3.2. Business: On opportunities, speed and good prospects

Internet as a determining factor today

Life without the infrastructure of the Internet would be unthinkable for companies today. By opening new sales and marketing channels and enabling more effective customer relations, the Internet makes it easier to conduct business – in home markets and around the world. But more than that, it serves as a source of inspiration for innovative ideas, products and services. For many new companies, the Internet is the foundation of their business model. It therefore comes as no surprise that some in the business community are downright euphoric about the Internet and the opportunity that it represents.

“I associate the Internet with incredible potential. Not just for new business models, which we have now also realized in our own company, but also for existing companies, which can seize upon this opportunity to really re-invent themselves with regard to process optimization and customer relationships.”

“I myself am convinced that the Internet has brought one of the most defining changes in the last 100 years. I won’t say the last thousand years, but certainly for my generation and the next gene- ration it will bring change more than any other single thing […]. This means a huge opportunity. And it goes for all areas of life – from work to entertainment, to the way people communicate with each other. Everything is changing.”

The Internet is considered less a means to an end (as is common in the public sector, for example), and more an all-encompassing feature of modern life. The Internet is taken for granted as the natural setting for business and work. It is simply there. Like water or air, it is a given, a natural feature of today’s reality, a “force of nature” that one can neither avoid nor call into question.

This is one reason why opinion leaders in business only rarely talk about the risks associated with the Internet. When it comes to the Internet, many business leaders seem to regard a standard risk vs. opportunity analysis as out-of-place, inappropriate, and even annoying.

“For us it is an opportunity more than anything else. […] I really don’t think you can argue against a mega-trend like this in terms of possible risks. It’s like saying you need to be able to swim before you know whether the ocean is an opportunity or a risk. Yes, the ocean is there. And if you live on the ocean you need to be able to swim. That’s how I see the Internet. We simply don’t think in terms of opportunity or risk. It is like a force of nature. The ocean is simply there.”

“I don’t see it in those terms at all. What are the risks of a water main? What are the opportunities associated with a water main? For us, the Internet is like a water main or an electric cable.”

While business leaders are certainly aware of the risks, they consider them inherent to the system, and by no means do the risks devalue the opportunity that the Internet represents. It is much more about accepting the existing risk and dealing with it head on. Overall, they believe risks should be regarded more as challenges and tasks rather than hazards or threats. Risk management and security management are simply part of the challenge, and part of the process of tapping the potential of the Internet.

The prevailing attitude among business leaders is characterized by great optimism, a “can-do” mentality, self-confidence and faith in progress. Risks – especially those of the technical nature – are considered eminently manageable. There is no desire to turn back from what has been achieved so far and, in their view, there is no “collective coercion” towards digitalization.

They acknowledge the fact that 39 percent of Germany’s population is still classified as “Digital Outsider”1 , but are quick to explain this as a natural part of this transitional period.

“Yeah, yeah, it is a large group of people, but the Neanderthals were also a large group and they of course died out in the end. Quite honestly, I don’t understand this group of people at all. Let’s move on to the next question.”

Companies see themselves as captains on the sea of opportunities

The private sector lives with, in and from the Internet. Its use and configuration makes up more or less the core business – not only for designated Internet companies but also for other large corporations. Business leaders see their own business activities, ideas and innovations – along with the increased use of social media – as the key drivers of the Internet revolution. It is their initiative that has made it possible for the Internet to evolve with such blinding speed into such a gigantic marketplace of infinite possibilities (“without us there would actually be no Internet”). They see themselves as captains on the sea of opportunities. They are the ones with a clear orientation and grasp of the situation; they understand their business and know what it takes to succeed. While the policymakers see them- selves as slightly behind the curve of developments, these „captains“ see themselves at the forefront of the movement – as the (technological) avant-garde. This is where new things are being created and the future defined; this is where the content and course of the Internet is being decided.

“Change is always a challenge, but ultimately also an opportunity. We want to take advantage of the opportunity and take part in shaping the future – not sit idly on the sidelines. […] It is playing a role in more and more areas of life. […] IT continues to enter into more and more areas of life. I personally feel a certain obligation to recognize this trend, to take part in it and further its development.”

These business leaders have worked hard and invested a lot in the development of innovative products and services; they have gradually gained the trust of users and customers; and they, themselves, have made the commitment to new ways of doing things (such as managing their own financial transactions and internal communications). They have created new jobs and helped ensure that Germany remains among the world’s leading IT locations. So they do not want other players putting up any unnecessary roadblocks. In their view, the trend is towards more and more regulation, and forced attempts to initiate a debate driven by fear. And many of them decidedly reject this approach.

 “I find some of the solutions being proposed – mainly those involving increased government control – to be dangerous and totally misguided. I just don’t want the minister of the interior protecting me while I do business.”

