Digital Watch newsletter – Issue 51 – June 2020

​

The year 2020 will undoubtedly go down in history as one to remember. The first six months saw COVID-19 spread across every region, and change our way of life. Technology and digital policy developments were also impacted. This review looks at the top five issues so far, in chronological order.

1. Data governance: The quest for pooling and sharing data

Discussions on data governance centred mostly on data sharing and related challenges in the areas of standardisation, privacy protection, and cross-border exchanges. In February, the European Commission published a Data Strategy which envisions the creation of a single European data space to facilitate access to and the re-use of public and private data, across nine new sector-specific data spaces (in areas such as manufacturing, health, and energy). The new Data Act, planned for 2021, will provide the governing framework.

The strategy also notes the need to improve data portability rules (now part of the General Data Protection Regulation (GDPR)), so that individuals can have more control over who can access and use their data at a granular level. Such enhanced rules could be embedded in a revised GDPR or the new Data Act.

When it comes to international data flows, the Commission envisions ‘an open, but assertive approach [...], based on European values’. Recognising the importance of international data flows for the competitiveness of European companies, the EU will continue to support international cooperation with regard to data, while working to address the unjustified barriers to cross-border exchanges.

In parallel with the Data Strategy, the Commission also launched an Artificial Intelligence (AI) White Paper, which explores governance approaches towards trustworthy AI. The EU knows that data and AI are interlinked The sooner it creates its framework for common data spaces and AI governance, the more robust its data-driven economic sector will be.

In Geneva, the Road to Bern via Geneva process has been providing Geneva-based international organisations an opportunity to discuss digital and data cooperation issues. Organisations that are dealing with vast amounts of data (such as CERN and the World Meteorological Organization) and those for which data is a relatively new focus area (e.g. the World Health Organization) are meeting to discuss issues related to collecting, protecting, sharing, and using data.

The COVID-19 crisis has accelerated discussions on the sharing of data with respect to containing the pandemic and advancing research for a vaccine.

(Open) data is also among the digital public goods highlighted in the UN Secretary-General’s Roadmap for Digital Cooperation as essential in achieving sustainable development.

2. State responsibility in cyberspace, amid rise in cyberattacks

Discussions on state responsibility in cyberspace, and how to apply international law to cyberspace, continued via two main processes.

The UN Group of Governmental Experts (GGE) on advancing responsible state behaviour in cyberspace in the context of international security is the oldest international process on cybersecurity; the current working group is the sixth. While the fifth group failed to reach consensus on a report, the reports of 2013 and 2015 have become a cornerstone in cyber-norms negotiation processes. Now, the sixth GGE is continuing the work around a main issue: How to apply international law to cyberspace (rather than whether to apply it, as this has already been confirmed).

The Open-Ended Working Group was established in 2018 in parallel with the sixth GGE, as a space for ‘all interested parties’ to continue to develop rules, norms, and principles of responsible state behaviour in cyberspace. Its latest meeting was in February, but the group had continued working on its draft outcome document, collecting written submissions from the parties involved. The group’s chair recently suggested that the final meeting, scheduled for July 2020, be rescheduled for 2021. A final decision is yet to be made.

In parallel, COVID-19 has triggered an increase in state-backed and criminal attacks exploiting the crisis context, ranging from scams and phishing to attacks against health infrastructures. The serious risks posed by the latter have had governments and organisations such as NATOand the CyberPeace Instituteissuing calls and statements urging state and non-state actors to refrain from and prevent cyber-attacks against the healthcare sector.

3. Contract tracing apps trigger new privacy debates

Of all the policy issues affected by COVID-19, those around contact tracing apps were probably the most prominent over the past few months, with a serious debate emerging around centralised and decentralised approaches.

Tracing apps relying on the centralised approach involve the collection and storage of data in a central space accessible to public authorities (such as healthcare services). Because such apps need to be developed from scratch, their development is slow. Moreover, they are likely not interoperable, since every app is developed unilaterally and relies on different standards. As governments tend to take the lead in developing centralised apps, concerns have been raised regarding potential misuses (e.g. mass surveillance or data being retained by authorities for a longer period than necessary).

