This Transcript was created using transcription software.
00:05:04 - 00:10:13
Kassandra
Hey, and welcome to The Dip, the podcast. I put some spicy sauce on even the driest economic topics.
00:10:14 - 00:16:10
Clifford
I'm Kassandra and I'm Clifford. This week we're going to be looking at Europe's dependance on U.S. tech.
00:16:12 - 00:32:10
Kassandra
Really, we want to know, is it even possible for a company here in Europe to ditch a U.S. tech stack and something we've been talking about a lot? But before we get to that, a quick favor before we get started, because if you haven't already, we would really love it if you could leave a review of our podcast wherever you're listening to us now.
00:32:13 - 00:37:23
Kassandra
It really pleases the algorithm gods and helps other people find our kind of podcast.
00:38:00 - 00:50:09
Clifford
Absolutely. We want to keep those algorithm gods happy. But today we're talking about tech, which is obviously a great topic for the algorithm gods and how Europe might finally be at a breaking point with its addiction to U.S. tech.
00:50:15 - 01:09:09
Kassandra
That's because France is looking to ditch Microsoft on 2.5 million computers. What we're really wondering is this the latest European tech rebellion? Joining us now is Mark Scott. He's a senior resident fellow at the Atlantic Council. He has been following the tech world and digital policy for quite some time. Mark, thanks so much for joining us.
01:09:11 - 01:10:20
Mark
Thanks for having me.
01:10:22 - 01:32:05
Clifford
Hi, Mark. Just looking at this French shift now, you know, in the moving out of these very essential programs, really. You know, there are so much parts of our everyday business life. Is this is this smoke or is this fire? You know, this is something that's. Is this a significant move? Do you think it's going to really affect France's ability to do to do business?
01:32:07 - 01:48:11
Mark
I mean, I think it would be. It's more smoke and mirrors or anything else. The Paris has been leading the way for so-called digital sovereignty in Europe, and which is trying to decouple or at least pull back from the US and a variety of different things. It makes a good headline, but in reality, it's not going to change much.
01:48:11 - 02:16:11
Mark
There's a reason why companies like Zoom and Microsoft have gained so much market shares because people use them. And as much as the French government would like to be perceived or seen by its electorate to be doing this, in reality, it's not going really to shift the needle much. Unless they do this a very extensive, long five, ten year period, and they have to sort of combine pulling back from the Americans by also creating services both in France and in Europe that sort of can match.
02:16:11 - 02:18:23
Mark
And currently there are a few that can do that.
02:19:00 - 02:34:12
Kassandra
Yeah, it's interesting that you say it seems like a bit of smoke and mirrors, because I would imagine that a transition in a in a real way wouldn't be seamless. Right? So many of these programs have really woven their way into entire organizations.
02:34:14 - 02:52:05
Mark
Yeah. I mean, I can't speak for the sort of the bureaucracy, the French government, but I presume, like every other government, it takes a long time. Right. And so procurement contracts, it services, support systems, the back end that no one wants to talk about, that is that's really hard to change quickly, let alone over a 510 year horizon.
02:52:05 - 03:14:02
Mark
So I think part of this for me is more posturing, given the sort of the deterioration between the relationship between the US and Europe and France. As I said before, he's kind of been leading the way to studies show that Europe has these national champions. But I would also say cynically, it's more to to support French companies than it is to support the French citizenry.
03:14:04 - 03:22:21
Clifford
Right. And going with what you say there and why now? Why why why why what is what can we read from the timing of this?
03:22:23 - 03:45:07
Mark
It's a bit of both. So, the relationship between Europe and the US, as we all know, has somewhat deteriorated over the last 12, 15 months. And that's sort of like a yeah, I try. Yeah, exactly. So and within that context, Macron in particular has been leading the charge, as I said before, to say, look, we need to be looking at European alternatives to the Americans.
03:45:09 - 04:13:15
Mark
That has been going on Pre-Trump that was happening during the administration where, again, Macron presidency and his government was looking to shift away, or at least put money, European money into European alternatives. I think that is, stepped up quite significantly after the threats to to Greenland. To be honest with you, around the Munich Security Conference and since then, both France, to a lesser degree, Germany and other European countries have been sort of fast tracking.
04:13:17 - 04:33:18
Mark
They're looking for alternatives. Other alternatives. Any good? Some are smart, but I think it's more the mood music that Paris is trying to set in terms of. We're going to start shifting from windows the next, we're going to start cutting back from zoom to whatever the French equivalent is, that is trying to demonstrates that they are, that they can put the money where the mouth is.
04:33:18 - 04:36:20
Mark
Unfortunately for me, that is a long track record to get there.
04:36:23 - 04:58:06
Kassandra
You know, I can't help but wonder. And the way that you're framing it, you know, you're seeing these headlines 2.5 million computers in the French government being moved away from windows, for example. But is this something that Microsoft or the other big American tech companies are even going to notice? Or is this kind of like a mosquito biting an elephant right now?
04:58:08 - 05:28:13
Mark
They notice they notice a lot. And it's not because 2.5 million computers from windows Linux is a lot. It is not compared to how many computers must be in the French government. What is important for the kind of, companies, the American companies in particular, is that this is sort of the ebbing and flowing of a dam designed to break and then one, 2.5 million computers, these two maybe a a massive, multibillion euro procurement contract for cloud services is that starts shifting away that 2.5 million computers now adds up to billions of euros over time.
