15 minute read
Thomas Byrne TD emphasises the importance of the
What is your vision for the future of Europe?
Should we increase the EU competence in health? Should the EU be more assertive in its foreign policy? Should the EU have a common taxation policy? These are the type of questions being answered by EU citizens in the Conference on the Future of Europe. Minister of State for European Affairs Thomas Byrne TD, writes.
It is now some six months since the Conference on the Future of Europe was launched in Strasbourg on 9 May, or Europe Day. I suspect that many EU citizens are still unaware that the Conference is taking place or of its significance.
In one way, this is not that surprising. Launching a major reflection on the Future of Europe when we are still battling to emerge from an unprecedented global pandemic was always going to be a challenge.
But it is precisely because we are at such a critical juncture, as we seek to rebuild
our societies and our economies and adjust to the new realities imposed by the pandemic, that such a reflection about where Europe is headed is warranted.
The nature of this initiative is very significant. It is a citizen-centred exercise where citizens direct the conversation; it is for them, the people affected by the decisions of the EU, to outline what type of Union they want. At its core, the basic idea behind the Conference is to have a conversation with our citizens, and particularly our younger people, about where we see the EU progressing in the next five, 10 or 20 years.
We in Ireland can take pride and some credit for the basic premise underlying and inspiring the Conference. Ireland has led the way in prioritising the issue of citizen engagement and trying to forge a more participative democracy. Our citizens’ assemblies have been a model which many others in Europe and indeed, across the world, have noted and admired. They have been the vehicle for major social change in our country.
As the Minister with lead responsibility on this issue, I have been engaging in an extensive series of virtual consultations with groups and communities around the country, particularly reaching out to those whose voices may not normally be heard when we discuss the future of the EU.
We really need to hear as many voices as possible in the coming months discussing what should be the future priorities for our union. This includes those who might regard themselves as eurosceptic or who would favour less, rather than more Europe.
This cannot be an exercise in which the voices of member state governments or of politicians such as myself are loudest.
Ordinary citizens want to have a real dialogue in which their ideas and suggestions matter. Ideas such as whether the EU should guarantee a basic right to housing. Or one suggestion put to me by a student is that there should be a pan-European central applications system for university entry.
This is the clear intention in terms of how the Conference is being organised. Four citizens’ panels, each composed of 200 EU citizens randomly selected, are now underway across Europe. I am very pleased that one of these panels will have its final, decisive session in Dublin in early December 2021.
The proposals and recommendations emerging from these panels will be a critical element in determining what finally emerges from this conference.
We also need to have our say in Ireland and hear the ideas of our own people on what the EU is doing and where it can do better.
That is why I really want to urge as many people, including EU citizens in Northern Ireland, and community groups as possible to get involved and organise their own discussions on the future of Europe. Any ideas or proposals emerging from these conversations can be officially recorded for consideration on the Conference’s digital platform (www.futureu.europa.eu) which is available in all 24 EU languages. The digital platform also has plenty of practical information and guidance on how to organise an event in connection with the Conference.
There are no prescriptions for what will emerge from this conference. The only assurance, to which all member states, including Ireland, have committed is that whatever recommendations eventually emerge from this conference must be taken seriously and acted upon by the European institutions.
The Conference is a really exciting and new departure for the European Union. It can be regarded as the first steps towards promoting more participative democracy and a stronger voice for ordinary citizens in determining the future directions and priorities within the Union. It is an opportunity which should not be missed.
Credit: Linda De Volder
EU agrees regulation targeting Big Tech
The EU has reached agreement on its Digital Markets and Digital Services act, twin tools in the Union’s effort to curb the power of Big Tech, which it hopes will bear fruit “as soon as possible”.
The Digital Markets Act and the Digital Services Act make up the EU’s attempt to get to grips with the ever-increasing power of Big Tech platforms. Having unveiled the legislation package in December 2020, the European Commission has since been in negotiations with the European Parliament and member states to reach a deal on the package. Having stated in October 2021 that the Commission hoped to agree a legislative package “as soon as possible”, agreement was reached in the European Parliament for the Digital Markets Act in November 2021 and the Digital Services Act in December.
The Commission states that the EU needs new rules governing the online behaviour of companies because the “rapid and widespread development of digital services has been at the heart of the digital changes that impact our lives” and the Digital Services Act and Digital Markets Act would “ensure that European legislation evolves with them”.
