BATO NEWSLETTER NOVEMBER 2018

PAGE 1 of 3VOLUME 9/ISSUE 11

Two years ago, Google announced its plans to open its innovation campus on the former power plant Umspannwerk Kreuzberg along the river bank Paul-Linke-Ufer in the hip Berlin-Kreuzberg.

The nearly 3,000 m2 site was set to be redeveloped and turned into a campus with mentoring programmes, workshops, networking and other offers for local startups.

But Google´s announcement triggered local protests due to serious concerns about rent hikes and gentrification that would certainly result from the campus establishment. In fact, local shop owners interviewed by BATO Group said that local asking rents have already doubled after the campus announcement.

The anti-Google movement was led by a small but apparently strong group, supported by local residents. The movement involved anti-Google Café sessions, online and offline campaigning, demonstrations and paint ball attacks and culminated in a few-day occupation of the site in September.

The activist group stated to the media that they opposed Google´s tax and data collection practices and, in general, said that capitalist companies should be expropriated. The activists announced further protests and attacks against companies in the neighbourhood.

Google lately called off its plans for the startup campus and announced that it will turn the site into a"house for social commitment" instead. Two charitable organisations, the donations platform Betterplace and the youth charity Karuna will move into the former power plant, while Google will be investing €14 million for development of the property and rent for a five-year period.

Google´s spokesperson said that the company did not give up its plans because of protests. The company would not let anyone dictate its actions, he said. Rather, Google had concluded that the concept of a social house would be the best solution for the Umspannwerk in Kreuzberg after continued talks with different players in the neighbourhood, including Karuna and Betterplace as well as other local social organisations. Karuna also said that it already had a history of mutual charitable projects with Google. It was also said that activists were unwilling to attend the negotiations.

Google had a bumpy start since it first announced the campus opening, as the Kreuzberg government (Bündnis 90/Die Grünen) refused to give the company a building permit for the site on the grounds of foreseen work spaces in the basement area (without day light)and a 24/7-operating cafe.

The tech giant does not plan to open a campus anywhere else in Berlin, although it also did not completely cut its ties with the Umspannwerk site.

Sour

ce: B

ATO

Gro

up

GOOGLE CAMPUS & BERLIN? THE HEATED DEBATES ABOUT GOOGLE´S LATEST ANNOUNCEMENT

Google´s latest announcement not to open the originally planned campus in the former substation site Umspannwerk Kreuzberg amid vigorous protests of local activists has triggered heated debates. This would have been Google´s seventh campus world-wide and the fourth in Europe, after London, Madrid, Warsaw, Tel Aviv, Seoul, Sao Paolo. But what seems like as unique chance for the local economy and the city´s startup ecosystem, would also present a threat to the social and business environment of Kreuzberg´s unique atmosphere. In today´s newsletter we are reviewing the latest events and the dividing debates about what they mean for Berlin´s future.

The former power plant Umspannwerk in Kreuzberg

BATO NEWSLETTER NOVEMBER 2018

PAGE 2 of 3VOLUME 9/ISSUE 11

Kreuzberg´s identity

Kreuzberg, formerly a working-class and student´s district, has transformed into a trendy neighbouthood, popular for nightclubs, street food, art galleries and its diverse cultures, alternative lifestyles and movements, sometimes with a rough character.

Kreuzberg has also become a sought-after location for young startups and co-working space providers. Next to numerous small enterprises and coworking offices, large companies such as Mozilla and WeWork are also present here. More companies plan to open branches in the neighbourhood, such as the large coworking provider Factory.

This significantly increases rents and, unfortunately, forces out local businesses, and, against this background, powerful activist groups in Kreuzberg are supported by local citizens and policy makers when it comes to protecting the local social and business environment. The question arises whether larger enterprises stand a chance to locate here.

Local entrepreneurs who attended the talks led by Google said in an interview with BATO Group that they weren´t convinced by Google´s offers. Attending workshops that would teach them to scale their businesses was not in their interest, as the local business structure is thriving on a different mentality (people-to-people interactions instead of online businesses). They were already regretful to see some local businesses such as barber shops and other being replaced by restaurants and cafés as part of the already ongoing gentrification that sooner or later will prevail.

Google is not the first company to withdraw from its original plans of settling in Kreuzberg. In spring this year, the online retailer Zalando withdrew from its plans to acquire a 34,000 m2 office complex in the redevelopment site Cuvry Campus, a mixed-use office and retail development project. According to Zalando, the plan was not cancelled due to worries about potential protests, but because an agreed construction mile stone was not delivered on time.