05:28:15 - 05:42:15
Mark
So for the American companies, for the right, for the wrong, they see this as an existential concern for their European operations. Because if 2.4 million computers can quickly turn into a massive multi-year cloud contract that disappears overnight.
05:42:17 - 06:05:11
Kassandra
You know, there's this saying in German politics vandal door handle basically change through trade. It rhymes in German. That it's this idea that increasing economic ties, even with adversarial nations, that it can bring the change that, you know, Western countries want to see. We saw that a lot, in the merkel times with Russia, for example. And I'm wondering, has that borne fruit here?
06:05:11 - 06:24:01
Kassandra
The US and Europe have been really close trading partners for a while, on the one hand. But on the other hand, was this divergence or this push for sovereignty inevitable, or was it the Trump of it all, that kind of push this, this move towards, digital sovereignty?
06:24:03 - 06:43:11
Mark
I think sometimes the Trump administration is over it. 2.0 excuse me, is is overestimated. Europe has been doing this for for decades. I think it's escalated and been fast tracked over the last 12, 15 months. But it was going on in Trump point one, 1.0. And the Joe Biden administration, even with Obama there, has been a, an an effort.
06:43:15 - 07:04:05
Mark
And I'm old enough to remember a German French search engine called Quero that was created in the 90s, that was supposed to take on Google and it completely failed. This is not new. This is again from the American side of things. They would be saying that this is a typical European response to a problem they could have solved if they had better products.
07:04:07 - 07:24:05
Mark
I do wonder, to be honest, if this is good bang for the euro. It's a mixed metaphor for the European citizens in terms of just like, what are you getting for the money if you're going to be spending double money on a worse product that is less secure just because it's European. That's a lot of money to spend when the European taxpayers aren't.
07:24:09 - 07:48:01
Mark
It's actually got a lot of, years in the pocket currently. So I think part of this is about, yes, there's been a shift towards digital sovereignty, but there's also the other side of this is, yes, your sovereignty is important. And I think Europe does need to be looking at its own path, but it also needs to be looking at how do you spend your taxpayers euros in a way that is most efficient for, citizens, and paying over the odds for a European alternative that isn't as good as an American one?
07:48:03 - 07:52:08
Mark
I struggle to see how that's good. Tax payer efficiency.
07:52:10 - 08:14:08
Clifford
Yeah, I like that. The whole idea of bang for your euro. So when you think about these products, I mean, zoom, you know, basically as did Skype, which I think it was originally very European by nature and then was became a Microsoft product. And, you know, these these are kind of staples in our offices nowadays. So I'm just sort of wondering what what products are there they're going to replace them with.
08:14:09 - 08:28:12
Clifford
You know, I mean, you mentioned we talked earlier as well a bit, a little bit about French innovations in France going its own way. Has France developed its own zoom that that will suddenly outperform the, the American rival?
08:28:14 - 08:47:13
Mark
I mean, Skype was, I believe, Estonian or Finnish. I believe it went before it's been bought by America itself. So definitely had, you for instance, there are French alternatives. There are open source utterances which are basically free for everyone to use no matter where you're from. If they were good enough, they would be already being used.
08:47:13 - 09:09:21
Mark
And therefore I just struggle to see how a a French government mandate to shift from zoom to the French version of zoom. Yeah, that makes complete sense that the French government should spend money where it thinks it's to spend money. But if it really was a commercial decision for the French government, they would have done it already. They wouldn't have had to make this a political statement of moving from zoom to a European alternative.
09:09:23 - 09:29:11
Kassandra
It seemed like this American tech dominance has been a bit of a slow moving train. That it was inevitable you were going to see it coming over here, coming over the horizon. Is that just my interpretation as someone who doesn't remember all these innovations from the 90s, or how do you view it?
09:29:13 - 09:52:13
Mark
I mean, so I'm also old enough to remember the Microsoft, competition cases also from the 90s, so I'm showing my age again. But I think the US has been dominant on the tech stack or tech ecosystem for since Silicon Valley started 80 years ago. And that's fine. You know, I think sometimes the Europeans, particularly European governments, pay down their own indigenous tech sector Paris, Berlin, even London.
09:52:13 - 10:13:01
Mark
If you're sort of moving outside the EU for a little bit, they have extensively large, well-built and mature tech ecosystems. They're just not as big as Silicon Valley. But Beijing, Shanghai also not as big as Silicon Valley. So the dominance is there because they do consumer products. Everyone uses Google, they use, Facebook. I was going to say TikTok, but that's that's Chinese thing.
10:13:02 - 10:32:23
Mark
Right. So that there are alternatives out there. It's just the Europeans for a variety of different reasons, which are frankly, you know, around macroeconomic policy and the integration of the 26, 27 countries. That isn't as sexy as to say, why don't we have a European Google or you've been Amazon's. If they were good enough, they would compete.
10:33:03 - 10:53:23
Mark
There are questions about how the 27 countries work together to market, for digital services is still very de divided between member member states, but that's a different issue to say. We need to push back on U.S. dominance. I would argue we do in terms of giving Europeans that alternative. But why, say one or the other? Why can't it be European, American?
10:54:03 - 11:15:22
Mark
Chinese? Canadian? Brazilian? It doesn't matter if if you're does see itself as a free market, then the free market economics is about competition. And you shouldn't, I think, be using government policy to shift from one where the other you should have. Let's provide the pillars for competition and then see where the market decides.
