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DW Weekly #99 – 20 February 2023

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Dear all,

Munich had the world’s attention this weekend as leaders from around the globe gathered for a security summit to wrap up an action-packed week for cybersecurity. In other news, the private sector is focusing more on the latest generative AI frenzy than on the metaverse and cryptocurrencies. 

Let’s get started.

Stephanie and the Digital Watch team


Munich Security Conference: Cyberspace a national security issue

The week (or rather, weekend) was dominated by security talks. Heads of government, defence ministers, and security experts descended upon the Bavarian capital on 17–19 February for the annual Munich Security Conference (MCS). 

Unavoidably, the main topic was the Ukraine war, which started almost a year ago. World leaders hit hard on Russia, especially US Vice President Kamala Harris, who said that the USA formally accused Russia of committing crimes against humanity. 

Against this backdrop of tensions, countries are increasingly aware of vulnerabilities to cyber attacks as they move to digitise their economies and rely more heavily on technology. NATO Secretary General Jens Stoltenberg warned: ‘Military forces are necessary to protect our security. But they are not sufficient. We must also secure our cyberspace, our supply chains, and our infrastructure.’ 

The EU’s High Representative, Josep Borrell, also acknowledged that the battlefield has extended to cyberspace, and includes cyber defence alongside other areas of national security. 

All in all, there were fewer explicit mentions of cybersecurity and cyber resilience compared to previous MSCs, which shows how digital security has become an issue of national security for countries worldwide.

A packed hall at Munich’s Hotel Bayerischer Hof following European Commission chief Ursula von der Leyen’s address. Photo: Munich Security Conference

China’s role in the Ukraine war could affect tech trade relations 

A new development could put China’s tech trade relations with other countries to the test. During the weekend, US Secretary of State Antony Blinken said that according to US intelligence, China is ‘strongly considering’ providing military support to Russia – a claim that China dismissed as disinformation.

The USA has already taken an aggressive stance, including restrictions on Chinese telecoms giant Huawei and other Chinese companies over national security concerns and controls on exports of high-tech chips and other technology to Chinese companies. 

The EU has taken a milder approach by seeking to diversify its own sources of technology while still maintaining working relations with Beijing. Its approach is to encourage innovation within member countries by increasing investment in areas like AI and semiconductors while avoiding tech reliance on any single country, particularly China. For NATO’s Secretary-General Stoltenberg, although security interests should outweigh economic interests, countries ‘should continue to trade and engage economically with China’. 

If China’s involvement in the ongoing war intensifies, this could affect the trade relations China has with other countries and regions, particularly the EU, which could be prodded to do much more than decrease its tech dependence on China.

Digital policy roundup (13–20 February)

NATO sets up coordination body to protect undersea cables

NATO has set up a Critical Undersea Infrastructure Protection Cell to coordinate engagement between military and industry stakeholders around the protection of undersea infrastructure. The new body will also share best practices and leverage new technologies. It will be led by former German military officer, Lieutenant General Hans-Werner Wiermann.

Norway seizes USD5.8 million worth of crypto 

Norway seized a record USD5.8 million worth of cryptocurrency, stolen in March 2022 from a crypto-based game called Axie Infinity. Shortly after the cyberattack, the US Federal Bureau of Investigation said that the North Korean hacker group Lazarus perpetrated the attack. 

The Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime, which spearheaded the investigation, said that the Lazarus group started a still-ongoing massive money laundering operation right after the attack.

EU Council ministers discuss critical categories of devices in new cybersecurity law

EU ministers are discussing an amended version of the draft Cyber Resilience Act, which will establish baseline cybersecurity requirements for connected devices, such as internet of things (IoT) products that connect and exchange data with other devices.

Most devices can be self-assessed against these standards, yet some crucial devices must undergo external audits to check compliance. The new text, circulated by the negotiation-leading Swedish EU Council presidency (and seen by EurActiv), revises the list defining what is classified as ‘critical’ or ‘highly critical’.