Government is an “overly cautious” impediment to economic growth and innovation

In order to survive in the fast moving and constantly changing environment of the Internet, and to continue to expand and strengthen their market position, business leaders emphasize how critical it is to not only understand the rules of the game on the Internet, but to play a role in defining these rules. They want to tap the potential of the Internet in its entirety, develop innovative products and new business models. In their critical eyes, policymakers have succumbed to a kind of “regulation craze”. Companies fear that government regulation will knock them off course – or at least limit their cruising speed – and that they will lose their ability to compete internationally. At the same time, they stress the futility of this approach, saying that the global Internet space cannot possibly be controlled anyway.

 “To continue along this track of overly fussy legislation on the national level will lead us absolutely nowhere. I believe this impedes economic progress; it will have a negative impact on business locations, and the legislative process will never be fast or efficient enough to really protect people. That’s my take on it. This doesn’t mean, of course, that our politicians will drop the issue. It’s too big an opportunity to promote a cause and attract attention. That much is clear.”

„The notion that we can somehow censor the Internet is just not realistic. It’s like the ban on alcohol in Saudi Arabia. If you’re in a hotel, you won’t find it anywhere, you can’t get it. But if you’re invited into a private home, they’ll open the cupboard and offer you any kind of wine or whiskey you could ever dream of. And your Muslim hosts will be offended if you don’t get drunk. It’s really the same with the Internet. You can access anything your heart desires – because it is simply impossible to control access to the web.”

The insinuation is that decision-makers in the political arena suffer from impaired vision – and that they are even a bit clueless. But it’s not a subtle insinuation. In fact, the competency of policymakers on the issue of Internet regulation is being openly called into question. And in the view of business leaders, the prospects for effective and productive dialogue are not good. Politicians and policymakers are, in their view, simply too far removed from the issue. Their knowledge and experience is insufficient for them to understand the scope, importance and consequences of their decisions.

 “If I just try to imagine who I could talk to about these issues in the Bundestag or in the federal government or at the second-level of government, on the state secretary level, I come up with exactly this [uses hands to form a giant zero]. One more time for the audio tape: zilch. There is no one.”

But it’s not just politicians and government officials that get in the way. Business leaders also accuse the media of weakening the position of Internet companies with their one-sided reporting, which tends to highlight the risks of Internet commerce without talking enough about the added value and many advantages. According to this picture, the media is striving too hard towards greater transparency and is often overly critical. Their reporting tends to exaggerate and unnecessarily scandalize, they publicly discredit the Internet companies, bring disrepute upon them and the industry and ultimately cause users to become insecure or even to lose their confidence in the system.

 “But as we all know, the media is also responsible for conducting honest and thorough research before printing the big headlines – not just for publishing half-researched stories that continue to upset and unsettle consumers.”

“The media landscape has been thinned out so much in the last several years that serious journalists are now few and far between. I guess everyone gets a voice today, regardless of substance. And that has nothing to do with fairness. It’s just stupid. But that’s exactly what’s going on. So if someone represents a minority opinion – as long as it’s extreme enough or good enough for ratings – he’ll get his seat at the talk show table.”

When comparing Germany to other countries around the world (in particular USA), business leaders note the conspicuous trend in Germany – of all places – towards exaggerated public criticism of Internet companies for their business practices. This stirs up fear and insecurity on the part of users, which, in their view, is both unnecessary and avoidable. According to business leaders, security concerns in Germany result in totally excessive measures, especially when it comes to data security.

Germany’s data protection laws are already some of the world’s most rigorous, but this is apparently not enough, since policymakers insist on grappling with them on a daily basis.

From the point of view of business leaders, a company that is committed – and indeed obliged – to making a profit is bound to certain practices inherent to the business model. And this doesn’t necessarily make these practices objectionable. For example, providing free online services is not economically viable without some form of “payment” on the part of users in return for these services. The view is that companies are already under enough pressure from the competition and they should not have to face additional hurdles in a battle with regulators and policymakers.

Business leaders suggest that a lot of people in Germany are misguided. The virtual character of the Internet often “tempts” users to regard hidden processes or procedures with greater skepticism as compared to similar situations in the offline world. Business leaders see it as an important task to raise awareness on this – to make people understand how often they trust service providers in the „real“ offline world without fully understanding the situation or its implications.

 “I don’t think that monetizing data should be regarded as fundamentally wrong. The question is how the data is then used. I have the feeling that in Germany, one stops right there and says: oh, the data is being monetized – that’s really horrible. The media is of course happy to scandalize it. And that makes people insecure. You could even say the media upsets the users more than necessary about 95 percent of the time. […] I mean, no one is interested in the individual data. Take Mrs. Schmidt in Stuttgart. Who cares?! No one is looking at her! The data is simply organized according to segments so that Mrs. Schmidt can receive segment-specific advertising and information. I’ve often asked myself: what is so bad if, for example, Mrs. Schmidt, who never buys pork roast anyway, no longer gets any pork roast advertising in the future?”

“There are a lot of people who say: hey, I’m not stupid enough to pay with my credit card on the Internet. But then they go to Naples and hand over their credit card for half an hour in every restaurant they eat in. The staff could be in the back room making as many copies as they want! […] On the one hand they’re running around with their paranoia saying ‘I’ll never pay with a credit card on the dangerous Internet’. But, at the same time, if they feel they have it physically under control – like at the Pizzeria in Naples – then they think nothing can go wrong.”