00:11:15:24 - 00:11:33:18
Clifford
Yeah. There's one thing when I think about this, you know, I mean the EU is very good at regulation. It's very good at producing regulation. It's very innovative when it comes to reducing regulation. We have we've had fantastic regulations about like the Draghi report. Well this is regulation. But this is you know, we're talking about European competitiveness.
00:11:33:24 - 00:11:54:17
Clifford
But nothing's really happened. And we've had quite a lot of regulations. But enforcement seems to be a problem. And you know we've mentioned a little bit already about how they the there aren't the products there to in some ways to replace zoom. What do you what do you think about that? I mean, do you think there's a prospect for these regulations actually being enforced?
00:11:54:19 - 00:12:12:24
Mark
I think there are two different things here. There's there's the regulatory element to making sure there is a level playing field and making sure that European citizens privacy rights are upheld and social media isn't, you know, it's a safe space for people to communicate. That's one thing. And then there's providing an a European alternative via the competition support.
00:12:13:01 - 00:12:34:08
Mark
The drug report from 2024 was specifically trying to pare back regulation to allow competitiveness and industry to to thrive. I'm not sure that there's much of a connection between no regulation equals competitiveness, I would argue, between the current state and Europe saying we have a rule of law, we stand for something is a competitive advantage given what's going on in the US currently.
00:12:34:14 - 00:12:59:06
Mark
You know, so there's there's that element to I think the idea of saying regulate regulation equals bad economic policy or only good economic or competitive policy is no regulation. That for me, that doesn't there's no evidence of that. There's a balance. I think there's a balance between we want safe online spaces, we want privacy rights protected, but we also want the German medicine to thrive and digitized that.
00:12:59:06 - 00:13:21:17
Mark
Those two things can be the same. Can can be in the same conversation. I just wonder if you if you just want to compete, mimicking China or mimicking the US doesn't feel like the way to go. The European way is a third way. There is a way to balance regulation with economic growth. I just don't think currently that, Brussels and the member states have really cracked that nut.
00:13:21:21 - 00:13:36:18
Clifford
Though there's a sense in some way that that that Europe is still kind of reeling from Trump 2.0. I mean, you mentioned that, you know, a lot of this has been going on for a while, but I think the, you know, the the way the Trump administration, Trump administration operates makes it very difficult in some ways for Europe to react.
00:13:36:23 - 00:13:56:10
Mark
I mean, did the current administration in Washington is unique in terms of how it interacts with the world, where we're finding out in multiple different facets? I think the Europeans, if they're going to be again, in the in the tech space, at least if they are reacting to Washington, they are missing the boat like they need to be focusing on what's good for, Brussels, what's good for the member states.
00:13:56:16 - 00:14:15:24
Mark
And that does involve trying to mirror and marry the regulatory component with competitiveness. I think it's not one or the other. I just think sometimes it's the French example you gave at the beginning about trying to move from windows to Linux computers. That feels a little gimmicky. Is that really going to move the needle in terms of giving Europe sovereignty back?
00:14:15:24 - 00:14:32:22
Mark
No, it's a headline. What would be important is investing in digital skills in AI or the boring stuff, creating a unified capital market, all these things that no one wants to do. That's what will change the the, the needle, not, you know, moving from zoom to a French equivalent.
00:14:32:24 - 00:14:55:06
Kassandra
You know, Mark, coming into this, you know, the conversation in, in the newsroom was very much like, oh my God, 2.5 million computers are moving away from Microsoft. That was kind of like the buzz that we that we had. But what I'm hearing from you in a lot of ways, you know, you've said if the product was good enough, it would already be being used by you wouldn't have to convince companies or governments to use them.
00:14:55:06 - 00:15:21:00
Kassandra
So I can't help but wonder, has a horse already left the barn here? Like, are the products just not good enough? And even if they were on par, if you're already locked into using Google or Microsoft or whatever it is, is a company, especially given the economic headwinds that Europe is facing, is a company going to invest the time and money to actually switch to something just because it's maybe as good but unknown and happens to be European?
00:15:21:02 - 00:15:39:11
Mark
I think there's a conversation going on both in governments and EU country, companies right now. But there are two things you have to think about. There's the sovereignty question, which is more political with a small piece, you, and there's also the economic question. And then the security question, if I'm going to shift from zoom to a non zoom European alternative, the security needs to be the same.
00:15:39:11 - 00:15:58:19
Mark
And he said cost me the same or less. What is the economic value of me to do this just other than where we need the European flag? That's great. I would, I value that. I think there was a need to create new European products, on a global stage, but to do it as a token tokenism doesn't help business, doesn't help government.
00:15:58:21 - 00:16:26:01
Mark
It's just a it's just, frankly, I keep saying it's a bit of a gimmick. What would be helpful is to focus on, okay, if you really want to shift from a windows to a Linux or European alternative, how will you creating the supply chain inside Europe to build the computers at an economic value? That makes sense? How are you training the engineers and software developers to then provide the software to sit on top of that hardware, which you developed in within the country, within the member states?
00:16:26:03 - 00:16:52:16
Mark
What is what are the how are you going to restructure the capital market? So instead of sending venture capital money, you know, getting venture capital money or private equity money from the US because it's cheaper. How, you know, getting that from Frankfurt or Paris, those things, the real way you change this, that does not come from 2.5 million computers, that comes from looking at the long term policy implications of a bunch of levers that are being pulled, because the hard and it's difficult.
00:16:52:18 - 00:17:02:19
Mark
But if you're really want to maintain individual digital sovereignty, that's how I would do it. I wouldn't focus on the headline of, we're going to shift some computers from one service to another.