Decentralised apps store data locally, on users’ phones, and rely largely on existing application programme interfaces (APIs) of Google’s Android and Apple’s iOS operating systems. While this makes the apps easier to develop and interoperable, one challenge comes from the fact that authorities have to play by the rules set by the private companies. And while decentralised systems are considered to be more privacy-friendly, they still pose their own risks (e.g. bad actors could eavesdrop on data exchanged locally).

Another issue relates to the take-up of tracing apps, which depends on the trust users have in the governments or companies behind them. A low take-up makes the app ineffective. The main argument used to encourage take-up is that public health is imperative and can lead to disease-free environments. But users may feel that they are being presented with a trade-off (individual privacy vs public interest) they are not ready to make. Read more about tracing apps and their deployment around the world.

4. A slice of the digital tax pie

In recent years, it has become widely recognised that tech companies need to pay their fair share of taxes. The main issue is how to apportion taxes among countries, and how to establish the nexus between activity and consumers where no physical headquarters are present.

There are three main trends. At the international level, the Organisation for Economic Co-operation and Development (OECD) is facilitating a process towards a multilateral agreement. This approach is favoured by the EU and other countries, and was supported by the USA until June when the country decided to step out.

The EU’s regional approach for an EU-wide digital tax has so far failed to attract enough support from the bloc.

Since the progress at international level is slow, several countries, such as France, Italy, the UK, Spain, Turkey, and Indonesia, are opting to introduce unilateral measures. Some proposals contain sunset clauses, allowing unilateral taxes to cease to apply once regional or global rules are in place. Read more.

5. Accelerating the path towards digital cooperation

The COVID-19 pandemic accelerated the arrival of the ‘age of digital interdependence’, envisioned in the June 2019 report of the High-level Panel on Digital Cooperation. The world is now trying to grasp the tectonic economic, political, and social shifts triggered by the pandemic, as society becomes more dependent on digital technologies.

Digitalisation promises to speed up the recovery process, and this can most effectively be achieved if fast and solid governance solutions are developed for new issues such as tracing apps, e-commerce, and content policy. On the backdrop of this growing pressure for action, the UN Secretary-General’s recent Roadmap for Digital Cooperation comes at an opportune time, proposing measures to accelerate a digital cooperation that is anchored in the political, social, and legal realities of the digital world.

The Roadmap’s proposed policy actions indicate the main signposts towards effective digital cooperation that can lead to the ‘future we want’. It is now on governments, the private sector, civil society, international organisations, academia, and the technical community to follow up with responsibility and commitment. Read more.

​

The digital policy landscape is filled with new initiatives, evolving regulatory frameworks, and new legislation and court judgments. In the Digital Watch observatory – available at dig.watch – we decode, contextualise, and analyse ongoing developments, offering a digestible yet authoritative update on the complex world of digital policy. The monthly barometer tracks and compares the issues to reveal new trends and to allow them to be understood relative to those of previous months. The following is a summarised version; read more about each development by clicking the blue icons, or by visiting the Updates section on the observatory.

On 11 June 2020, UN Secretary-General António Guterres presented the Roadmap for Digital Cooperation. Building on the recommendations outlined in the report of the UN High-level Panel on Digital Cooperation, the Roadmap sets out a pro-development digital agenda, proposes concrete initiatives, and addresses controversial digital governance issues in balanced and actionable ways.

Development in focus

The Roadmap is mainly centred on development, and this has a direct bearing on the 2030 Agenda for Sustainable Development.

Although several sustainable development goals (SDGs) targets refer specifically to digital technology, the digital sphere and the potential of technology to achieve these targets are largely absent from the 2030 Agenda. The Roadmap fills this gap in a way: It introduces an 18th SDG, as a cross-cutting layer to the 17 existing SDGs.

While inclusion begins with access to networks and equipment, it only becomes meaningful if connectivity is affordable and if citizens possess the right digital literacy skills. The Roadmap proposes a baseline for digital inclusion that will bring forward more metrics and data to help achieve greater progress. It also pushes for the inclusion of women, migrants and refugees, people with disabilities, older people, young people, indigenous communities, and others likely to be excluded from the benefits of digitalisation. 