Following lengthy negotiations, the Digital Markets Act was agreed in the European Parliament in mid-November, endorsed by the Parliament’s Committee on the Internal Market and Consumer Protection a week later. The Act seeks to limit the anti-competitive behaviour of so-called gatekeepers such as Facebook, Apple, Alphabet and Google. Under the Act, gatekeeping companies would be defined as large online platforms who:
• have a strong economic position with significant impact on the EU market that are active in EU countries;
• have a strong intermediation position, linking large user bases with large numbers of businesses; and
• have or are about to have an entrenched and durable position in the market.
The passage of the Act would mean that these gatekeepers would have to allow their business users to access the data generate through use of the gatekeeper’s platform, provide companies advertising on the platform with the tools to carry out independent verification of advertisements hosted by the gatekeeper, and allow business users to promote themselves and conclude contracts outside of the platform. The gatekeepers would no longer be allowed to treat services and products that they offer more favourably than third-party services on the gatekeeper’s platform, prevent consumers from linking to businesses outside their platform, or prevent users from uninstalling preinstalled software or apps.
The Act will imbue the Commission with
the power to qualify companies as gatekeepers, update the obligations for gatekeepers “when necessary” and design solutions to systematic infringements of the Act’s rules. Noncompliance with the rules laid down in the Act could result in fines of up to 10 per cent of the gatekeeping company’s total worldwide annual turnover or periodic penalty payments of up to 5 per cent of the company’s average daily turnover. A major addition to the Act during negotiations was agreed, allowing the Parliament to restrict gatekeepers from making ‘killer acquisitions’ that further concentrate the market.
Systematic infringements of the obligations under the Act by gatekeepers could also mean that “additional remedies may be imposed on the gatekeepers after a market investigation”, with the remedies to be “proportionate to the offence committed”. If necessary, the Commission says that it will impose nonfinancial, behavioural, and structural remedies such as the forced divestiture of parts of a business as a last resort option.
The Commission’s impact assessment of the Digital Markets Act states that it will “increase the contestability of digital markets and help business overcome the barriers stemming from market failures or from gatekeepers’ unfair business practices”. The Act passed through the European Parliament with 642 votes for, eight against and 46 abstentions. One major amendment added during negotiations was the amendment on default settings, which will allow users to choose their default settings the first time but also to change them any time, including on pre-installed apps.
The Digital Services Act, the Digital Markets Act’s companion piece, seeks to “foster innovation, growth and competitiveness” while encouraging the scaling up of SMEs and start-ups via new rules to better protect consumers and the establishment of a transparency and accountability framework for online platforms. Its terms were approved by the internal market committee in December.
The Act includes: measures to counter illegal goods, services, or content online; new obligations on the traceability of business users in online market places; effective safeguarding for users such as the possibility to challenge a platform’s moderation decisions; transparency measures for platforms on issues such as recommendation algorithms; obligations for very large platforms to prevent the misuse of their systems; access for researchers to key data of the largest platforms; and oversight structure to address the complexity of the online space.
The Commission’s impact assessment of the proposed plans states that “a positive effect can be expected on the single market and on competition”, with an estimated increase of between 1 per cent and 1.8 per cent in cross-border digital trade, helping SMEs operate and significantly decreasing the costs “brought about by the inefficiencies of the existing set-up for the cooperation of authorities”.
One of the key aspects of the Digital Services Act from an Irish point of view is its reiteration of the country of origin principle contained in the eCommerce Directive, which states that the service providers are subject to the jurisdiction of their country of establishment, a principle that the French Government in particular are attempting to have changed to the country of their destination.
Ireland, as a state containing the European headquarters of many Big Tech juggernauts, has opposed this move by the French during the Digital Services Act negotiations and has deemed the issue a ‘red line’, gathering a coalition of countries in support including Croatia, Czechia, Estonia, Finland, Latvia, Lithuania, Luxembourg, Slovakia, and Sweden.
With the vote on the Digital Services Act due to take place in January, Irish voices are sure to be prominent in the debate given the frequency with which the Irish Government has clashed with the Brussels establishment over the regulation of Big Tech companies that have made a European home in Dublin and elsewhere. The message from Europe, however, remains clear, as the Commission’s initial publication of the acts in 2020 indicates: “The business and political interests of a handful of companies should not dictate our future. Europe has to set its own terms and conditions.”
European Chips Act forthcoming
The European Commission is preparing to put forward a European Chips Act aimed at vastly increasing the EU’s manufacturing of semiconductors and weaning the continent off of its digital reliance on China and the US.
Credit: European Commission
The European Chips Act, if passed, would plan for the EU to account for at least one-fifth of the world market value of cutting-edge and sustainable semiconductors by 2030. The Act would make up just part of a number of initiatives in the so-called Digital Decade for the EU in which the Union is looking to strengthen its hand in the digital market, with funds from a centrally managed programme to boost research, deployment and the manufacturing of these microprocessors being matched by an ambition to have built the EU’s first quantum computer by 2025.