00:17:03:00 - 00:17:22:00
Kassandra
You've spoken about the policy side of things, but in terms of what our audience can take away from this, what should they be looking for from stories or headlines in the near or maybe not so near future? For what? Real change is going to look like? Because these kinds of nitty gritty details don't always make it to like the first lead sentence of something.
00:17:22:00 - 00:17:29:11
Kassandra
So like, what can what can we be looking for on a substantial level from outside the halls of Brussels?
00:17:29:13 - 00:17:33:16
Mark
Sure. So to give me, a bit of a policy wonk when it comes to so.
00:17:33:18 - 00:17:37:10
Kassandra
No worries. No.
00:17:37:12 - 00:17:58:16
Mark
So the term digital sovereignty is here to stay, and that can mean a lot of things for different people, particularly if you're in Berlin versus Paris. But the idea you're trying to corral and gain control over the digital world, be that I be that social media, be that zoom, that will continue, what that looks like is going to differ per member country.
00:17:58:16 - 00:18:34:18
Mark
I think Germany is taking a very different route to to Paris, to France currently. But I think your viewers need to think of Europe. Is is looking to gain greater control over the digital space. They are looking to spend European taxpayers euros to do that. Some will will be successful, some will not. It's a question of how much do you want to decouple from the Americans and China, and how much can it decouple from the, I argue, the two largest tech powers, and how does it then use its regulatory levers, its rule, the rule of law, which is kind of important right now to demonstrate that Europe campaign this space.
00:18:34:18 - 00:18:41:19
Mark
It just has to be a different way of doing it. It can't just be copy pasting from China or the US.
00:18:41:21 - 00:18:49:01
Clifford
So joining us now in the studio is Frank Carter. Check. He's the CEO and founder of Nextcloud. Frank, thanks very much for joining us on the show today.
00:18:49:03 - 00:18:51:03
Frank
Thanks for having me. It's really great to be here.
00:18:51:04 - 00:18:59:06
Kassandra
So one question that really hangs over this whole conversation is, are European alternatives as good as U.S tech stocks?
00:18:59:08 - 00:19:18:08
Frank
I would say in a lot of cases they are in some cases they are not yet. But I think they're getting there. There's this huge trend at the moment to build up these European alternatives. And yeah, I think we're getting there in case of next cloud. We have lots of happy customers who replace like Microsoft Google with next cloud, and then no complaints about the functionality of the software.
00:19:18:08 - 00:19:22:17
Frank
So there are a lot of cases where it's definitely on the same level.
00:19:22:19 - 00:19:32:02
Clifford
So there's no danger then of losing out on, say, optimal functionality vis-a-vis the US behemoths, you know? Yeah. You're not going to suffer by by going for a European alternative.
00:19:32:04 - 00:19:51:24
Frank
The only thing that we hear from our customers is usually, if some people are not really flexible to migrate to a new solution. So I don't think nowadays there's no, like, technical problems. They're more like user acceptance problems. So some people do have confused if a button is right instead of left or have a different color than before.
00:19:52:01 - 00:20:04:02
Frank
So I meant it person. So I never really realized that this is important. I thought it was. It's obvious, but for a lot of people, it's really important that you really look at the same. And this is something like the user acceptance that it's a challenge.
00:20:04:04 - 00:20:19:08
Kassandra
We're hearing these, this headline, figure 2.5 million computers. And from the French government being moved away from Microsoft this year, it sounds like a big number. Do the European alternatives have enough scale to take on the American big companies?
00:20:19:10 - 00:20:44:02
Frank
Yeah, absolutely. I mean, the case of next Cloud, for example, we are we are only doing the software and actually hosting and the migrations and the trainings and operations are done by other companies. So you've got to get this over in France, Aruba and Italy, your units or sticking in Germany. So we scale through all these partner companies so we don't really have a scaling problem next cloud because software needs to be developed once, right.
00:20:44:02 - 00:20:48:15
Frank
And can run it as many times as you want. Right. So this works fine.
00:20:48:17 - 00:20:56:07
Clifford
I'm looking now digital dependency. You said before the digital dependency can choke innovation. Can you tell us a little bit more about that?
00:20:56:09 - 00:21:16:13
Frank
Yeah, that's another topic that is not discussed so much at the moment. Everybody talks about digital sovereignty with surveillance and vendor logins on. But I think that innovation is not a very important point that should be talked about more because, when you use like cloud services as products like from the s, for example, you basically get customer right, you give them some money and then you get access to the software.
00:21:16:13 - 00:21:31:22
Frank
You don't pay the money, there's no software anymore. So that's how it works. But you cannot really study the software cannot see it. You cannot like change it, you cannot run it locally and so on. So that is really hard to build innovation on top of that, because you're just a customer, don't really understand the core technology yourself.
00:21:31:22 - 00:21:39:05
Frank
And with open source what do you do? You have access to the whole stack. And this is like trade for building new startups, building new innovation.
00:21:39:07 - 00:21:53:11
Kassandra
We recently saw how the third party developer library, Axios, was compromised by a North Korean agency. Security is obviously a massive issue. Are European tech players more or less, vulnerable to these kinds of hackers?
00:21:53:13 - 00:22:09:22
Frank
I think these kind of hackers just it's like affects like everyone in theory, I wouldn't say that open source is better than not open source. I wouldn't say Europe is better than other places. It's just a challenge. You have a software vendor, you need to have like proper security processes. And for example, we have a security backbone program.