Either way, activists remain firm about continuing preventing further establishments (attacking Google &co.), their next targets being "The Shelf" development project for retail, small businesses, art & culture in Prinzenstraße (whereby rents here will be subsidised at 50%), the Factory Berlin at Görlitzer Park the luxury hotel Orania at Oranienplatz which opened about a year ago.

In June last year, a McDonald´s branch was hit by a gas bottle, the attack was presumably acted out by left activists. The development of the fast food branch in Kreuzberg was met by protests already ten years ago, when it was first announced.

Kreuzberg is quite protective when it comes to radical changes brought by new business models.

Concluding remarks

As in all sought-after neighbourhoods in prospering cities, Berlin is facing the dilemma of protecting its social milieus, on the one hand, and facilitating economic development and remaining attractive for businesses and investors, on the other.

The development in regards to the Google campus triggered vigorous political debates. What is viewed as success, or welcomed as a good decision by one camp, is a "disaster", for another.

The Berlin Red-Red-Green coalition welcomed Google´s decision. The senator for economy, Ramona Pop (Bündnis 90/Die Grünen) said the new plans for the "house of social commitment" were interesting and would show the significance of socially and ecologically oriented organisations in Berlin, which contribute about 6% to the local economy, she said. (In comparison, the digital sector lies above 8%.).

The opposition, on the other hand, criticised this attitude. The Free Democrats (FDP) called it a disaster pointing to the negative message that now would be sent to all companies and investors interested in settling in the capital, while activist groups would be encouraged to continue preventing any changes. The Cristian Democrats (CDU) called it a failure of the senate, with the consequence of a serious setback for the city´s business environment.

Campus proponents say it could have been a huge leap forward for Berlin as startup hub, its economy and employment situation. The campus itself was only set to have 6-10 employees, but a company like Google would have certainly attracted numerous other companies. After all, the numerous startups in Berlin were key job drivers in a city with previously extremely high unemployment rates, which were at their peak of 19% in 2005.

Critics, on the other hand, stress the negative effects of the campus for Kreuzberg´s neighbourhood – displacement of established local businesses including their employees, and hence, local cultures that shape the identity of Berlin´s characteristic districts.

A no-win situation?

On a very promising note, Berlin could also score a success by winning the industrial giant Siemens for the development of a large innovation campus (Siemensstadt 2.0), on a historical (70 ha) Siemens site in Spandau.

BATO NEWSLETTER NOVEMBER 2018

PAGE 3 of 3VOLUME 9/ISSUE 11

Siemens and the ruling Berlin senate were said to have tensed relationships over the negotiations. Siemens critisized the authorities for the lack of supportive attitude and the company was also considering other fast growing cities in Asia and the U. S. for a campus (it did not reveal the competitors).

Luckily, an agreement could be reached and the largest single investment in the history of Siemens, in the amount of € 600 million, goes to the German capital.

The Berlin government has commited to support the project with building permits and by developing the necessary transport infrastructure.

Siemensstadt 2.0 is set to become a high tech city quarter dedicated to innovative work solutions of the future (such as electromobility, internet of the things, industry 4.0). It will also provide social housing on an area of 60,000 square metres as part of its tradition to integrate work, life and research, according to the company.

The campus development will only be completed by 2030, but Siemens is planning to start with a first milestone developing a smaller scale campus with a € 60 million of investment.

Please note that the contents of this newsletter have been researched and written according to the best of our knowledge; however they are in no way to be accepted as a legal advice or suggestion. Therefore we exclude any liability.

Sources & References:

• The Guardian. 'Google go home': the Berlin neighbourhood fighting off a tech giant. link >>• Thomas Daily. Berlin: Google verzichtet auf Campus-Projekt. 25.10.2018• Focus Online. Grüne und Aktivisten bejubeln Google-Absage an Kreuzberg - die Folgen könnten fatal

sein link >>• Google Campus & Co verhindern. Pressemitteilung zur Absage der „Google Campus“-Pläne in Berlin-

Kreuzberg link >>• t3n digital pioneers. Warum Kreuzberg die erste No-Go-Area für Tech-Unternehmen ist link >> • Berliner Zeitung. Kreuzberg Google eröffnet doch keinen Campus im Umspannwerk link >> • Der Tagesspiegel. Google-Campus in Kreuzberg Kritik an Google-Absage: "Fatales Zeichen". link >> • The Washington Times: Tech prosperity, gentrification threaten Berlin´s funky mystique link >>• Der Tagesspiegel. McDonald's-Filiale in Berlin-Kreuzberg Sicherheitskreise: Gasflasche sollte

explodieren. link >>• Welt. Warum Siemens trotz Google-Absage auf Berlin setzt. link >>• Welt. Siemens errichtet in Berlin 600-Millionen-Campus link >>