Berlin, November 2014

Mr Andrus Ansip Vice President of the and Commissioner for the Digital Single Market European Commission Rue de la Loi 200 1049 BELGIUM

Mr Günther Oettinger Commissioner for and Society European Commission Rue de la Loi 200 1049 Brussels BELGIUM

Ms Vĕra Jourová Commissioner for Justice, Consumers and Gender Equality European Commission Rue de la Loi 200 1049 Brussels BELGIUM

Ms Commissioner for Competition European Commission Rue de la Loi 200 1049 Brussels BELGIUM

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Dear Mr Ansip, Dear Mr Oettinger Dear Ms Jourová, Dear Ms Vestager,

Digitalisation offers enormous opportunities to all of us. The framework conditions and chances for growth that major start-up metropolises like Berlin, London, Paris, Prague, , Copenhagen, and others offer to digital entrepreneurs striking out on their own, as well as the successful digitalisation of the European industry as a whole, are crucial for the prosperity of Europe. At the same time, this revolution leads us into the era of “Big Data.” It entails a wide variety of possibilities and huge potential for the economy of Europe, as well as for its citizens. Concurrently, the citizens of Europe are paying for the opportunities opening up to them with their personal data, which large platform operators use for commercial purposes and in order to enable the search for products, services, and media and to provide access to same, while, however, significantly influencing said search and access. We stand to profit most from the digital revolution if we remain free to decide ourselves what to pay for by which of our data, and whether or not we do so at all. It is our conviction that it must be ensured that personal data can be easily deleted at any time and transferred to other platform offerings. In our efforts to ensure data protection, we have committed ourselves to discrimination-free searches, transparency vis-à-vis the data subjects, and far-reaching transferability. These are the decisive pre-requisites for fair competition in the digital age.

It will be possible for us to establish the framework for innovation, growth, competition, security, consumer protection, and data protection in the digital economy only together, at the European level. With its more than 500 million citizens, the has an attractive single market and significant political means to structure it; the EU must bring these factors into play in order to assert itself against other parties involved at the global level. We wish to join forces with the European Commission in promoting the digitalisation of Europe while setting high standards for competition, security, and the protection of consumers and data by digital governance. Digital innovation must benefit in like manner the economy and society, citizens, the government and administration, as well as enterprises.

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In taking your new offices, you have accepted political responsibility within a central body of

Europe for designing these policy areas. As the ministers of the Federal Government responsible for these fields, we wish to offer our support for the major decisions you will be taking in the coming years.

As a first step, we would like to present the issues we believe to be relevant for creating digital framework regulations. The Digital Agenda the Federal Cabinet has issued on 20

August 2014 summarises the fields of action the Federal Government will be addressing.

This certainly does not comprehensively cover the entirety of all aspects making up the digital world. To cite but one example, we will need to jointly consider how we can effectively counter the new types of crime and extremism in cyberspace.

I. Digitalisation in the European economy

The decisive factors providing enterprises with opportunities for innovation and growth in the digital sphere, and enabling the digitalisation of the industry and economy in Europe overall, are the freedom to operate, good framework conditions, as well as an excellent and safe infrastructure.

 In this context, we expressly welcome the investment programme of €300 billion announced by Mr Juncker, President of the European Commission. We believe it will be necessary to place a strong focus on enhancing the digital infrastructure in this regard. Investments into the broadband buildout have significant multiplier effects on growth and thus should be at the heart of these efforts. We would be happy to assist in developing suitable criteria.

 In order to swiftly roll out the expansion and enhancement of the network infrastructure, moreover, it will be important to involve all providers and all suited technologies in the buildout and to create appropriate framework conditions for this purpose. On the one hand, this concerns the laws governing state aid. In this regard, we are working to ensure the eligibility for subsidies of all suitable NGA technologies. This also includes technologies that permit only virtual unbundling at present, such as vectoring. In this regard, we are pursuing efforts to ensure the swift conclusion of the pending procedure concerning the NGA framework regulation notified by the Federal Government already at the beginning of this year.

