Berlin beats back Big Tech

This is an audio transcript of the FT News Briefing podcast episode: ‘Berlin beats back Big Tech’

Marc Filippino
Good morning from the Financial Times. Today is Tuesday, January 17th, and this is your FT News Briefing.

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Top officials from the US and China plan to meet tomorrow in a rare face-to-face meeting. A member of a notorious Russian paramilitary group has escaped and promised to talk about his experience. Plus, it was a big deal when the EU passed its Big Tech regulation, but Germany was already out front.

Javier Espinoza
The centre of gravity has slightly shifted from Brussels to Berlin, where regulators are taking action ahead of the counterparts in Brussels.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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US Treasury Secretary Janet Yellen will meet her Chinese counterpart Liu He in Switzerland tomorrow. It’s their first ever in-person meeting. A US treasury official said the two will “exchange views on macroeconomic developments and other economic issues”. The talks signal that the two governments are committed to improving bilateral ties. And they take place just before Yellen heads to Africa for 10 days. There, she’ll try and entice countries to loosen their ties to Beijing and Moscow.

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A former member of the Russian paramilitary Wagner group has escaped from fighting in Ukraine and is seeking asylum in Norway. The defector says he’s a former commander and is promising to give evidence against the notoriously brutal group. The FT’s Moscow bureau chief Max Seddon has more.

Max Seddon
Well, this is the first time that someone that has so publicly fled to the West. Not just from the Russian army, but from something separate from the Russian army that has become more and more prominent on the front lines recently. Wagner, which you may remember as the mysterious mercenary group that was active in Syria and Libya, in the Central African Republic, where it was a sort of semi-secret paramilitary organisation that was there to give the Kremlin plausible deniability. Now, as the war has gone on and finally started to acknowledge its own existence, because I think it’s been going so badly that they need, quite frankly, everyone they can get.

Marc Filippino
And Max, the way I understand it, this is the first time we’ve seen someone offer evidence against the Wagner group. Do we have any idea why he defected?

Max Seddon
So he signed a contract for four months and he was not having a great time at the front because if you believe western, Ukrainian sources, they say that Wagner has been using people, especially these prisoners, as cannon fodder. He didn’t exactly enjoy that. And also Wagner is . . . it even celebrates its own brutality. They have claimed to have even witnessed several summary executions of Wagner fighters who refused to go to the front by their own comrades.

Marc Filippino
That’s the FT’s Moscow bureau chief Max Seddon.

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Big Tech companies face new regulation from Brussels, but they may want to keep an eye on Berlin. A German law which came into force two years ago is leading Europe’s regulation of Big Tech. It’s giving hope to entrepreneurs like Patrick Andrae. He co-founded a Berlin-based website for holiday rentals called HomeToGo. He’s been frustrated for years that he has to pay for ad space on Google and compete with Google’s own products.

Patrick Andrae
We don’t fear competition. We actually like competition. But it must be fair. And if you look over the years, we obviously see that Google’s actions might have detrimental long-term effects on the market by applying different rules to competing third parties than they might do for their own products.

Marc Filippino
To find out more about Germany’s tech regulation, I’m joined by our Brussels correspondent Javier Espinoza. Hi, Javier.

Javier Espinoza
Hi, Marc. Nice to talk to you.

Marc Filippino
So, Javier, the European Union passed its own law last year to try and curb anti-competitive practices. You’ve been covering it. It’s called the Digital Markets Act. And it was a huge deal. Why isn’t that giving hope to business people like Patrick Andrae, who we just heard from?

Javier Espinoza
Well, you know, it was brought last year, but it’s not going to start properly biting until 2024. So it has people like Patrick very frustrated. And this is why Berlin comes in, because it’s about timing and it’s about moving first. And this law, it’s already in place. So it’s almost like looking into the future of what Brussels might do. But today the centre, I think the key thing to emphasise here is that the magnet, the attraction of the centre of gravity has slightly shifted from Brussels to Berlin, where regulators are taking action ahead of the counterparts in Brussels.

Marc Filippino
So Berlin’s law went into effect sooner than the EU’s law. But are there legal differences? Does Berlin’s law provide regulators with more powers?

Javier Espinoza
One key difference between the Brussels law and the Berlin one is that the Brussels one, it’s more narrowly defined. It just has like a set list of things that are banned like, for example, Google cannot sell, prefers its on products ahead of rivals, whereas the Berlin law is more open, it has more flexibility, it allows for potential illegal behaviour that it hasn’t even manifested yet from actors like Amazon or Meta who are very inventive in the way that they can capture markets to actually regulate that. Whereas in Brussels it’s more rigid. One other key difference, and this is just a proposal so far an amendment to the law in Germany is that it can have the potential, the powers to break up companies, even if there are not repeat offences.

Marc Filippino
So is there concern that Germany’s antitrust law will pave the way for other countries to be in tension with Brussels over how to regulate Big Tech companies?

Javier Espinoza
There is definitely tension and a potential fight going on between Brussels and member states. So we will see in the future. At least this is what people that I talked to tell me will be the future. The DMA will be this very rigid law that it gets implemented from Brussels and it’s going to be in Berlin, where the regulators will be identifying the new markets, the new illegal behaviour, where we are going to see really more innovative ways of interpreting the law.

Marc Filippino
Well, it certainly sounds tough. Is there concern it could stifle innovation or scare big companies from operating in Germany?

Javier Espinoza
It depends who you ask. If you ask people close to Big Tech companies they would, of course, say that the law is only another way to stifle innovation because Europe is not able to come up with its own version of Google or Facebook.

Marc Filippino
Javier Espinoza is the FT’s EU correspondent. Thank you, Javier.

Javier Espinoza
Thank you.

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Marc Filippino
Before we go, scientists in Switzerland have figured out a way to divert lightning strikes with lasers. This laser lightning rod fires short pulses of intense light and creates a channel to guide a lightning strike. It may sound like a Marvel movie, but these scientists have been researching lightning diversion for 20 years. And they say this is the most significant advancement in lightning projection in more than 200 years since the American inventor Benjamin Franklin constructed the metal lightning rod. One of the scientists called it an important step forward in developing projection for critical infrastructure like airports and power stations.

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You can read more on all of these stories at FT.com. This has been your daily News Briefing. Make sure you check back tomorrow for the latest business news.

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