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Despite talk of digital sovereignty, Europe sleepwalks into Chinese dominance on drones

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In her State of the European Union speech, European Commission President Ursula von der Leyen delivered a clear-eyed assessment of the European Union’s position within the global digital economy. Alongside predictions of a European “digital decade” shaped by initiatives such as GaiaX, von der Leyen admitted Europe had lost the race on defining the parameters of personalized data, leaving Europeans “dependent on others”, writes Louis Auge.

Despite that straightforward admission, the question remains whether European leaders are willing to mount a consistent defence of their citizens’ data privacy, even as they accept reliance on American and Chinese firms. When it comes to challenging American social media or e-commerce giants like Google, Facebook, and Amazon, Europe has no problem seeing itself as the global regulator.

In facing China, however, the European position often seems weaker, with governments only acting to curb the influence of Chinese technology suppliers such as Huawei under intense US pressure. Indeed, in one key area with serious implications for several economic sectors Commission President von der Leyen cited in her speech – unmanned aerial vehicles, otherwise known as drones – Europe is allowing a single Chinese firm, DJI, to corner the market practically unopposed.

A trend accelerated by the pandemic

Shenzhen Dajiang Innovation Technologies Co. (DJI) is the unquestioned leader of a global drone market predicted to skyrocket to $42.8 billion in 2025; by 2018, DJI already controlled 70% of the market in consumer drones. In Europe, DJI has long been the unmanned aerial vehicle (UAV) supplier of choice for military and civilian government clients. The French military uses “commercial off-the-shelf DJI drones” in combat zones like the Sahel, while British police forces uses DJI drones to search for missing persons and manage major events.

The pandemic kicked that trend into high gear. In European cities including Nice and Brussels, DJI drones equipped with loudspeakers admonished citizens about confinement measures and monitored social distancing. DJI representatives have even tried to convince European governments to use their drones to take body temperatures or transport COVID-19 test samples.

This rapid expansion in the use of DJI drones runs counter to decisions being taken by key allies. In the United States, the Departments of Defense (the Pentagon) and the Interior have banned the use of DJI’s drones in their operations, driven by concerns over data security first uncovered by the US Navy in 2017. In the time since, multiple analyses have identified similar flaws in DJI systems.

In May, River Loop Security analyzed DJI’s Mimo app and found the software not only failed to adhere to basic data security protocols, but also that it sent sensitive data “to servers behind the Great Firewall of China.” Another cybersecurity firm, Synacktiv, released an analysis of DJI’s mobile DJI GO 4 application in July, finding the company’s Android software “makes use of the similar anti-analysis techniques as malware,” in addition to forcibly installing updates or software while circumventing Google’s safeguards. Synacktiv’s results were confirmed by GRIMM, which concluded DJI or Weibo (whose software development kit transmitted user data to servers in China) had “created an effective targeting system” for attackers – or the Chinese government, as US officials fear – to exploit.

To address the potential threat, the Pentagon’s Defense Innovation Unit (DIU) has introduced a small Unmanned Aircraft Systems (sUAS) initiative to procure drones from trusted American and allied manufacturers; France’s Parrot is the only European (and, indeed, non-American) firm currently included. Last week, the Department of the Interior announced it would resume purchasing drones through the DIU sUAS program.

DJI’s security flaws have also sparked concern in Australia. In a consultation paper released last month, the Australian transport and infrastructure department flagged weaknesses in Australia’s defenses against “the malicious use of drones,” finding UAVs could potentially be used to attack the country’s infrastructure or other sensitive targets, or otherwise for purposes of “image and signals gathering” and other types of reconnaissance by hostile actors.

In Europe, on the other hand, neither the European Data Protection Board (EDPB), the German Federal Commissioner for Data Protection and Freedom of Information (BfDI), nor the French National Commission on Informatics and Liberty (CNIL) have taken public action on the potential dangers represented by DJI, even after the company’s products were found forcibly installing software and transferring European user data to Chinese servers without allowing consumers to control or object to those actions. Instead, the use of DJI drones by European military and police forces may appear to offer consumers a tacit endorsement of their security.