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 In order to ensure certainty of planning and legal certainty for investments in the

digital field while deepening the digital single market, we will need, on the other hand, a regulatory framework within which investments into the buildout of network infrastructure are worthwhile, which restricts itself to justified market interventions, and which safeguards the proper protection of consumers. We should bring these standards to bear also in further discussing the topics to be addressed by the Digital Single Market (DSM) Regulation. In this context, we should reach an understanding regarding the shared principles of net neutrality and should enshrine them in European policy. An important aspect in this context is to maintain the open internet while concurrently allowing for sufficient scope for quality innovations, however. Where the overall review of the telecommunications package is concerned, we will be happy to make a contribution with our expert staff, on short notice if needed, for an exchange of views and experiences on the relevant topics, also in a workshop context, for example.

 The European Commission has already taken a number of steps as regards venture capital and expansion financing. We intend to tie in with that. We wish to jointly launch the €500 million facility provided by the European Investment Fund for expansion financing, in a scope of up to €30 to € 40 million per enterprise, in the very near future.

 Our intention is to promote the combination of traditional industry competencies with IT and telecommunications (Industry 4.0) while advancing systematic digitalisation and networking. This should enjoy greater support at the European level, in particular where the Europe-wide establishment of standards is concerned.

 At the IT Summit, we presented a package of measures regarding the digital agenda of the Federal Government. It will focus on the build-out of the infrastructure, intelligent mobility, the increasing convergence of the various communications technologies, cloud computing, industry 4.0, smart services, smart home, trustworthy ICT, data protection, as well as IT and data security. We intend to more strongly promote those innovations and techniques that serve as the foundation for new big data applications, while concurrently reducing the dependency on the collection of individualised, personal data. We would welcome it if it were possible to achieve even greater synergistic benefits for our national and European research programmes than has been the case thus far, for example where Horizon 2020 is concerned.

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 Concurrently, we intend to structure and design work in the digital world such that the

fundamental rights of employees continue to be safeguarded. The digital workplace of the future should offer good wages, social security, and should protect workers against demands of limitless availability as well as against surveillance. We would welcome it if the newly constituted European Commission as well could make this a focal aspect of its agenda.

 In order to continue reducing the administrative burden on enterprises and citizens alike, we must press ahead with the digitalisation of the administration. By further expanding electronic administrative services, Germany is making a significant contribution to improving the digital communications between the economy and citizens on the one hand with the authorities on the other. The role of Europe primarily will be to provide the framework for secure, cross-border administrative services and to promote specific applications. We support the newly constituted European Commission in its vigorous pursuit of this project.

II. Market organisation

Open markets and fair competition are the basic premises underlying innovation, also in the digital economy. The dynamism in the digital sphere should not blind us to the fact that strong networking effects continue to further strengthen the market power of established platforms while increasing the risk of abuse, such as by leveraging the power to neighbouring markets and giving preferential status to the platforms’ own products and services in search results, for example. Competition policy must ensure that these economic positions of power remain contestable. Wherever these power positions cannot be challenged (any longer), the consequence might be to regulate the conduct by platforms having significant market power.

 The outcome of the ongoing “abuse of dominance” proceedings against Google is of far-reaching significance. We welcome the fact that the proceedings are being continued. Effective remedies need to be found in order to ensure that a search engine with a dominant position on the market does not (1) unfairly give preference to links to its own, specialised search services; (2) use original content obtained from third-party websites without authorisation; (3) force website operators to cover, if not all, then the lion’s share of their search engine advertisement needs via the dominant search engine platform; (4) restrict the ability to transfer (advertisement) content to competing platforms. - 6 -

 Established platform operators in the data-based economy stand to profit from strong

networking effects. Concurrently, search engines in particular are of great significance for access to information and the media. Accordingly, it should be reviewed to what extent further regulations should be introduced for platform operators above and beyond the prohibition of the abuse of a dominant position under anti-trust laws (Article 102 TFEU). A working group instituted by the German and French Ministries of Economic Affairs has already developed some suggestions in this regard. Regulatory provisions applying to dominant platforms that tie in with anti-trust laws and extend beyond the obligations these laws contain could be comprised of the following: (1) the obligation to present competing offers at no charge; (2) the provision of discrimination-free access to all content, with effective controls regarding abuse; (3) the introduction of a principle of “platform neutrality,” along with an efficacious implementation of same and the introduction of the structures required for this purpose. The following is conceivable for such regulation: an instrument aligned with the laws governing competition; the laws on electronic communications that already provide for the regulation of conduct by enterprises having significant market power; or a provision specific to the internet. A green paper might be prepared in which these options are presented for discussion.