Online platforms comply with first Digital Services Act deadline

Online platforms had until 17 February to inform the European Commission how big their monthly audience is. Platforms whose audience exceeds 45 million users include Facebook, Google Search, Maps, Play and Shopping, Instagram, TikTok, Twitter, and YouTube. Under the new Digital Services Act (DSA), these companies will be subject to additional obligations, such as making a risk assessment and taking corresponding risk mitigation measures. Among those below the threshold are eBay, Microsoft’s App Store, and Spotify.


Microsoft pitches AI-revamped Bing to advertisers

Microsoft is engaging in conversations with advertising agencies and demonstrating how its revamped Bing search engine, powered by generative AI, can insert paid links within responses to searches.
The company is testing these ads on its early version of the Bing chatbot, which is available to a limited number of users, according to an anonymous advertising executive and ads seen by Reuters last week.


EU’s draft Chips Act enters next phase

European lawmakers have agreed on a draft text on semiconductors which will be used in negotiations with the EU Council. The Chips Act proposes that the EU’s share of global production capacity reach 20%. A second text, the Chips Joint Undertaking, will increase support for developing this type of European presence.

US chip plants get investment boosts 

Taiwanese chipmaker TSMC has announced it will inject up to USD3.5 billion into its Arizona (USA) plant. The factory construction began in 2022 and will start operating in 2024. This will bring the total investment in the Arizona facility to USD40 billion (EUR37.4 billion). 

In other news, Texas Instruments announced it would build a second semiconductor factory in Utah (USA), adjoining an existing factory. This will form part of the company’s USD11 billion (EUR10.3 billion) investment in Utah.


Tencent lets go of VR hardware plans; Apple pushes back launch of MR headset

Chinese company Tencent Holdings has decided against taking the plunge into virtual reality hardware, as economic uncertainty calls for tighter purse strings and an overall restructuring of their metaverse unit, Reuters reported

Meanwhile, Apple has also decided to postpone the launch of its first mixed reality (MR) headset by a few months. It’s not the first time the company has decided to push back the launch.

Gamer uses a virtual reality headset and controller
Photo: Lintao Zhang/Getty Images


PayPal pauses stablecoin launch due to regulatory scrutiny

PayPal is hitting the brakes on its new project to create a type of cryptocurrency called stablecoin (as the name implies, stablecoins are pegged to a normal currency so that they’re less volatile than cryptocurrencies).

Bloomberg News reported that although the company hoped to launch its stablecoin in the coming weeks, the plans are now unclear, due to heightened regulatory scrutiny. A vital partner in the project is also being investigated by the New York State Department of Financial Services.

The cryptocurrency world is currently going through some turbulence after major players have fallen victim to collapsed investments.

// JOBS //

Job cull in tech sector continues

We’ve been keeping track of the companies announcing layoffs. This week it’s Yahoo’s turn, which announced plans to lay off more than 20% of its total 8,600 workforce, and DocuSign to lay off 10% of its workers in a second round of cuts. The BBC reports that Yahoo’s cuts will take place by the end of this week. Here’s the whole list of significant tech layoffs in 2023.

The week ahead (20–26 February)

20–24 February: The Commonwealth Telecommunications Organisation (CTO) is holding a week-long gathering in London for Commonwealth tech ministers, the private sector, and other stakeholders. Three main events will happen throughout the week: The CTO Forum on 20 February, the Ministerial Alliance for Digital Nations on 21–22 February, and the 60th council meeting on 23–24 February.

21–23 February: The Internet of Trust conference, organised by UNESCO, will serve as a discussion forum for UNESCO’s draft global Guidelines for regulating digital platforms. The input will help the UN agency finalise the guidelines in the coming months. The conference itself is on 22–23 February; the extra day on 21 February is dedicated to side events.

munich report

The latest Munich Security Report

There’s an entire chapter dedicated to cybersecurity in the 174-page Munich Security Report 2023, released right before last weekend’s Munich Security Conference.

The chapter in brief: There’s one main reason why major powers are vying to control global architectures (including the digital infrastructure): Such control allows some countries to control the rules of the game and renders other countries dependent on them. There’s more focus on protectionist approaches, competition, and autonomy and less on free markets and interdependence. Read the report.

Stephanie Borg Psaila
Director Digital Policy, DiploFoundation

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