policy, Monika Bickert, also writes in the blog.

“If designed well, new frameworks for regulating harmful content can contribute to the internet’s continued success by articulating clear ways for government, companies, and civil society to share responsibilities and work together. Designed poorly, these efforts risk unintended consequences that might make people less safe online, stifle expression and slow innovation,” she adds, ticking off more of the tech giant’s usual talking points at the point policymakers start discussing putting hard limits on its ad business.

Source: TechCrunch

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Will online privacy make a comeback in 2020?

Last year was a landmark for online privacy in many ways, with something of a consensus emerging that consumers deserve protection from the companies that sell their attention and behavior for profit.

The debate now is largely around how to regulate platforms, not whether it needs to happen.

The consensus among key legislators acknowledges that privacy is not just of benefit to individuals but can be likened to public health; a level of protection afforded to each of us helps inoculate democratic societies from manipulation by vested and vicious interests.

The fact that human rights are being systematically abused at population-scale because of the pervasive profiling of Internet users — a surveillance business that’s dominated in the West by tech giants Facebook and Google, and the adtech and data broker industry which works to feed them — was the subject of an Amnesty International report in November 2019 that urges legislators to take a human rights-based approach to setting rules for Internet companies.

“It is now evident that the era of self-regulation in the tech sector is coming to an end,” the charity predicted.

Democracy disrupted

The dystopian outgrowth of surveillance capitalism was certainly in awful evidence in 2019, with elections around the world attacked at cheap scale by malicious propaganda that relies on adtech platforms’ targeting tools to hijack and skew public debate, while the chaos agents themselves are shielded from democratic view.

Platform algorithms are also still encouraging Internet eyeballs towards polarized and extremist views by feeding a radicalized, data-driven diet that panders to prejudices in the name of maintaining engagement — despite plenty of raised voices calling out the programmed antisocial behavior. So what tweaks there have been still look like fiddling round the edges of an existential problem.

Worse still, vulnerable groups remain at the mercy of online hate speech which platforms not only can’t (or won’t) weed out, but whose algorithms often seem to deliberately choose to amplify — the technology itself being complicit in whipping up violence against minorities. It’s social division as a profit-turning service.

The outrage-loving tilt of these attention-hogging adtech giants has also continued directly influencing political campaigning in the West this year — with cynical attempts to steal votes by shamelessly platforming and amplifying misinformation.

From the Trump tweet-bomb we now see full-blown digital disops underpinning entire election campaigns, such as the UK Conservative Party’s strategy in the 2019 winter General Election, which featured doctored videos seeded to social media and keyword targeted attack ads pointing to outright online fakes in a bid to hack voters’ opinions.

Political microtargeting divides the electorate as a strategy to conquer the poll. The problem is it’s inherently anti-democratic.

No wonder, then, that repeat calls to beef up digital campaigning rules and properly protect voters’ data have so far fallen on deaf ears. The political parties all have their hands in the voter data cookie-jar. Yet it’s elected politicians whom we rely upon to update the law. This remains a grave problem for democracies going into 2020 — and a looming U.S. presidential election.

So it’s been a year when, even with rising awareness of the societal cost of letting platforms suck up everyone’s data and repurpose it to sell population-scale manipulation, not much has actually changed. Certainly not enough.

Yet looking ahead there are signs the writing is on the wall for the ‘data industrial complex’ — or at least that change is coming. Privacy can make a comeback.

Adtech under attack

Developments in late 2019 such as Twitter banning all political ads and Google shrinking how political advertisers can microtarget Internet users are notable steps — even as they don’t go far enough.

But it’s also a relatively short hop from banning microtargeting sometimes to banning profiling for ad targeting entirely.

Alternative online ad models (contextual targeting) are proven and profitable — just ask search engine DuckDuckGo . While the ad industry gospel that only behavioral targeting will do now has academic critics who suggest it offer far less uplift than claimed, even as — in Europe — scores of data protection complaints underline the high individual cost of maintaining the status quo.

Startups are also innovating in the pro-privacy adtech space (see, for example, the Brave browser).

Changing the system — turning the adtech tanker — will take huge effort, but there is a growing opportunity for just such systemic change.

This year, it might be too much to hope for regulators get their act together enough to outlaw consent-less profiling of Internet users entirely. But it may be that those who have sought to proclaim ‘privacy is dead’ will find their unchecked data gathering facing death by a thousand regulatory cuts.

Or, tech giants like Facebook and Google may simple outrun the regulators by reengineering their platforms to cloak vast personal data empires with end-to-end encryption, making it harder for outsiders to regulate them, even as they retain enough of a fix on the metadata to stay in the surveillance business. Fixing that would likely require much more radical regulatory intervention.

European regulators are, whether they like it or not, in this race and under major pressure to enforce the bloc’s existing data protection framework. It seems likely to ding some current-gen digital tracking and targeting practices. And depending on how key decisions on a number of strategic GDPR complaints go, 2020 could see an unpicking — great or otherwise — of components of adtech’s dysfunctional ‘norm’.

Among the technologies under investigation in the region is real-time bidding; a system that powers a large chunk of programmatic digital advertising.

The complaint here is it breaches the bloc’s General Data Protection Regulation (GDPR) because it’s inherently insecure to broadcast granular personal data to scores of entities involved in the bidding chain.

A recent event held by the UK’s data watchdog confirmed plenty of troubling findings. Google responded by removing some information from bid requests — though critics say it does not go far enough. Nothing short of removing personal data entirely will do in their view, which sums to ads that are contextually (not micro)targeted.

Powers that EU data protection watchdogs have at their disposal to deal with violations include not just big fines but data processing orders — which means corrective relief could be coming to take chunks out of data-dependent business models.

As noted above, the adtech industry has already been put on watch this year over current practices, even as it was given a generous half-year grace period to adapt.

In the event it seems likely that turning the ship will take longer. But the message is clear: change is coming. The UK watchdog is due to publish another report in 2020, based on its review of the sector. Expect that to further dial up the pressure on adtech.

Web browsers have also been doing their bit by baking in more tracker blocking by default. And this summer Marketing Land proclaimed the third party cookie dead — asking what’s next?

Alternatives and workarounds will and are springing up (such as stuffing more in via first party cookies). But the notion of tracking by background default is under attack if not quite yet coming unstuck.

Ireland’s DPC is also progressing on a formal investigation of Google’s online Ad Exchange. Further real-time bidding complaints have been lodged across the EU too. This is an issue that won’t be going away soon, however much the adtech industry might wish it.

Year of the GDPR banhammer?

2020 is the year that privacy advocates are really hoping that Europe will bring down the hammer of regulatory enforcement. Thousands of complaints have been filed since the GDPR came into force but precious few decisions have been handed down. Next year looks set to be decisive — even potentially make or break for the data protection regime.

Source: TechCrunch