 Furthermore, it should be reviewed to what extent the transparency requirements on the internet should be expanded. In particular, the clear identification by dominant platforms of their own services in the list of search results might be considered, as might the identification of sponsored search results. In cases of suspected abuse, there must be independent government institutions that are able to pursue the allegation and prevent such abuse.

 In light of the sales generated by WhatsApp, which currently are still low, the takeover by Facebook of WhatsApp for US$19 billion would not have been governed by European merger control stipulations. Accordingly, it should be reviewed whether the turnover thresholds set out in the European Merger Regulation should be amended to reflect the data economy. A clause is conceivable that takes account not only of current sales, but also of the value of the transaction, which may depend to a significant degree on the number of users and the value of the data.

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In particular major digital companies generating high income in the European Union

and using third-party infrastructure to do so should no longer have an unfair competitive advantage over enterprises who adequately pay their taxes, and should not be allowed to continue to evade their obligations to contribute to financing the community. In this regard, the OECD Action Plan on Base Erosion and Profit Shifting (“BEPS initiative”) can only be a starting point. We emphatically support a strict application of the European subsidy rules targeted against special tax deals such as in the case of Apple, and against the selective preferential treatment of certain enterprises. Above and beyond this, we need to achieve a minimum of harmonisation in Europe as far as corporate taxes are concerned.

III. Trust and security in the digital world

Digitalisation will be able to unfold its full potential for the economy and society in Europe only once security and protection in the internet have been provided to a sufficient degree. IT security is a major driver of innovation and growth. Our task is to create the right framework conditions for a high degree of trust and security in Germany and in Europe alike.

 We support the objective set by the President of the European Commission to develop and implement measures serving to make Europe more reliable and safer as far as the internet is concerned, just as we welcome the announcement that the EU intends to be a leader in cyber security preparedness and trustworthy ICT and to increase the confidentiality of communications. It is our common objective, together with the European Commission, to ensure Europe continues to be one of the safest digital locations in the world.

 Our policy places a strong focus on significantly improving security in information technology systems. In order to achieve a high level of IT security in all of Europe, we support the work prioritised by the European Commission on the Directive on measures to ensure a high common level of network and information security across the Union.

 Additionally, we are working on taking specific measures to ensure the trustworthiness of digital infrastructures, to expand our technological competence for systems, and to reduce dependencies. We would welcome it if the European Commission were to likewise focus on these issues.

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 It is just as important to make available secure digital infrastructures and systems in

order to allow citizens to better protect their own identity on the internet, or to communicate securely. By putting in place the German identity card with online identification function and the secure electronic communications service DE-Mail, we have already laid the foundations for this in Germany. High security standards must also apply to eID and electronic communications services where they extend across borders. The implementing acts provided for in the EU regulation on electronic identification and trust services for electronic transactions in the internal market for these areas should be worked out in the near term, and the standards applicable on a cross-border basis in order to ensure the requisite technical and organisational security of these services should be put in specific terms in a user-friendly manner.

IV. Consumer protection and data protection

We are convinced that data protection providing for an effective right to informational self- determination is pivotal for any digital regulatory policy. Where consumer protection is concerned, this centres on the data sovereignty of citizens. The transferability of data is the necessary condition for freedom on the internet. For this reason, the negotiations of the General Data Protection Regulation of the EU must continue expeditiously and it must be adopted in the coming year. We must finally come to a point at which we can guarantee a consistently high standard of data protection throughout Europe.

 We wish to strengthen the role of approval as an important legal basis for data processing in the private sphere. This must be granted unequivocally and voluntarily as informed consent; more particularly, consumers must be informed clearly about the nature and scope of the use of their data. What should be strived for is a separate consent, outside of the General Terms of Business, for example by having consumers click on a button. In the negotiations, the Federal Government has made specific suggestions regarding the pre-requisites for an effective consent.

 In order to protect users, a provision on profile generation will have to be included in the General Data Protection Regulation. The generation of non-anonymous profiles that severely intrude into personal freedoms must be subjected to narrow legal boundaries.

 At the same time, we must improve the regulation’s suitability for the internet in order to give the correct answers to the new technological challenges. Big data applications must be kept in line with the fundamental right to informational self-determination.