00:22:09:22 - 00:22:22:07
Frank
So everybody who finds the problem, this stuff gets €10,000 from us. And this helps that we need to, yeah. To make the software stable and, yeah, that's what's needed. It's the same for everybody.
00:22:22:09 - 00:22:33:19
Clifford
Yeah. You you mentioned a bit already, but maybe we can talk a bit more about, about vendor lock in and how it can make these vendor locking strategies can make it difficult to switch. Yes. Can you talk us through that a bit?
00:22:33:21 - 00:22:53:17
Frank
Yeah. Yeah. This is one of the challenges that, we have a lot of customers, partners that, using the Microsoft and I want to move to next cloud. And, I don't know what the other things in our world were. It's super easy if you want to have a different gas station or just think of the gas station, it's easy to go to different supermarkets.
00:22:53:17 - 00:23:14:19
Frank
Also very easy. Even switching from one phone provider tool to another is easy because nowadays you can take your number with you, but switching such service is actually very hot. Usually there are a lot of big migration projects involved because you need to get your data out, which is hard because they don't provide the APIs. So we intentionally make it hard to move the data out and then migrated somewhere else.
00:23:14:19 - 00:23:22:02
Frank
And this is unfortunately a process and can take a bit. And this is also why a lot of organizations are afraid of it, because it is it is some work.
00:23:22:04 - 00:23:38:13
Kassandra
This work that you describe. It really makes me wonder, like, is it already too late? You know, when we talk about the German economy, for example, I mean, I'm getting I'm getting a little forest for trees here, but follow me. When we talk about the German economy, it's been kind of bordering on recession for a few years now.
00:23:38:13 - 00:23:55:03
Kassandra
There's not a lot of growth. And I'm just looking at these companies who might be thinking, okay, maybe I would like to move to next cloud or away from Microsoft in some way, but do they have the money and the time and the will to move to something that's maybe on par or a little bit better, or a little bit worse for their needs?
00:23:55:03 - 00:23:58:12
Kassandra
Like, are the economic headwinds too much right now? Yeah.
00:23:58:14 - 00:24:29:02
Frank
So I mean, there's not a lot of cost that is involved in that. I mean, obviously migration project takes time, but once you have next cloud, it's like, similar or cheaper than other companies. So I don't think there's a big financial problem. I see the other way around. I see it even more beneficial if companies use like more open source software like Nextcloud, because my private theory, faced with the problems of the German industry, was a recession, for example, is that you really need to be more innovative and you have no more forward looking products.
00:24:29:04 - 00:24:49:01
Frank
And we see this at the moment with the car industry. I think, the German cars, they are fine, but they are lagging behind in software. So the software stack is really a problem. And as this is what I said earlier, we really need to have a strong European software industry and European, German software business, not only for cars but just for everything.
00:24:49:01 - 00:24:59:09
Frank
I mean, my country and my country and said, or software is eating the world, right? And this is happening so one, one sector after another. So we have to be better in software.
00:24:59:11 - 00:25:08:20
Clifford
Just just on that. Do you think we talk ourselves down too much in Europe? Does I mean, just perception is there that somehow that Europe is kind of like lost in the race in the it?
00:25:08:22 - 00:25:09:12
Frank
I think so.
00:25:09:12 - 00:25:14:10
Clifford
In the IT crowd, for want of better expression. Do you think, do you think we talk or slows down.
00:25:14:11 - 00:25:36:11
Frank
Yes, yes we do. There are some terms, for example, the term hyperscaler. I don't like that. Because I'm saying that. Yeah. Because Hyperscaler usually is the name for like Amazon, Google, Microsoft. Right. A big cloud companies. And Hyperscaler implies that you need to be hyper to scale. Basically it means it means that only the big ones.
00:25:36:11 - 00:25:56:07
Frank
Then that's what it means. And this is wrong. It's actually wrong. There are very strong players in Europe, as I said, like you're not over age 20, local, many others. And it's actually funny if you compare the prices with the one from the hyperscalers, they are not more expensive. So the whole theory that you need to be huge to scale is not exactly true.
00:25:56:09 - 00:26:15:19
Frank
There are a lot of lot of, capable, like cloud providers here. Sometimes I get the question, okay, at a really big enough, then I can bring an example. The German telecom, they run a service called Magenta Cloud with Next Cloud, and they have like 4.3 million users that ask you what should the customer do? You have more or less than 4.3 million users.
00:26:15:21 - 00:26:22:20
Frank
Most of them have less. So there is no problem. So, the infrastructure is there. We just need to use it.
00:26:22:22 - 00:26:43:10
Clifford
I'm talking about cloud. I'm going to cloud matters by talking about another cloud which is the US cloud act. Yes. Which I'm just going to read out. It's the clarifying lawful overseas use of Data Act. Yes. And this has been introduced to X. It's being it can access personal data to combat serious crimes. Yep. There's been a lot of pushback from Europe about this.
00:26:43:12 - 00:26:55:17
Clifford
The US says it can help combat crimes like terrorism, crime, child trafficking. Yes. Whereas the on the European side, I suppose, as critics say, that it can be used for whatever the US government wants it to do.
00:26:55:20 - 00:26:59:13
Kassandra
Because they can access data stored on servers outside the United States.
00:26:59:17 - 00:27:06:06
Clifford
Yes. Yeah. Very important distinction because obviously they can they're saying that the company it's the company's data. It's not where it's located.
