European digital ethics: the key to regaining data sovereignty

Market dominance beyond any doubt

Looking for European companies in the global ranking of the 20 most successful Internet companies is a waste of time, because the top 20 consist exclusively of American and Chinese companies. The dominance of the GAFAM tech giants (Google, Amazon, Facebook, Apple, and Microsoft) has not been challenged to date and forms an unbreakable bond between the vast majority of consumers and their products pretty much all over the globe, including Europe.

Although most consumers state that the privacy of their data is important to them and that they are careful with their data, that hardly stops anyone from intensively using services like Instagram, Facebook and Google or installing digital voice assistants like Amazon’s Alexa. There is a clear discrepancy here between the desires and needs of users and their actions. After all, nearly every social media profile openly reveals the user’s interests and consumer preferences.

Consequently, users surrender control of their data to American tech corporations, which can exclusively use it to influence specific users for their benefit – or rather for the benefit of a paying advertiser. There is absolutely no transparency with regard to who ultimately has access to the data and who uses it for their own purposes.

Everybody benefits from digital ethics

Users have long been aware that advertising companies use this data to target customers as accurately as possible through programmatic advertising or retargeting measures. However, while precisely those European companies that advertise on social media platforms claim at the same time that the protection and security of their customers’ personal data is highly important to them, a broad group of users is now capable of exposing this as sheer hypocrisy. In turn, trust in the brand diminishes. And, as we all know, a loss of trust signals the start of a brand’s demise.

The problem summed up:

• The volume of data pertaining to German and European consumers in the hands of American tech giants keeps rising,
• the growing influence of these U.S. firms on European markets stifles potential competitors and makes entire industries more dependent on their data pools, and
• mistrust vis-à-vis German and European companies, which pay a lot of money to use this data in order to optimally address their target group, increases.

A lose-lose situation. The solution: European digital ethics.

Digital ethics in Germany: data protection, and all is well?

A survey conducted last year by auditing and consultancy firm PwC on the topic of digital ethics provided a sobering result: only 50 percent of the 300 surveyed companies with 50 employees or more consider themselves to be well positioned with regard to digital ethics, and less than a quarter have formulated their own digital ethics standards.

Even in the companies that rated themselves highly, the focus is predominantly on complying with data protection regulations and implementing digitalization. There is a real lack of fundamental understanding of the entirety of the term “digital ethics” and the fact that it covers way more than just compliance with the GDPR (General Data Protection Regulation).

However, consciously addressing and transparently communicating digital ethics are essential to gaining the trust of customers and retaining them in the long term. “Trusting customers are more loyal and more willing to share information,” affirms Daniela Hanauer, partner and expert for risk consulting at PwC Germany. According to Hanauer, a responsible approach to digitalization significantly improves the relationship with customers and other stakeholders. Systematically practiced digital ethics are essential in this respect.

Pioneering technological development only possible with digital ethics

To prevent the next topics of the future, for example the advancement of AI in a wide range of applications, from automatically being exclusively left to tech giants in the USA and China without a fight, it is also important to bring data sovereignty back to Europe. At the same time though, this data must also be made available and utilized in this part of the world for the research and development of future technologies that are based on data and dependent on data analyses.

For companies in Europe, this means:

• Taking responsibility for their own digital ethics
• Assuming social responsibility for their digital activities
• Communicating transparently and honestly with customers with respect to how their data will be used
• Regaining the trust of their target group members by continuously improving the data relationship formed with them

Establishing digital ethics: what can companies do?

As a first important step towards achieving these goals, digital companies need to devise a comprehensive, company-specific strategy for ensuring

• responsible handling of customer data and
• new technologies as well as
• maximum transparency for the target group and existing customers.

A comprehensive CDR (corporate digital responsibility) approach needs to be implemented within the company, its culture, its alignment, and its strategy. In short, a clear attitude must be demonstrated. Before customers make a purchasing decision, they must experience maximum transparency and know precisely what data the company will use from what sources and for what purposes.

However, there is currently still a lack of appropriately qualified and trained personnel. Comprehensive digital ethics cannot be implemented within a company by a data protection officer. To date, only one in five companies in Germany has an in-house digital ethics officer or even an ethics steering committee, such as the one set up by SAP. Consequently, there is an urgent need for training in this field.

Digital ethics as a political and macrosocial task

However, such in-house and company-specific CDR strategies should be embedded in an extensive informational and educational program promoted at the European policy level. Consumers should generally be informed of

• why companies collect certain data,
• to what extent the collection of certain data is essential to research and development,
• to what extent this further development is vital for national and European companies to stay competitive, and
• how consumers ultimately benefit from it.

The mission is to establish an approach to handling consumer data that is based on European values and is both consistent with a corresponding culturally embedded view of humankind and also generates the level of acceptance needed within the general public to make data available so that research and innovation can flourish.

Only in this way will it be possible to take back control over the highly personal data of hundreds of millions of Europeans from large American corporations in the medium term and also stop it from flowing directly into the hands of Chinese tech giants.