Companies complain that policymakers are allowing the most inexperienced and naïve Internet users to set the standard and using this as the basis and justification for their restrictions and censorship. This, they say, is rooted in the tradition of the protective welfare state.

“It’s getting to the point where I can’t stand Germany’s do-gooder approach anymore […] I’m star- ting to get the feeling that I don’t actually belong to myself, but that the generous state has loaned me my body and my existence and is now making sure I don’t do anything stupid with it. More and more, I am seeing too many people with normative ideas about a proper existence who are trying to tell me how to live my life. […] I am very concerned that we really will become a paternalistic dictatorship.”

Overall, the business leaders surveyed see themselves up against a critical social climate, in which the configuration of the Internet is the subject of a heated debate.

Ensuring competitiveness by actively shaping public and political opinion

A central challenge for companies is to secure their market position and to fend off threats to their competitiveness. Especially on the Internet, companies see themselves up against an increasing number of competitors and new levels of cut-throat competition – all of which is made even more intense by the relentless speed of it all. The leaders of today, they point out, can easily be forgotten tomorrow (“nobody even mentions Yahoo anymore”). The companies therefore consider it all the more important and desirable to do business in a social and political environment where decisions and public dialog reflect positively on the meaning and importance of Germany as an Internet location. Often enough, however, policymakers are making decisions on things that elude their own grasp. As a result, they fail to sufficiently consider the economic feasibility factor when pursuing their “socially desirable” goals.

This is why business is so intent on assuming an active role in the Internet discourse and influencing the process of public and political opinion-making. Business leaders see the need to direct the regulatory process into the right channels – if it cannot be avoided altogether.

 “I think government can specify the framework to an extent, but the solutions ultimately need to come from the private sector.”

“The regulatory environment of the future will of course have a huge impact on business. Take the whole discussion surrounding ‘the right to be forgotten’, as an example. Nice ideas, but you have to question whether we are realistically capable of living up to the standards we set. […] This is why we take a very careful look at what we consider feasible, what we support and then also the instances where lawmakers maybe have lost their grip on what is realistically doable.”

“Before we become subject to government regulation (take the issue of cloud computing, for example) we would of course first try to create options for the providers and instill sufficient trust so that we do not actually need the government regulation at all.”

However, business leaders do see the need for regulation where it pertains to the security and reliability of their own business model, i.e. to user trust and confidence. Users should be able to expect a certain level of security with regard to personal data protection and a certain level of legal protection that secures their Internet-based transactions, so they can navigate the Internet “safely” and remain willing to do business.

“I do believe that regulations are necessary that define how reversible transactions should be. If a business transaction is completed on the Internet, for example, there needs to be the option of canceling the transaction just as there is with door-to-door sales transactions. I believe these regulations are necessary – already exist to an extent – but that they are also sufficient.”

“As I said, the regulation of data privacy, legal shelters with regard to identities and so on – I consider these things absolutely necessary.”

Regulation is considered particularly important when it comes to the protection and sale of the companies’ own products and services (e.g. protection from product piracy, copyright regulations, secure processing of online financial transactions).

 “I would say that sooner or later German material law will have to address and define the issue of private copying more clearly. For us, defining more clearly of course means putting greater limits on it. But I don’t see that as a disadvantage for consumers. I really think that on this issue – especially on this issue – the user is entitled to understand.”

“For us, piracy is of course a huge problem; for us and for everyone else. There are even platforms on the web that do nothing more than collect content on their platform, or to link, and then make money with their own service by selling access, data access speed (data rates) and running advertisements on their platforms so that they ultimately even earn money with our content.”

Security becomes most relevant for companies when a lack of trust threatens their own business success. This applies to their customer relations. Especially in the virtual world of the Internet, companies know the importance of taking seriously the fears and concerns of the customer and to be reachable and actually available to handle questions and problems. Long-term customer loyalty based on trust (understood as the sum of positive experiences with regard to security and reliability) is the foundation for doing business. Trust is often established by way of a slow and painstaking process. Inadequate internal (security) management and lack of transparency, along with negative reports in the media, can destroy this trust very quickly – and thereby threaten a company’s ability to conduct business. Business leaders inevitably view investments in Internet security in terms of costs vs. benefits. The bigger the company and the greater the fear of damage to the company’s image, the greater the company’s investment in security measures is likely to be. This makes it less about maximizing security for the user and more about minimizing reputational damage and the associated loss of business.

“When you read in the newspaper that [name of company] has been compromised, that has business relevance for us. And of course economics is what drives our decision-making and operations as well. Investments in information security are a logical step designed to avoid reputational damage for one, but also fines and other penalties.”

  1. See the DIVSI Milieu Study, http://46.30.3.106/publikationen/studien/divsi-milieu-study-on-trust-and-security-on-the-internet/ [↩]