The Roadmap points to digital public goods as key to achieving the SDGs. It also calls for a return to the early ethos of the Internet built around openness. The term ‘open’ is used on 22 occasions in the document, in reference to open source, open content, open software, open AI, etc. 

Towards digital governance solutions 

Currently, there is no single policy space on a global level where countries, companies, and citizens can come together to discuss tech developments, address pressing digital issues, and agree on common principles and rules whenever possible. 

If the Roadmap’s proposals had to be implemented today, policy questions surrounding, for instance, contact tracing apps, would most likely land at IGF Plus, one of the governance models proposed by the Panel’s Report and endorsed by the Roadmap. IGF Plus would gather all directly concerned actors and bring their expertise to the table. Then, in a transparent and inclusive manner, new policy approaches and recommendations could be relayed to the appropriate normative and decision-making forums. Actionable outcomes could be further accelerated by a high-level segment and ministerial or parliamentarian tracks as proposed by the Roadmap.

Does AI need specific governance?

The Roadmap sends two messages. First, it outlines the need for AI governance by, for example, listing gaps such as ‘lack of overall coordination’ among AI initiatives and ‘no common platform to bring these separate initiatives together’. Second, the Roadmap is cautious by ‘taking into account existing mandates and institutions’ when addressing AI governance. This careful approach reflects the current shift from considering AI as a separate policy area to anchoring it in existing rules covering issues such as human rights, liabilities, and consumer protection.

Treating carefully on cybersecurity issues

The Roadmap is shy on cybersecurity, given the political controversies surrounding these issues. It proposes a statement on digital security and trust which would be negotiated by UN member states and endorsed by other stakeholders.

A refreshing novelty is the Roadmap’s linking of cybersecurity and development, an aspect which is often missing in digital policy discussions. An insecure Internet in developing countries not only harms economic and social growth, but also damages the overall stability of the Internet.

Consolidating human rights principles

The Roadmap’s section on human rights consolidates what has been achieved at policy level. It reiterates that human rights exist online as they do offline. It calls for due diligence of tech developers when it comes to the impacts their products have on human rights; reiterates that blanket Internet shutdowns are against international human rights law; and outlines the current level of public debates on issues such as data protection, surveillance and facial recognition, online harassment, and content governance.

The Roadmap also brought forward a new element for UN policy documents. It clearly points to the social media platform business model of data monetisation as a structural cause of data privacy breaches.

Avoiding hype: Learning from blockchain

The Roadmap bypasses the traps of tech-hype and this is a promising sign of the organisation’s development of ‘tech-hype immunity’. It was not always like this. Three years ago, the UN and many other actors were considering blockchain as the silver bullet to many societal problems. While blockchain can have some useful applications (e.g. supply chain management, voting), it cannot deliver on all promises and expectations.

The Roadmap does not make a single reference to blockchain. This marks an important first step for the UN towards developing an immunity to tech-hype. This resistance can help save time and funding, and ensure healthy and constructive enthusiasm for the use of technology in solving pressing societal problems.

Next steps between the sprint and the marathon

The Roadmap provides direction and the main signposts for the next steps on the journey towards a more inclusive, informed, and impactful digital cooperation as we move into an increasingly uncertain future.

On this journey, we need to run a sprint (provide immediate solutions in response to the COVID-19 crisis) and a marathon (shape digital governance architecture that supports the 2030 Agenda). The ultimate test for digital cooperation will be who, where, and how can answer the growing number of calls from countries, companies, and citizens for protection of their digital rights and interests?

***

This analysis is based on Prof. Jovan Kurbalija’s article Digital Roadmap: The realistic acceleration of digital cooperation. For more details and updates on the Roadmap, follow the dedicated space on the Digital Watch observatory.

Many governments around the world are concerned that tech giants are not paying their fair share of taxes in the countries where they operate. Such concerns have resulted in new national taxes and new efforts at the international level to define global solutions. COVID-19 put the question of digital taxes into sharper focus with the shift of economic transactions online and the growing economic power of tech platforms. What is the state of affairs now?

At a time when tech multinationals such as Apple, Google, and Facebook perform business activities in countries where they do not necessarily have a legal presence, it becomes all the more difficult to tax generated profits. While governments and international organisations agree that existing tax rules need to adapt to today’s rapidly changing digital economy, they have not yet agreed on what exactly these rules should look like. 