00:27:06:06 - 00:27:07:04
Kassandra
In American companies.
00:27:07:05 - 00:27:11:17
Clifford
American companies. Yeah. Right. Yeah. So what's your take on this?
00:27:11:19 - 00:27:14:16
Frank
Well, that's, philosophically a big question.
00:27:14:18 - 00:27:16:13
Kassandra
And you could boil it down to one sentence.
00:27:16:15 - 00:27:44:03
Frank
Yeah. I said, no, I can't. No, I mean, it's like the more the, the more surveillance you have, the more data access by by law enforcement organizations, the safer you are. Right? But also the less free you are. So I mean, like 20 years ago, I once did, like a vacation on. And Cuba, which is obviously a dictatorship, but I never felt more secure in there because, well, it's a police state, right?
00:27:44:03 - 00:28:07:02
Frank
I mean, obviously they're very secure. I still don't want to live there. Yeah. And that's of course, a bit off the balance. So, for example, in the classic offline world before the internet, you. Yes, the police can look into your private data, like break into your house, look at all your documents, search everything you have, but only after a warrant from a judge and you get the warrant.
00:28:07:02 - 00:28:31:03
Frank
Only if there is some evidence, some strong evidence. And I think this is how it also should work, like in the digital world. Like if there's some evidence, something going on, if someone's doing something illegal drugs, terrorism, whatever. Great. Like search the person and find some proof. But I don't think there's a point in like surveillance, all the data from every human on the planet all the time.
00:28:31:05 - 00:28:33:03
Frank
Yeah, that's for me. Too much.
00:28:33:07 - 00:29:02:01
Kassandra
Yeah, but there's the philosophical side of things. But then there's also the practical, right? For example, here in Germany, many people here are very, data privacy minded. So are companies in Germany, for example, going to see the enforcement of the cloud act and say, okay, well, I thought a data center built here was a safe alternative. Turns out after a few years of this, this law being implemented, that maybe it's not as separate as you thought it was.
00:29:02:04 - 00:29:19:17
Frank
Yeah, exactly. It's definitely not separate because as long as it's like operated by the same company, then, the US, can say, hey, I want to have access to the data. It's actually interesting. I like, study this little bit the sovereignty washing because a lot of organizations say, no, it's fine, it's fine, it's fine. Yeah. And the details are very interesting.
00:29:19:17 - 00:29:39:13
Frank
So, that's for example, the, the whole narrative around. Yeah, it's encrypted like Amazon cannot access the data. What's the presentation lately. Better than. No no, no they cannot because data and then three slides later they say yeah. But of course we give the data away to law enforcement agency as if to force us to do like okay.
00:29:39:17 - 00:29:59:18
Frank
Right. And then they say, yeah, but we have this transparency website where we list all the cases where the data was handed to the government. And but of course, you get like a gag order to get, Mr.. Surveillance and there's a national security letter and Pfizer and some other things where they're basically forces company to not talk about it.
00:29:59:20 - 00:30:08:08
Frank
Yeah. So of course, the transparency website is always empty, obviously, because they're not allowed to talk about it. So there's so much like, I don't know sovereignty washing going on.
00:30:08:12 - 00:30:24:15
Kassandra
Yeah. Keeping that in mind that maybe in some ways sovereignty is just a buzzword or is it too late for European companies to actually do anything about this? Are we witnessing because we are witnessing this growing monopoly power among major cloud providers, like you said, and their products?
00:30:24:15 - 00:30:25:17
Frank
Yeah, it's not too late.
00:30:25:18 - 00:30:27:22
Kassandra
Okay. Give us hope then.
00:30:27:24 - 00:30:28:16
Mark
00:30:28:18 - 00:30:58:11
Frank
Yeah. I mean, there are services. I mean, for example, we work together with unions. We have a very nice service. It's very comparable to my group five. We even have advanced AI features built into it that's available today. And I already have thousands of of customers organizations using it. So this is this is working. And by the way, I wouldn't I'm not saying that it is not too late, but also it can't be too late because I mean, what's the alternative? It’s like we just give up and be a digital colony hub going forward?
00:30:58:11 - 00:30:59:19
Frank
This cannot be.
00:30:59:21 - 00:31:22:12
Kassandra
Something we've spoken about. Quite a bit this week is regulation and how one thing that Europe is very good at is regulation. And and we were wondering, you know, does the EU have the firepower to regulate via antitrust or anti-competitive investigations. And I'm asking because next Cloud withdrew its antitrust complaint against Microsoft. Clearly you were unsatisfied with the progress.
00:31:22:14 - 00:31:25:02
Kassandra
So where does this leave us?
00:31:25:04 - 00:31:52:18
Frank
Yeah, I think we are doing fine. Finish on the legislation side. So the DMA, the DSA, the GDPR, I think data and so on, all these regulations from the, from the EU, they're going in the right direction. They're saying, yeah, hey, some different markets, like for example, you need to have export APIs. You need to be open for competitive products from come from from your ecosystem to integrate and so on.
00:31:52:20 - 00:32:02:08
Frank
So it has like it has the right intentions and it also has the right tools. What is missing is the actual enforcement of the laws.
00:32:02:10 - 00:32:00:17
Kassandra
So that was your lawsuit initially filed in 2021. Is that correct? Yeah. And so four years later, withdrawn, because my part of it.