Despite an opaque ownership structure, links to Chinese state abound

Suspicions of DJI’s motives are not helped by the opacity of its ownership structure. DJI Company Limited, the holding company for the firm via the Hong Kong-based iFlight Technology Co., is based in the British Virgin Islands, which does not disclose shareholders. DJI’s fundraising rounds nonetheless point to a preponderance of Chinese capital, as well as linkages with China’s most prominent administrative bodies.

In September 2015, for example, New Horizon Capital – cofounded by Wen Yunsong, son of former premier Wen Jiabao – invested $300 million in DJI. That same month, New China Life Insurance, partly owned by China’s State Council, also invested in the firm. In 2018, DJI may have raised up to $1 billion ahead of a supposed public listing, although the identify of those investors remains a mystery.

DJI’s leadership structure also points to links with China’s military establishment. Co-founder Li Zexiang has studied or taught at a number of universities linked to the military, including the Harbin Institute of Technology – one of the 'Seven Sons of National Defence' controlled by China’s Ministry of Industry and Information Technology – as well as the National University of Defense Technology (NUDT), directly supervised by the Central Military Commission (CMC). Another executive, Zhu Xiaorui, served as DJI’s head of research and development up until 2013 – and now teaches at the Harbin University of Technology.

These links between DJI’s leadership and China’s military would seem to explain DJI’s prominent role in Beijing’s repression of ethnic minority groups. In December 2017, DJI signed a strategic partnership agreement with the Bureau of Public Security of the Autonomous Region of Xinjiang, outfitting Chinese police units in Xinjiang with drones but also developing specialized software to facilitate missions for the “preservation of social stability.” DJI’s complicity in the campaign of “cultural genocide” against the Uighur population of Xinjiang burst into the headlines last year, when a leaked video – shot by a police-controlled DJI drone – documented a mass transfer of interned Uighurs. The company has also signed agreements with authorities in Tibet.

An inevitable crisis?

While DJI has gone to considerable efforts to counteract the findings of Western governments and researchers, even commissioning a study from consultancy FTI that promotes the security of its new “Local Data Mode” while sidestepping existing flaws, the monopolistic control of this emerging sector by a single firm with links to China’s security establishment and direct involvement in systemic human rights abuses could quickly become a problem for regulators in Brussels and the European capitals.

Given how prevalent drones have become across the wider economy, the security of the data they capture and transmit is a question European leaders will have to address – even if they prefer to ignore it.

Digital economy

Digital transformation: Importance, benefits and EU policy

EU Reporter Correspondent

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Learn how the EU is helping to shape a digital transformation in Europe to benefit people, companies and the environment.

The digital transformation is one of the EU's priorities. The European Parliament is helping to shape the policies that will strengthen Europe's capacities in new digital technologies, open new opportunities for businesses and consumers, support the EU's green transition and help it to reach climate neutrality by 2050, support people's digital skills and training for workers, and help digitalise public services, while ensuring the respect of basic rights and values.

MEPs are preparing to vote on a report on shaping the digital future of Europe, calling on the Europea Commission to further tackle challenges posed by the digital transition, especially to take advantage of the opportunities of the digital single market and to improve the use of artificial intelligence. What is digital transformation? 

  • Digital transformation is the integration of digital technologies by companies and the impact of the technologies on society.  
  • Digital platforms, the Internet of Things, cloud computing and artificial intelligence are among the technologies affecting ... 
  • ... sectors from transport to energy, agri-food, telecommunications, financial services, factory production and health care, and transforming people's lives. 
  • Technologies could help to optimise production, reduce emissions and waste, boost companies' competitive advantages and bring new services and products to consumers. 

Funding of the EU's digital priorities

Digital plays an essential role in all EU policies. The Covid crisis accentuated the need for a response that will benefit society and competitiveness in the long run. Digital solutions present important opportunities and are essential to ensuring Europe's recovery and competitive position in the global economy.

