First thoughts on the distribution of value added contributions under GAIA-X

This week at the Digital Summit in Dortmund, Germany, representatives of the German federal government, industry and science presented the GAIA-X project. GAIA-X is to become a digital ecosystem in which data can be made available, merged and shared between government, industry and science securely and trustfully.

In particular, the focus will be on minimizing dependence on non-European cloud providers. A first test of the technical concept is expected in the second quarter of 2020 and live operation is expected to start at the end of 2020.

The executive summary states: “The central collection and analysis of this data in the cloud characterizes a higher value-added stage of digitization (“As a Service” model), especially in the consumer sector”.

The Federal Government sees the area of application in data collaboration between government, industry and science, ranging from the optimization of administrative matters to the complete cure of cancer. These goals are ambitious, and thus also the desired exchange of data in sufficient quantity and quality to feed the algorithms.

Companies, government and science should be able to determine which data they provide and for how long. The extent to which this data sovereignty can be maintained remains to be seen.

Due to the heterogeneity of the data, determining the value added contribution of data is complex in practice.

The arm’s length principle applies both nationally and internationally to counteract the transfer of profits from companies to other countries. The arm’s length principle requires business relationships within the group to be conducted on the same or at least comparable terms and conditions as with third parties. Transfer prices enable the transfer of profits.

In practice, the Shapley Value is mainly used to determine the individual value added contributions of the companies and thus to determine appropriate transfer prices (also see the blog article from May).

In the future, new tax and social issues will arise with GAIA-X if not only affiliated companies within a group provide their data for further value creation across national borders, but also third parties.

Some questions are, for example:

– Does the synthetic data (e.g. by anonymization) from original data have the same value as the original data?

– Does the provision of data lead to a controllable service for the companies? What is it like when the state provides data?

– Are consumers remunerated for providing their data (e.g. on taxes, business or profit sharing)?

– Are more innovative data trust models required? Who is the economic owner of the data silos?

– Is there a need to further develop the Shapley Value or completely new allocation methods to allocate value contributions?

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