00:32:00:20 - 00:32:31:23
Frank
Exactly. Because nothing happened. Yeah. And this is not only us is in a lot of cases, I mean, there's clear proof that, GDPR violations, for example, with mixing data together between Facebook and Instagram, there are other things like, from DSA perspective, a lot of hate speech and like, I don't know, deep fake. Lots of things happening on Twitter right at the moment.
00:32:31:23 - 00:33:00:21
Frank
Yeah. And yeah, it's really the US has problems of actually fighting it. That the problems are there. Yeah. We can see it. Yeah. But actually enforcing it is hard. For example, there was lately a story that, there was a signed up for an agreement between the European Commission and the US government where the agreement is, every time in the future that the EU tries to enforce one of those laws, the first need to consult with the US government, which is really.
00:33:00:23 - 00:33:12:21
Frank
Yeah, exactly. That's a great. Yeah. That's interesting. Yeah. Next time you want to, like, arrest a bank robber, or you first have to talk us to bank robber if it's okay. So,
00:33:12:23 - 00:33:29:23
Clifford
Yeah. Well, I mean, it's sort of related. But critics say that your hardline stance against sort of US participation in European digital initiatives like Gaia X, that it sort of ignores the political and economic realities of global cloud infrastructure. What would you say to that?
00:33:30:00 - 00:33:49:20
Frank
Yeah, X is an interesting example. I mean, it came from the from the government, more like a top down approach. And I think the actually strategy was actually quite good because it the idea was not to build like a European hyperscale or Amazon alternative, but to bring the existing ones together with open standard open protocols. And I think that idea was very good.
00:33:49:22 - 00:34:17:13
Frank
But at the end it didn't work out, because I think, I don't know, the politic, the politicians to put themselves out to early and left basically to the industry. But the industry doesn't has the like overall strategy. Right. Every company usually only cares for themselves. So there was no overall strategy to make Europe more independent. And then it failed, I think.
00:34:17:15 - 00:34:40:03
Clifford
And yeah, I'm just maybe following up and on how much of this is cultural, you know, I mean, I don't want to overstate the role of the tech moguls. And yeah, that's but but a lot of it's personality driven. I mean, they make personal attacks on European actors now. I mean, whether that be governments or companies or regulations, particularly the EU, you know, is it's the cultural, that cultural aspect and the role of the tech moguls.
00:34:40:03 - 00:34:41:21
Clifford
Is that a big part of it?
00:34:41:23 - 00:35:00:04
Frank
I think it is. I think it is. Yeah. I don't know how much is cultural, but there are different definitely differences. Right? A lot of those big companies do have a strong founder who is sometimes, like in the case of meta, like, although in full control of the organization, I, the stockholder, shareholders can do nothing around it.
00:35:00:04 - 00:35:20:23
Frank
So basically, I like little kingdoms. So I do all this and Musk is the same. Everybody has their own little king kingdom. And then of course, if you have a kingdom, it's easier to do big decisions. Bold decisions also be opinionated sometimes also in a weird, wrong way. Yeah. The supporting European right wing parties, for example.
00:35:20:23 - 00:35:43:11
Frank
I'm not a big fan of that. But you can be opinionated while Europe is very content oriented. I see this a lot of conversations in Brussels or like yesterday was he in the German parliament again does everything is content oriented. Yeah. And then if you do want to do like a bold move then it's actually very hard to find the right people for that.
00:35:43:13 - 00:35:57:02
Frank
So admire what France is doing at the moment with the commitment that it's probably from Microsoft to Windows to, to Linux. Yeah. French is a little bit more centralized government. Yeah. In Germany it's very, very hard to do decisions like that.
00:35:57:05 - 00:35:58:00
Clifford
Yeah.
00:35:58:02 - 00:36:17:19
Kassandra
Looking ahead, have we past the turning point or do you think that there's still a turning point that needs to be turned? Turned around, turn right over. For us here in Europe to actually be able to say, okay, now we are digitally sovereign, like, when will we know that sovereignty has arrived?
00:36:17:21 - 00:36:36:07
Frank
Well, there's no there's no one point in time. It's already done. It's a spectrum. It's a it's a journey for sure, obviously. But and I don't think it's too late. I don't think so. There's actually a lot of talking at the moment. If like, 10% of all is talking turns into action, then that then would be good. I think.
00:36:37:03 - 00:36:59:07
Clifford
I’m just wondering, though, just maybe one final question, because I know that your, you know, your own company, you've got some very high profile clients, you've got giant German telecom, the various universities. Do you think that the companies that are going to be, leading this charge, the European charge will be more like, you know, off the scale of your company?
00:36:59:07 - 00:37:01:23
Clifford
Do you think?
00:37:02:00 - 00:37:24:22
Frank
Not a good question. So, I personally, I'm not sure I find this a strange situation, to be honest, because we are, as I said, we are the market leader. But we also 165 people, right? So how can we be the market leader business model. And it's it's like weird. Of course, in software you can do a lot with small teams.
00:37:24:24 - 00:37:48:01
Frank
But I think even Instagram was acquired also like ten people or something, right? Yeah. Like small teams can be very productive. And I think we are very productive. But on the other hand, we are just very small. So I can see a lot of space for people like us. I mean, I but the area where we are with digital sovereignty and open source, there are a lot of similar companies can fit there.
00:37:48:01 - 00:38:02:22
Frank
I think, bigger ones. Yeah. I'm not sure. Sometimes you need to be bigger, right, to do a have a bigger impact. But it also then takes time to not getting big like in in one year.
00:38:02:24 - 00:38:03:18
Clifford
Yeah. Yeah.
