(Editor's note: this is a contribution from Thomas Kösters, an entrepreneurship professional with the Technische Universität München and co-founder of the European Startup Initiative)
It's interesting that Google chairman Eric Schmidt recently published an article in German media defending his company’s operations. In it, he lamented that many pundits (especially German ones) “attack the entire Internet and its magic, which gives anyone, anywhere access to previously hard-to-find information."
While I understand that as the executive chairman of Google, it's expected that he react to attacks in this fashion, I also believe the criticism the company has received is good.
Now don’t get me wrong – I don’t think Google should be used as a scapegoat, but I do believe there needs to be a discussion on how the Internet and digitalization are affecting our privacy rights.
So, I'm glad that Schmidt has entered into the public sphere for debate.
The times they are a-changing
Digitalization is essentially the conversion of physical objects into digital ones – everything becomes data. As a result of the conveniences that come with it, it seems we are all incessantly giving away valuable information about our personal and professional lives.
In fact, it's often difficult to see the real costs of these data packages we use to pay for “free” services, and where this data is going
Mathias Döpfner, CEO of Europe's largest newspaper publisher Axel Springer, summarized the significance of the digital revolution by saying: "If fossil fuels were the fuels of the 20th century, then those of the 21st century are surely data and user profiles."
In an open letter to Eric Schmidt, Döpfner argued that Google and others are becoming "new digital super-authorities", which pose as a danger in extracting themselves from the reach of regulation. He even went so far as to openly admitting being afraid of their power.
No wonder he's afraid though, the Internet infrastructure reaches much further than the jurisdiction of a single nation state or even the European Union. Plus, the core values of the free world (like freedom of expression) largely forbid any limitations of this free flow of data.
In fact, democratic institutions fight with conviction for the preservation and expansion of what is the basis of Google's business.
Growing power of Internet giants across borders
The debate on deterritorialization and the loss of the power of the nation state vis-a-vis multinational companies that can blackmail governments by moving to another location are old and, I believe, inaccurate.
If anything, Google's campus in Palo Alto is a clear sign of the indispensable link between business and territoriality. Companies thrive on communities and profit from localities, where talent and information is abundant, and this doesn't just hold true in the Valley.
That said, governments will always have a grasp on companies as they grant access to markets and set rules of doing business (European tech startups may know this too well).
However, the costs of regulating markets vary and democracies have not yet adopted the new price list. We are used to using political capital to fight unemployment or to protect the environment – but to keep the Internet open? Or to strike the fine balance between protecting digital privacy rights and enabling technological innovation to boost the startup economy?
No wonder attempts to find political answers have been clumsy, at best.
In his letter, Döpfner took it upon himself to reprimand the work of European competition regulators, who reached an agreement with Google over the EU anti-trust inquiry, and said, "Will European politicians fold or wake up? Institutions in Brussels have never been as important as they are now."
In another instance, to protect privacy rights, the EU set out to regulate the use of cookies, forgetting that Google and Amazon algorithms work quite well without. To top this off, the negotiated terms between the EU and Google are only binding for its EU web domains and not for apps installed on smartphones.
Still, the notion that Google, Apple or Facebook are like infrastructure providers similar to the railroad companies of the past is not completely far-fetched. They function in the same manner: Once you put your wagon on its rails, it's hard to switch. But if you don't put them there, your goods will never make it to the market.
So this begs the question: Are the digital infrastructure providers abusing their market domination to restrict access to their networks, the market?
No easy answers
It's also important to ask ourselves: Without the railroad – where would we stand today?
Clearly, Google is not only taking. As Schmidt wrote:
The German Institute for the Economy states for the years between 2007 - 2011 that more than 28,000 small companies have been founded in Germany with the help of Google products. Those new companies stand for an annual revenue of more than 8 billion euros and almost 100,000 jobs giving clear proof of the economic power of the web and of Google’s contribution to the German economy
I know what he is talking about – Google functions as a resource for many startups since it's making data widely available that couldn't have been aggregated otherwise.
The digital revolution, spearheaded by these Internet giants, affects every stone in our society – from industrial production to social interaction.
Digitalization is a huge opportunity and I agree with Satya Nadella, Microsoft's new CEO, who stated in a recent blog post:
The opportunity we have in this new world is to find a way of catalyzing this data exhaust from ubiquitous computing and converting it into fuel... This fuel will power improved experiences, understanding and interactions.
When these devices around us gain the capacity to listen to us, respond to us, understand us and act on our behalf, we enter into an entirely new era.
To live (survive?) in this new era of data, he called for "a data culture for everyone".
But what I want to understand from this, are both the benefits and dangers of technological use as well as their implications. And we cannot have a meaningful debate without the main players explaining their role.
So, please Mr. Schmidt, Mr. Zuckerberg, Mr. Nadella, Mr. Page and Mr. Cook, continue the debate.
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