Tue. Dec 7th, 2021

Good morning and welcome to Europe Express.

The whistleblower behind the Facebook Papers, Frances Haugen, speaks today in the European Parliament in Brussels as part of her extensive tour of European capitals (London, Berlin and Lisbon so far). We will look at what ammunition MEPs hope to gather from this trial in their efforts to keep Big Tech in check.

Also today (and tomorrow), finance ministers meet first in Brussels in Eurogroup, then in full Ecofin format, to discuss inflation, energy prices and the Commission’s recent suggestions on how to approach a review of the block’s fiscal rules. I will unpack their agenda and what prospects are for progress, pending the formation of a new government in Berlin.

And on the Covid-19 vaccination front, we look at political tensions brewing in the Baltic countries, most notably between the President and the Prime Minister of Lithuania.

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Target targeted ads

The controversial practice of targeted advertising is back in the spotlight today when Frances Haugen, a Facebook whistleblower, addresses lawmakers in the European Parliament, writes Javier Espinoza in Brussels.

With an update of the bloc’s technological rules still under discussion, Brussels is feeling increasing pressure from politicians, academics, activists and privacy watchdogs to impose a ban or at least limit the extent to which companies including Google and Facebook (now known as Meta) is able to track users’ online behavior and sell the resulting profiles for targeted ads.

A direct ban would be a massive blow to Big Tech, as their core business model relies on the multibillion dollar adtech industry.

So far, the European Commission has been reluctant to include a direct ban. EU officials argue that the move is likely to hurt small businesses, which rely on targeted advertising, excessively to let social media users know about their products and services. Technical managers argue a ban is not necessary if privacy rules are properly applied.

This has not stopped the controversy surrounding the practice. Earlier this year, members of the center-left Socialists and Democrats launched a campaign titled #AdsZuck (a reference to Meta CEO Mark Zuckerberg) that sought to collect signatures for a public petition calling for a total ban on targeted advertising. About 2,000 people have signed the petition so far.

Today’s trial (which you can watch live here from 16:45 CET) with Haugen is an attempt to gather more ammunition for parliament’s position that the planned update of the bloc’s technology regulation does not go far enough.

Axel Voss, a center-right German lawmaker involved in technology regulation negotiations, is likely to ask Haugen how to prevent targeted advertising from being a tool for harmful content, for example for children, while not banning it [it] entirely ”, according to a person with knowledge of his question.

Haugen will know a thing or two about social media that harms children (Read her full profile). During her time at Facebook, she has collected a myriad of documents exposing the company’s alleged culture of placing profits above the well – being of its users. Facebook said she was a middle-level employee with no decision-making power who incorrectly characterized the way the company works.

Some hope that her arrival in Brussels in a time of deep political division within parliament over the draft rules for the modern internet will help unblock the deadlock on the day that legislators were supposed to have a common position ready to with member states and the commission.

According to the US-based activist group Avaaz, Haugen’s revelations are a “golden opportunity” to influence the final phases of the Digital Services Act. Avaaz says MEPs need to focus on three key battles: regulating platform’s’ harmful ‘algorithms, opening up the platforms’ black box with data and stronger enforcement of EU rules.

Andreas Schwab, another German center-right MEP involved in technology regulation, said the evidence “is likely to further reveal the problematic role that platforms such as Facebook play in modern society”.

Schwab said the technological rules currently being discussed would not be enough to tackle “political advertising, fake news and foreign interference in domestic politics online”, and urged the commission to “hurry” with its supplementary proposals on these topics.

“We may never have another Cambridge Analytica 2.0 where personal data is misused for political gain,” Schwab said, referring to the UK data company hired by Donald Trump’s campaign to influence American voters in the 2016 presidential election. “Haugen’s revelations showed that we can no longer wait,” Schwab said.

Graph of the day: Green bill

Bar graph of Additional investment needed to reach net zero, by sector (£ billion) showing Capital expenditure on green projects must rise rapidly this decade

The UK Government’s independent Independent Climate Adviser, the Climate Change Committee, estimates that the elimination of net greenhouse gas emissions from the UK by 2050 will come with a bill of £ 1.4tn. This is the equivalent of an average of £ 1,700 per year for each household, on top of £ 3,000 non-climate-related tax increases, which Boris Johnson’s government has also introduced over the next few years. (More here)

Waiting for Berlin

EU finance ministers meet in Brussels today to have an exchange of views on how the bloc’s economic governance (and a return to the bloc’s fiscal rules in 2023) should be structured in the post-pandemic era, but without a new finance minister in Berlin the discussion is unlikely to go very far.