00:38:03:18 - 00:38:07:07
Frank
So it's a I don't really know. Yeah.
00:38:07:09 - 00:38:24:00
Clifford
Well that was really interesting. I'm getting two views from two really good experts on this, you know. What do you think of this? I mean, how would you would you be able to give up zoom and give up your Microsoft products and in favor of some, you know, Linux or one of these other, providers?
00:38:24:06 - 00:38:53:01
Kassandra
I feel honestly a bit intimidated by some of this, like this idea of moving to open source. Maybe I'm showing just kind of like how in the walled garden of these providers I am. But the idea of going open source and being able to mod stuff, like, I know people who do that kind of thing, but I honestly, I don't really even know where to start going from, you know, my personal computer being a mac and coming to work and it being Microsoft is already already I for me sometimes, you know, so I feel like I'm, I don't know if I could do it.
00:38:53:01 - 00:39:08:10
Kassandra
And there was a really an optimistic case put forward by Frank from Next cloud. But, I see how slowly sometimes the wheels turn, especially if these big companies like moving a big tanker. And I'm just not sure how quickly it can happen if I'm being honest.
00:39:08:12 - 00:39:19:16
Clifford
Yeah. I mean, one thing he said is if 10% of it happens, then it's a big achievement. And I sort of feel like it's something that I know it's kind of the right thing to do. But every time I've tried to explore this, I've just been I've found it really difficult.
00:39:19:17 - 00:39:38:20
Kassandra
This happens across so many platforms as well, right? Like something that's come across my algorithmic timeline in the last probably 3 or 4 months. So a lot of people saying, you know, that advocating for moving away from Spotify, for one example. But then at the same time, I'm not sure how many people are actually making these moves versus signaling that they think it's important.
00:39:38:20 - 00:39:58:05
Kassandra
The sovereignty washing, as Frank put it, I thought I felt like, okay, that that's that rang something for me because it does seem to seem like such a buzzword. You know, in Berlin we hear it from Brussels, and I don't know when we're going to have reached a point where Europe is sovereign. I just don't know the measuring stick that we're using right now.
00:39:58:11 - 00:40:26:10
Clifford
I suppose the background to this is the it's the sort of the feeling that European tech companies have trailed so badly because they, you know, European Silicon Valley and you don't even have this stuff that the Chinese are doing. You know, Europe is and there's a lot of mistrust about tech. There's a huge obsession with privacy. So all of these sort of combined to mean that, you know, you often feel that Europe is flagging even though as, as, as Frank was saying that, you know, it is also still very, it is still very dynamic.
00:40:26:10 - 00:40:28:02
Clifford
And we do talk ourselves down quite a lot.
00:40:28:06 - 00:40:45:13
Kassandra
Yeah. The China of it all does seem to be the elephant in the room in a lot of ways, because we're here talking about, you know, can Europe break away from, from US tech. But who else is there at that point. Of course it's China.
00:40:45:15 - 00:41:09:03
Clifford
Yeah. And that's too risky. I mean it's it's for different reasons that these things are happening. The people are, are people are decoupling from, from China and from the US. But there are quite distinct reasons, even if the lines are, you know, it's very much a security issue with Chinese tech. You know, data being used for nefarious purposes for, for Chinese military purposes, dual use purposes, all of these things.
00:41:09:05 - 00:41:19:11
Clifford
Whereas the US, it's more about tech's dominance and monopolies. Although increasingly under the new Trump administration, some of the some of the security issues are also raising their heads.
00:41:19:11 - 00:41:20:12
Kassandra
100%. Yeah.
00:41:20:12 - 00:41:22:12
Clifford
Which was also mentioned in by the guys.
00:41:22:12 - 00:41:47:07
Kassandra
And I think too, that Europeans not all of them, obviously, but there is a growing, chorus, maybe a quiet chorus of of of people here in Europe who are not happy with the, the politics of the US and how that information could be used. Maybe it's one thing for under the Obama administration had a certain a certain branding to it, and it didn't bother the certain class of Europeans so much.
00:41:47:07 - 00:42:07:24
Kassandra
But now that it's a Trump administration and we saw concerns for example, around the Winter Olympics, you know, that there was going to be potentially Ice agents traveling with the I believe it was the vice president, right, who was visiting, the Olympics at the time. But there's just a branding issue that then adds a certain flavor, even if ultimately they were kind of playing the same cards.
00:42:08:02 - 00:42:08:21
Kassandra
Yeah.
00:42:08:23 - 00:42:15:01
Clifford
Yeah. And also that was mentioned that this does have an impact on the US tech companies. I mean, there's also I was.
00:42:15:01 - 00:42:20:17
Kassandra
Surprised by that. Yeah. Yeah. It does feel like small potatoes from where we're sitting. But it was interesting that Frank brought that up.
00:42:20:22 - 00:42:25:02
Clifford
Yeah. That's all for this edition of The Dip.
00:42:25:04 - 00:42:37:04
Kassandra
And of course don't be afraid. Leave us a comment. Leave us a question wherever you're listening or watching us right now. Or of course, if you're a good old fashioned email kind of person, you can shoot us a message over at the dip. Dw.com.
00:42:37:09 - 00:42:43:00
Clifford
Yeah, we do like to get your messages. So thanks very much for tuning in today and thanks for listening to tip.
00:42:43:02 - 00:42:44:01
Kassandra
Cheers. Thanks.
00:42:44:03 - 00:42:46:07
Clifford
Bye bye bye bye. Bye bye.