Dubbed as the ‘largest global economic battle of 2020’, the impasse resulting from this month’s developments poses a threat to relations between traditional allies. 

Countries move towards unilateral actions

In March 2019, the EU stalled its plans for an EU-wide digital tax following opposition from several countries which argued that such measures could harm the EU’s economy. Instead, the EU opted to wait for the OECD to complete its work on global tax rules for the digital economy. Fast forward June 2020 and the OECD process seems to be at an impasse. But before we look at this, let’s see what has happened in the meanwhile.

Several European countries concerned that the OECD approach may be too slow took unilateral actions and developed their own digital taxation rules. For instance, various forms of digital taxes have been introduced in Austria (a 5% digital tax on online advertising services provided by large multinational companies), Italy (a 3% tax on gross revenues obtained by digital platforms from advertising services), and in the UK (a 2% tax on the revenues of search engines, social media services, and online marketplaces which provide services to UK users).

France has also enacted a 3% tax on revenues earned in the country by digital giants, but decided to postpone its implementation until the end of 2020, due to opposition from the USA. Belgium, the Czech Republic, and Spain are among the countries that announced their intention to introduce digital taxes.

Beyond European shores, countries such as Canada, Egypt, Brazil, and Russia have also announced plans to introduce digital service taxes. Other countries at the global level have already introduced various types of digital taxes; examples include Indonesia, Kenya, Malaysia, and Turkey.

OECD negotiations at an impasse?

In its efforts to get countries on the same page, the OECD proposed a two-pillar approach to digital taxation. According to the proposal, companies would be subject to taxation in the countries where their products or services are sold, even if they do not have a physical presence there. If companies were to continue to find ways to register their profits in low-tax jurisdictions, countries could apply a global minimum tax rate. 

In May, the OECD reiterated its hope that a consensus-based solution to these issues would be agreed by the end of 2020, while implementation details would be decided on in 2021. But the month of June brought a major challenge: The USA decided to suspend its participation in the OECD discussions, because, as US Trade Representative Robert Lighthizer noted, ‘we were not making headway’ on a global agreement on digital services taxation. The country also ‘suggested a pause in the OECD talks [...] while governments around the world focus on responding to the COVID-19 pandemic and safely reopening their economies’.

Lighthizer – who in early June launched an investigation into whether digital taxes imposed by several countries represent an unfair trade practice – noted that ‘if countries choose to collect or adopt such taxes, the United States will respond with appropriate commensurate measures’. But he also acknowledged that there is still ‘room for a negotiated settlement’, in the form of ‘an international regime that not only focused on certain sides and certain industries, but where we generally agree how we’re going to tax people internationally’.

What next?

Europe was quick to react to the US announcement. Paolo Gentiloni, European Commissioner for Economy, reiterated the EU’s commitment to continuing the negotiations towards a global agreement at OECD level. But he also pointed out that, unless such an agreement is reached by the end of the year, the Commission ‘will come forward with a new proposal at EU level’.

Several countries, such as France, Germany, Italy and Spain also expressed their willingness to advance the OECD discussions; some noted that they will not accept threats from the US government and that they will move ahead with national taxes if EU or global solutions are not found. 

In the latest developments, however, France, Italy, Spain, and the UK seemed to take a softer approach by proposing to limit the scope of the proposed global digital tax. The limited scope would see the tax apply only to automated digital services such as search engines and social media platforms (e.g. Google and Facebook), in the first phase. Tech giants selling goods and services (the likes of Microsoft and Apple, for instance) would not be captured during this phase. This could help relax existing tensions, and give the OECD’s plan the impetus it needs to move forward. It remains to be seen how the USA will react. 

Meanwhile, the OECD remains intent on reaching a global solution by the end of the year. The risk is that, unless a multilateral agreement is achieved, countries will continue to impose unilateral measures to tax tech firms. This would trigger tax disputes and tensions that ‘would hurt the economy, jobs and confidence even further’.