The EU's plan for economic recovery demands that member states allocate at least 20% of the €672.5 billion Recovery and Resilience Facility to digital transition. Investment programmes such as the research and innovation-centred Horizon Europe and infrastructure-centred Connecting Europe Facility allocate substantial amounts for digital advancements as well.

While the general EU policy is to endorse digital goals through all programmes, some investment programmes and new rules specifically aim to achieve them.

Digital Europe programme

MEPs are set to vote in April on the Digital Europe programme, the EU’s first financial instrument focused specifically on bringing technology to businesses and people. It aims to invest in digital infrastructure so that strategic technologies can help boost Europe’s competitiveness and green transition, as well as ensure technological sovereignty. It will invest €7.5 billion in five areas: supercomputing (€2.2 billion), artificial intelligence (€2 billion), cybersecurity (€1.6 billion), advanced digital skills (€577 million), and ensuring a wide use of digital technologies across the economy and society (€1 billion).

Online safety and platform economy

Online platforms are an important part of the economy and people's lives. They present significant opportunities as marketplaces and are important communication channels. However, there also pose significant challenges.

The EU is working on new digital services legislation, aiming to foster competitiveness, innovation and growth, while boosting online security, tackling illegal content, and ensuring the protection of free speech, press freedom and democracy.

Read more on why and how the EU wants to regulate the platform economy.

Among measures to ensure safety online, the Parliament is voting on new rules to prevent the dissemination of terrorist content online in April. MEPs are also considering rules on a new European cybersecurity centre.

Artificial intelligence and data strategy

Artificial intelligence (AI) could benefit people by imroving health care, making cars safer and  enabling tailored services. It can improve production processes and bring a competitive advantage to European businesses, including in sectors where EU companies already enjoy strong positions, such as the green and circular economy, machinery, farming and tourism.

To ensure Europe makes the most of AI's potential, MEPs have accentuated the need for human-centric AI legislation, aimed at establishing a framework that will be trustworthy, can implement ethical standards, support jobs, help build competitive “AI made in Europe” and influence global standards. The Commission presented its proposal for AI regulation on 21 April 2021.

Read more on how MEPs want to regulate artificial intelligence.

The success of AI development in Europe ilargely depends on a successful European data strategy. Parliament has stressed the potential of industrial and public data for EU companies and researchers and called for European data spaces, big data infrastructure and legislation that will contribute to trustworthiness.

More on what Parliament wants for the European data strategy.

Digital skills and education

The Covid-19 pandemic has demonstrated how important digital skills are for work and interactions, but has also accentuated the digital skills gap and the need to increase digital education. The Parliament wants the European skills agenda to ensure people and businesses can take full advantage of technological advancements.

42% of EU citizens lack basic digital skill

Other interesting articles to check out

More on Europe's digital policies 

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Computer technology

Vega: Launch of the first world-class supercomputer in the EU

EU Reporter Correspondent

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The European Commission, together with the European High-Performance Computing Joint Undertaking and the government of Slovenia has inaugurated the operation of the Vega Supercomputer at a high-level ceremony in Maribor, Slovenia. This marks the launch of a first EU supercomputer procured jointly with EU and member state funds, with a joint investment of €17.2 million.

A Europe Fit for the Digital Age Executive Vice President Margrethe Vestager said:“We are celebrating today the launch of the Vega supercomputer – the first of several. Supercomputing will open new doors for European SMEs to compete in tomorrow's high tech economy. Even more importantly, by supporting artificial intelligence to identify the molecules for breakthrough drug treatments, by tracking infections for COVID and other diseases, European supercomputing can help save lives.”

Executive Vice President Vestager participated in the launch ceremony on 20 April together with the Prime Minister of Slovenia, Janez Janša. The new Vega supercomputer is capable of 6.9 Petaflops of computer power and will support the development of applications in many domains, such as machine learning, artificial intelligence, and high-performance data analytics. It will help European researchers and industry to make significant advances in bio-engineering, weather forecasting, the fight against climate change, personalised medicine, as well as in the discovery of new materials and drugs that will benefit EU citizens. The EuroHPC Joint Undertaking pools European and national resources to procure and deploy world-class supercomputers and technologies.