“We need to link together world class research, design and testing capacities,” European Commission President Ursula von der Leyen said in her State of the Union address. “The aim is to jointly create a state-of-theart European chip ecosystem, including production, that ensures our security of supply and will develop new markets for ground-breaking European tech.”
The Commission had in the past created an industrial alliance on microprocessor and semiconductors in an attempt to support companies manufacturing the next generation of microchips and to return offshored manufacturing to Europe. Microprocessors are now ubiquitous in the digital world, to be found in smartphones and watches, cars, trains and smart factories, and Europe’s plans to increase its manufacturing of the technology are central to its plans to expand digitally and lessen reliance on Asia in particular. Indeed, von der Leyen commented that Europe’s digital plans would be impossible without these chips.
As von der Leyen noted in her speech, Europe’s share in the semiconductor market has shrunk; microchips made in Europe currently account for 9 per cent of the European microchip market today, a steep fall from the 40 per cent rate 30 years ago. 90 per cent of the EU’s data is managed by US companies, many of whom have European headquarters in Ireland, and under 4 per cent of the top performing online platforms are European. Semiconductor sales by European companies totalled €3.2 billion in May 2021, a 31.2 per cent increase on the sales level of May 2020, but the Commission estimates that the EU
would have to multiply its annual sales of microprocessors by five in order to reach a 20 per cent share of the world market by 2030.
In its attempt to do this, the Commission estimates that the EU will need to fill an investment hole of €125 billion every year, with €42 billion, €17 billion, and €11 billion estimated to be needed annually in communication networks, semiconductors, and cloud technologies respectively. The US Government, in comparison, plans to spend $52 billion aiding semiconductor manufacturing and research in a country that already accounts for 48 per cent of world computer chip sales.
Plans are afoot for the US chipmaker Intel, whose European headquarters are in Ireland, to construct a $20 billion semiconductor factory within the EU, a project that it says could be spread across the continent into multiple EU states. The company is currently said to be looking for a site of circa 1,000 acres that could support up to eight chip fabrication facilities. The plan is to initially establish two fabrication facilities with costs of $20 billion over the first 10 years, but the company has predicted total investment if up to $100 billion.
Intel’s fabrication facility in Ireland is something of a leader in the manufacturing of chips in the European context.
Few facilities in Europe currently produce nodes smaller than 22 nanometres, but the Irish Intel site is currently producing 14 nanometres chips and is seeking to incorporate 7 nanometres chips as soon as possible. However, this still leaves Europe behind the capabilities evident in Asia, with TSMC in Taiwan currently building a factory for the manufacturing of 3 nanometres chips, which are expected to be up to 15 per cent faster than the 5 nanometres chips it currently manufactures and use up to 30 per cent less power.
While the presence of global chipmakers such as Intel will be one of the planks of the European efforts to ramp up chip production, the EU also has plans for boosting its indigenous chipmakers such as Infineon, Bosch, STMicroelectronics, and Dutch company ASML, the only supplier of advanced lithography machines used in semiconductor manufacturing in the world. The head start companies such as TSMC have enjoyed is sure to be felt in Europe, where the manufacture of the 2 nanometres chips set to increase in prevalence due to smart cars remains a distant possibility. Such is the lead that TSMC enjoys in operating capacity that Intel has begun to outsource some of its production to its Taiwanese rival.
However, there is reason for optimism, such as the German Government briefing European officials that it was willing to invest €3 billion of its own capital funding to reclaim production sites along the entire chain of semiconductor production.
“While global demand has exploded, Europe's share across the entire value chain, from design to manufacturing capacity has shrunk,” von der Leyen said in her State of the Union address. “We depend on state-of-the-art chips manufactured in Asia. This is not just a matter of our competitiveness; this is also a matter of tech sovereignty. So, let's put all of our focus on it.”
Semiconductor design and manufacturing shares of 2018 sales based on company headquarters
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Equipment Materials (nonwafer) Materials (wafer) IP/electronic design automation Fabless Integrated device manufacturers Pure-play foundry Semiconductor assembly, testing, services
28% 20%
11% 11% 45%
1% 14%
1% 63% 58%
47%
49% 30%
2% 71% 20%
1% 1%
65%
1% 18%
10% 1%
15%
34% 40%
19%
4% 40%
17% 16%
3%
11% 25% 4%
4%
United States Taiwan Europe China Rest of world
Source: McKinsey and Company