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For this purpose, Germany has delivered a comprehensive note on pseudonymisation

that particularly discusses solutions for processing huge amounts of data. In this context, data protection by technical means must play a major role, as must the obligation of providers to provide data protection-friendly default settings.

 We support the introduction of a data seal awarded to providers who comply or even exceed data protection standards.

 We fundamentally advocate the rights set out in the proposal for the regulation, these being the right to have data erased / to be forgotten and the right to data portability; we wish to strike a good balance between data protection and freedom of expression. The freedom of the press must not be restricted.

 For purposes of better enforcement, the rights of consumer advocacy groups should be strengthened, in particular by granting authority to the Member States to give them the opportunity to file an action in the case of violations of data protection laws.

 We intend to maintain the strict German standards in data protection. Where employee data protection is concerned, we are striving for a high level of such protection within Europe and appropriate saving clauses for national stipulations. Where data are exchanged between citizens and governmental authorities, we wish to ensure from the outset that saving clauses exist in favour of national legislation applicable to the individual sector.

 It is important to establish uniform rules for data protection in the European Union. It is just as important to uniformly enforce these rules, since otherwise there is a risk of data being transferred precisely to that country that has put in place the most lax implementation standards.

 All providers offering their services in Europe must be subject, without exception, to European data protection laws. The marketplace principle must consistently apply.

 In light of the widely diverging data protection standards applying in Europe and in the United States, and in view of the recently disclosed mass surveillance, the “Safe Harbour” mechanism must be improved on the basis of the proposals made by the Commission and must be re-negotiated swiftly.

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V. Copyright law

In the age of digitalisation and networking, copyright law has evolved to cover various aspects of the law in the information society. It is an important component of legal, cultural, economic, education, and innovation policy. Creative services are increasingly gaining in significance for the Member States’ economies. Intellectual creations are traded on the European Single Market as works protected by copyright – as texts, music, software, and films – and significantly contribute to the prosperity of Europe. They are an expression of the rich culture of the Member States and contribute in a significant way to our continent growing together. They serve education and science just as much as they do the entertainment and information of citizens.

Technological progress and the evolution of business models that the internet has enabled mean that copyright law must constantly face new challenges. Accordingly, it is necessary to continuously review the legal framework in terms of copyright and to develop it further. In Germany, we have set ourselves the goal to align our copyright law with the requirements and challenges of the digital age. We will be able to make this a success only with the assistance of the European Union.

In everything we do, we should not forget that the central task of copyright law remains to create a just balance of interests. We will be able to achieve appropriate solutions only if we take account of the creative authors and rightholders just as much as we consider the parties exploiting a copyright and the users. Today, the internet is the central medium by which works are made accessible and are transferred. That is why the intermediaries active in the internet – such as the platform operators – are increasingly coming into view when provisions of copyright law are being discussed.

 In our view, bringing copyright law under the umbrella of the newly formed policy area “Digital Economy & Society” offers an excellent opportunity to make the necessary adjustments to copyright law to bring it in line with digital developments. In this context, we should review critically whether the provisions in place are still in keeping with the times. The Directive on copyright in the information society, in other words the central instrument for bringing copyright laws up to date with the internet age, was conceived in the 1990s, and thus harks back to the last century. It originates in a time in which modern digital applications such as smartphones or video streaming for the most part were unknown.

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 Inasmuch as copyright laws no longer sufficiently correspond to modern forms of use,

we must make the necessary adjustments. We are convinced that the laws of contract continue to be an important means of balancing the interests between rightholders and users; however, it is not possible to resolve all issues under copyright law by finding contractual solutions between rightholders and users. But in all cases, the following will apply: While easing the requirements on end users in keeping with the times is sensible, the fair remuneration of creative authors cannot be left by the wayside.

By submitting these suggestions to you, we wish to continue the constructive dialogue that we had begun with your predecessors. It is our conviction that besides innovation and growth, the most pressing political tasks also include the protection of market competition, consumer protection and data protection, as well as the creation of framework conditions for a high degree of security in the digital field. This will require swift and courageous steps to be taken, which we would be pleased to take with you.

Yours truly,

Sigmar Gabriel Dr. Thomas de Maizière Heiko Maas Alexander Dobrindt