In addition to Vega in Slovenia, EuroHPC supercomputers have been acquired and are being installed in the following centres: Sofia Tech Park in Bulgaria, IT4Innovations National Supercomputing Center in Czechia, CINECA in Italy, LuxProvide in Luxembourg, Minho Advanced Computing Center in Portugal, and CSC – IT Center for Science in Finland. Moreover, a Commission proposal for a new Regulation for the EuroHPC Joint Undertaking, presented in September 2020, aims to enable a further investment of €8 billion in the next generation of supercomputers, including emerging technologies such as quantum computers. More information will be available in this press release by the EuroHPC Joint Undertaking.

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European Commission

Commission approves acquisition of certain Suez waste management companies by the Schwarz Group, subject to conditions

EU Reporter Correspondent

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The European Commission has approved, under the EU Merger Regulation, the acquisition of certain Suez waste management companies in Germany, Luxembourg, the Netherlands and Poland, by the Schwarz Group. The approval is conditional on the divestiture of Suez's lightweight packaging (LWP) sorting business in the Netherlands.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “Competitive markets at every level of the recycling chain are a crucial contribution to a more circular economy and essential to achieve the objectives of the Green Deal. With the divestment of Suez' sorting plant in the Netherlands, the acquisition can go ahead while preserving effective competition in the sorting of plastic waste market in the Netherlands.”

Both the Schwarz Group and the Suez waste management companies concerned are active across the waste management chain in several countries. In particular, the two companies are leaders in the sorting of lightweight packaging originating in the Netherlands.

The Commission's investigation

The Commission had concerns that the proposed acquisition, as originally notified, would have significantly reduced the level of competition in the market for the sorting of LWP in the Netherlands.

In particular, the Commission's investigation found that the merged entity would become by far the largest market player, owning more than half of the capacity for LWP sorting in the Netherlands, and an unavoidable trading partner to Dutch customers.

The Commission found that competitors located outside of the Netherlands exert a weaker competitive constraint, as customers prefer for waste to be sorted as close to the collection point as possible in order to minimise the financial cost and CO2 emissions associated with road transport.

The proposed remedies

To address the Commission's competition concerns, the Schwarz Group offered to divest the entirety of Suez's LWP sorting business in the Netherlands, including Suez's LWP sorting plant in Rotterdam and all assets necessary for its operation.

These commitments fully remove the overlap between the Schwarz Group and the Suez waste management companies concerned for the sorting of LWP in the Netherlands.

The Commission therefore concluded that the proposed transaction, as modified by the commitments, would no longer raise competition concerns. The decision is conditional upon full compliance with the commitments.

Companies and products

The Schwarz Group, based in Germany, is active in food retailing in over 30 countries through its retail chains Lidl and Kaufland. It also operates as an integrated service provider in the field of waste management through its PreZero business division.

The Suez waste management companies concerned, subsidiaries of the French Suez group, are active in the collection, sorting, treatment, recycling and disposal of household and commercial waste in Germany, Luxembourg, the Netherlands and Poland.

Merger control rules and procedures

The transaction was notified to the Commission on 19 February 2021.

The Commission has the duty to assess mergers and acquisitions involving companies with a turnover above certain thresholds (see Article 1 of the Merger Regulation) and to prevent concentrations that would significantly impede effective competition in the EEA or any substantial part of it.

The vast majority of notified mergers do not pose competition problems and are cleared after a routine review. From the moment a transaction is notified, the Commission generally has a total of 25 working days to decide whether to grant approval (Phase I) or to start an in-depth investigation (Phase II). This deadline is extended to 35 working days in cases where remedies are submitted by the parties, such as in this case.

More information will be available on the Commission's competition website, in the Commission's public case register under the case number M.10047.

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