The COVID-19 crisis has pushed several discussions, negotiations, and processes to continue online; in other cases, meetings have been postponed. Geneva-based organisations have adjusted quickly to the new online reality. The global focus on health and humanitarian issues has increased the relevance of Geneva dynamics for global governance. The following updates cover the main discussions of the month. For event reports, visit the Past Events section on the Digital Watch observatory.

ITU – Virtual Consultation of Councillors | 9–12 June 2020

The 2020 physical session of the ITU Council, initially planned for June, has been postponed. However, a virtual consultation of councillors was held, which was attended by 346 delegates. During the consultations, it was proposed that the World Telecommunication Standardization Assembly be postponed to 23 February–5 March 2021, and that the World Telecommunication/ICT Policy Forum be postponed to 1–3 June 2022. Also discussed was the impact of the COVID-19 pandemic on the telecommunication/ICT sector and the functioning and activities of the ITU.

Commission on Science and Technology for Development (CSTD) – 23rd Annual Session | 10–12 June 2020

Held online, the 23rd CSTD session started with a ministerial discussion on using science, technology, and innovation to accelerate progress on the SDGs and address COVID-19. It continued with debates on harnessing rapid technological change for inclusive and sustainable development, and the role of space technologies in sustainable development. The Commission also explored progress made in the implementation of the outcomes of the World Summit on the Information Society (WSIS).

Conference of European Statisticians – 68th Plenary | 22–24 June 2020

Held as a hybrid meeting in Geneva and online the conference discussed the impacts of globalisation and digitalisation on the future of economic statistics, and the challenges of measuring the digital transformation. Emphasis was put on the need to invest in digital infrastructures for statistics, as well as on the importance of fostering international cooperation and multistakeholder dialogue on measuring the digital economy. Other topics included the role of national statistical agencies and geospatial agencies in emerging national data ecosystems, and the role of official statistics in dealing with the COVID-19 pandemic and providing data for the SDGs.

World Summit on the Information Society Forum 2020 | 22 June–10 September 2020

Held entirely online, the 2020 WSIS Forum started on 22 June with a high-level dialogue on fostering digital transformation and global partnerships. The first week also included debates on digital agriculture, digital inclusion and accessibility, AI governance, and smart city governance. The forum will continue with a weekly programme of workshops and special tracks, and conclude with a final week (7–10 September) including policy statements, high-level dialogues, and a ministerial round-table.

The great lockdown and its impact on small business | 24 June 2020

Organised by the International Trade Centre (ITC) in the form of a webTV programme, the event was dedicated to showcasing examples of business responses to the COVID-19 crisis, and discussing solutions to mitigate its effects. ITC also presented its SME Competitiveness Outlook 2020, which explores the impact of the pandemic on small firms, international supply chains, and trade. The report notes that SMEs need to be involved in building a ‘new reality’ post-COVID-19, characterised by the embracing of digitalisation opportunities, and greater inclusiveness and sustainability.

Learn more about the upcoming digital policy events around the world, and use DeadlineR to remind you about important dates and deadlines.

​

Most Geneva-based organisations are now tackling digital aspects, making the Geneva digital policy landscape rich and diverse. How can we navigate this landscape and understand who is dealing with what, and how to overcome policy silos? These questions were the subject of an online conference organised by the Geneva Internet Platform (GIP) on 23 June. These are some of the main takeaways.

Mapping needs of different communities

Stakeholders play various roles in shaping digital policy. In return, they need guidelines and tools to help them navigate the numerous initiatives, processes, and forums for discussion and decision-making. For instance, diplomatic missions could benefit from tools to assist them in providing fast cross-cutting coverage of policy issues beyond the traditional silos. For international organisations, the development of a common ground on terminology, practices, and norms would be a step towards strengthening collaboration. And while the private sector may find it challenging to follow Geneva-based digital policy discussions, clear gateways such as the Road to Bern events could help them better understand the context and participate more effectively.

Mapping digital policy areas: Approaches and initiatives

With digitalisation affecting practically every aspect of our lives, the policy area around digital and technological developments is becoming increasingly broad and complex. Mapping initiatives provide clarity on who is covering which policy issues and how, but they also need to bring out the interlinkages among the work of actors, and emphasise the various entry points to connect what is being done in various areas. Common taxonomies are also important in helping people and organisations speak the same policy languages and understand each other.

​

​