“We cannot remain in this vulnerable position, sandwiched between two power blocs engaged in a cyber and military arms race”, writes René Obermann, Partner of Warburg Pincus and Managing Director of Warburg Pincus Germany, in his essay to our article series “Europe can do better. How our continent finds new strength. A wake-up call from economy” which was initiated by Handelsblatt and United Europe: “Only a credible deterrent will actually deter, but our armed forces are in no position to provide that.”
It could be much worse for us Europeans. Democracy and the rule of law, an increasingly integrated community, reduced levels of unemployment, open borders, even our single currency; all have withstood the tests of recent years. We are used to the separation of powers, to a media not afraid to criticise, to social media storms, to endless discussions about and subsequent ‘deceleration’ of important initiatives.
An anxiety, or at the very least a scepticism, about technology – be it radiation from mobile phone antenna or data in the cloud, artificial intelligence or genetic engineering – is part of the DNA of our affluent Western European society. We indulge in exhaustive debate about pretty much everything before we finally, under pressure from global competition, somewhat half-heartedly get going. Of course it’s important not just to wave through everything new without first weighing up the pros and cons, but we can’t dither for ever. There will be serious consequences for Europe if we don’t move more quickly to decide on and implement important technology issues.
“Der Spiegel” cuts to the chase: “Issues which are readily dealt with in countries with autocratic or powerful presidential leadership, such as China or the USA, become a Herculean task in the cacophony of Europe.” Everyone is demanding uninterrupted 5G coverage, but preferably with no electro smog or masts. And powerlines for a dependable electricity supply, but not through our countryside. Our political paralysis is most evident in the hand-wringing about the digital deficit. Diffused responsibilities, no end of advisory bodies and innovation forums, and in Germany, where countless thousands of schools still lack proper ICT equipment, the ‘digital pact’ allocating them funding blocked by individual states.
Autocratic China presents the countermodel, not only because of the way the State has controlled the transformation of the economy, but also because of its attitude to technology. Take an example: according to a study by Accenture, 90 percent of Chinese business leaders believe that AI will have a positive effect. The figure is similar in the US, but here it is only about half. And when people believe something, that generally influences how they live and behave.
Miriam Meckel, professor of communication sciences, writes of the global technological arms race: “This is about more than a few technical adjustments. It’s about who will deliver the blueprint for the digital economy of the future. The US, with its libertarian capitalist market approach to the tech sector – Made in Silicon Valley? Or China, with its model of rigid state capitalism, where things often move more quickly because no one needs to worry about objections from sceptical citizens.” Whatever the case, we Europeans have to stop these eternal debates. I agree with Meckel when she says: “…if we want to safeguard our EU, we must change tack; stop wavering and face the future with optimism – and be more willing to try things out.”
Must our first reaction to everything really be anxiety? Whether it’s digital interconnectivity in healthcare, genetic engineering, pattern recognition, artificial intelligence or robotics. I’m not asking because I object to high ethical standards, but because I don’t want to see our European economy steamrollered by US and Chinese tech giants which aren’t subject to the same societal or regulatory restrictions as us. Because without a strong EU economy there will be no effective, socially equitable policy.
China is now investing more in artificial intelligence than the US, and it is using this technology everywhere, including in the military arena. The Financial Times reported some time ago that all civilian companies must make their technology available to the military. The use of Chinese components in European and American communications networks is highly controversial, as the West has concerns about cyber security gaps and the risk of espionage or so-called cyberwarfare (hostile internet attacks). Digital monitoring of its citizens, the turbo-development of genetic engineering and cyber armament (arguably the most effective weapons of the future) are just three of the ways China is seeking to become the most powerful nation on earth.
Digital technologies influence how economic regions compete, and unfortunately the same goes for the military domain. Artificial intelligence, robotics, drones and networked operations are already a reality in every type of military activity, and now in space too. Triple digit billions are being invested in the continued development of these systems in the US, China and Russia.
Stuck in the middle: just where does Europe stand?
Sadly we can no longer take the good Hegemon, long our patron saint, for granted. He is currently playing divide et impera. The German weekly Die Zeit writes: ‘Donald Trump will continue to relish treating his friends with disdain and flirting with authority…He knows that the EU cannot do without the American marketplace or the protection of the US. That’s the sorry situation in which we Europeans find ourselves…’.