Like the FT written last week, the likelihood that fiscal hawk Christian Lindner will be appointed at the helm of the Bundesfinanzministerium raises alarm bells among economists.

And with COP26 in Glasgow making it very clear that much more, not less, public spending will be needed to reach Europe’s greenhouse gas emissions targets and move away from fossil fuels over the next few decades, analysts are beginning to worry about where EU ministers’ finances are on the way.

“On current policy,” writes Erik Nielsen, chief economist at UniCredit, in a note to investors, “such an investment boost is made impossible by the combination of EU fiscal rules and the political reality of not wanting to raise taxes or cut other spending in sufficient amounts. “

In an interview last week with the FT, Lindner said that “continuing with an ultra-expanding fiscal policy would be a major danger to Europe” – a position that other fiscal hawks in the bloc would remain is to endorse.

Other topics for discussion at today’s Eurogroup and tomorrow’s Ecofin are:

  • Rising inflation and the energy crisis

  • Digital euro (more on that here)

  • An update from the ECB and the Single Resolution Board on their risk reduction indicators

  • A discussion on the financing of NextGenerationEU, the bloc’s € 800 billion post-pandemic recovery plan

Baltic tension

Covid-19 cases are sky-high in the Baltic countries and so is political tension, writes Richard Milne, Nordic and Baltic correspondent.

Most striking is the dispute between the President of Lithuania and the government in Vilnius over pandemic measures.

President Gitanas Nauseda last week vetoed a bill proposing that unvaccinated workers pay for their own Covid-19 tests, prompting Prime Minister Ingrida Simonyte to sharply criticize the head of state for interfering in Lithuania’s efforts to stab more people.

In a way, the tension is not strange. Nauseda beat Simonyte in the 2019 presidential election and state broadcaster LRT reports the two have not had their weekly official meeting in two months.

Nauseda and the government have found room to agree on foreign policy, take the same hard line against Belarus and China and strongly proclaimed Vilnius’ defense of democracy and freedom.

But the timing of the latest quarrel is weak. It came two weeks after Nauseda proposed that the government deliberately delayed vaccination efforts to humiliate him after setting a mid-July target of 70 percent.

Covid Numbers was boom in the Baltic countries, which recently placed all three states worldwide in the top 10 per capita, although there are signs that they are starting to decline.

Covid-related political tensions are not limited to Lithuania.

Estonia’s new president, Alar Karis, also criticized the government in Tallinn, saying it had not done well enough, especially in terms of communications. His comments followed the resignation of Estonia’s Minister of Culture, allegedly the only member of the government who had not been fully vaccinated, after weeks of pressure on some of her skeptical views.

All three Baltic countries, and much of Eastern Europe, are struggling with a fourth wave of Covid-19 due to lower-than-average EU vaccinations. The political sniping is likely to continue.

What to watch today

  1. Facebook whistleblower Frances Haugen speaks in European Parliament

  2. Eurozone finance ministers meet in Brussels

. . . and later this week

  1. Charles Michel, head of the European Council, will address the plenary session of the European Parliament in Brussels on Wednesday.

  2. EU foreign ministers meet in Brussels on Thursday for a trade council

Remarkable, quotable

  • Spanish delay: Weak household spending and supply chain bottlenecks weigh on Spain’s recovery. The country makes much less progress as other members of the eurozone to recover pre-pandemic output levels.

  • Mafia trials: An Italian court has sentenced 70 members of the Calabrian mafia group, the ‘Ndrangheta, to up to 20 years in prison. DW report. A total of 355 suspects are on trial in a series of cases that could take another two years.

  • Greece boom: British airlines, including easyJet and Jet2, is preparing to add hundreds of thousands more seats for flights to Greece next summer, compared to 2019, in hopes of a boom as travel restrictions ease.

  • Polish protests: Thousands of Poles took part in vigils and marches Saturday after the death of a pregnant woman whose case sparked a debate over the country’s highly restrictive abortion laws.

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Today’s Europe Express team: javier.espinoza@ft.com, richard.milne@ft.com, valentina.pop@ft.com. Follow us on Twitter: @javierespFT, @rmilneNordic, @valentinapop.

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