We cannot remain in this vulnerable position, sandwiched between two power blocs engaged in a cyber and military arms race. Only a credible deterrent will actually deter, but our armed forces are in no position to provide that.
As with defence, we must not continue being stuck in the middle when it comes to the technologies of the future. US tech companies dominate the business world in the West. China has its own tech giants, like Alibaba and Tencent. We know that we can learn from the data being generated literally everywhere, be it from social media or sport, whilst we’re sleeping, eating or driving, from industrial machinery, turbines, or in the agricultural or medical fields. Or to be more exact, it’s not just us who learn, but those who analyse our data. In the ‘data analytics’ sector even large European corporations use American platforms such as Microsoft, Google or Palantir. And there are currently no serious alternative contenders coming out of Europe. The implications for the longer term are clear: much of the value created from this data will migrate to where the findings can be used.
The US and China dominate in artificial intelligence. Regrettably they will also move more quickly than us on 5G, if the present flood of lawsuits against the 5G frequency auction is any indicator. It will be just the same in quantum computing and cloud-based technologies, and their requisite infrastructure. Just try finding a suitable location in Europe for a so-called hyperscale data center with reasonable energy costs. Yet it’s abundantly clear that we urgently need these sites.
A revolution in thinking: more technology education
And alongside all these great challenges, what we absolutely must not forget is our children, and the technological, creative and ethical skills required by future generations. There is constant talk of education. Everyone wants more money, maybe justifiably so. But what exactly needs to be taught, and where? What precisely do teachers need to know? How should schools, businesses, vocational colleges and families be equipped and supported? Educational federalism is failing here! But private initiatives are not yet being sufficiently promoted either. Take for example the businesswoman Verena Pausder, whose ‘Digitalwerkstatt‘ (‘technology labs’) offer parents and children a useful opportunity to learn about coding and robotics, who could only find high-profile support from Facebook and Airbus, and from the state of North Rhine-Westphalia.
There are as yet no compulsory technology workshops for teachers, let alone decent IT equipment and qualified staff in every school in the country. Often there isn’t even a high- speed internet connection. We cannot go on like this; for a country with an unprecedented technological transformation ahead of it nothing should be more important than ensuring its young people are properly skilled. And that means everywhere! Because an urban tech elite with high incomes and top jobs in a few large cities is not enough.
And what goes for Germany goes for the whole of Europe. Maybe working together on this could become an important building block for the unity of our continent: giving young people from all levels of society a genuine programme of technology education. That’s how to confront our anxieties and shape the future! But businesses and politicians will have to enter into a new pact on the financing and the methodology. A pact which is binding on future governments, as it will take many years to implement.
I am of the firm opinion that we need millions of committed advocates for the European cause. And if business leaders are prepared to nail their colours to the mast, as some have recently done, that is certainly a good start.
The article series “Europe can do better” appears in Handelsblatt in German and in German and Englisch on Handelsblatt Online and the website of United Europe until the European Elections. They are also collected in a book which was published on 15 April, 2019 by Herder-Verlag. Please find more information about the book in German here.
About René Obermann
In February 2015 René Obermann joined Warburg Pincus, a leading private equity firm, as a Managing Director and Partner. Subsequent to investments made by Warburg Pincus, he assumed roles as Chairman of the Board at 1&1 Internet Holding SE and Non-Executive Director of inexio KGaA. Furthermore, he serves on the boards of Allianz Deutschland AG, Telenor ASA, and as a member of the Editorial Board of DIE ZEIT.
René worked as CEO of Ziggo BV in The Netherlands in 2014 until the merger with LibertyGlobal’s UPC in November. Prior to Ziggo, René worked at Deutsche Telekom Group (DT) from 1998 until 2013. After running DT’s mobile division (T-Mobile International), he was appointed as CEO of Deutsche Telekom AG in November 2006, where he remained until December 2013.
René began his career with a business traineeship at BMW AG in Munich. Next, he founded his own business in Münster in 1986: ABC Telekom, a company distributing telecommunication equipment and providing technical services. After the acquisition of ABC Telekom by Hutchison Whampoa in 1991, René became Managing Partner of the resulting company: Hutchison Mobilfunk GmbH. Between 1993 and 1998, he was CEO of that company.
From 2007-2013, he also served as Vice President of the German Association for Information Technology, Telecommunications and New Media (BITKOM).