In meetings in various international capitals this
summer—from a gathering of defense ministers in Singapore to a meeting of
economic policy heavyweights and CEOs in Paris—discussions frequently revolved
around the impact of technology. Of course, technological developments have
long had implications for the global economy and international security,
whether the advent of gunpowder or the railways, or the mastery of radio or
nuclear fission. But with the “return of history” we may also be witnessing a
return—after an anomalous period of positive-sum progress—of the geopolitics of
technology. The scale and speed of this technological change makes it difficult
to completely internalize the opportunities and challenges that lie ahead for
the world’s major powers.
Essentially, different approaches to technological
development, and specifically the use of data, threaten to divide the world and
shape the contours of geopolitical competition, contributing further to the
securitization of technological competition. Instead of a “clash of
civilizations,” we could be in for a “clash of automations.”
The iPhone Era
The past two to three decades may well have been an
aberration. They were marked by an acceleration of globalization: the faster,
cheaper, and more efficient flow of goods, people, capital, information, and
energy. This period witnessed rapid advances in broadband and satellite
telecommunications, accelerated microprocessor speeds, more efficient energy
use, the evolution of global financial markets, and the dispersal of
manufacturing supply chains. The apotheosis of this world was the iPhone.
But there was an inherent compromise at the heart of the
iPhone era of globalization. The United States and other advanced economies
remained world leaders in innovation, deriving benefits from the resulting
intellectual property and their marketing power. Meanwhile, actual
manufacturing of these products shifted to lower income countries, notably
China, and also parts of East and Southeast Asia. Lower cost services—software
development, research, and back-end work—were outsourced to places like India.
The global economy grew and everyone benefited, even if some—such as China, the
United States, and India—benefited more than others.
The Next Wave of Technologies
But the new era of technologies, many of which are
already emerging, may not simply build upon these developments—rather, in
counterintuitive ways they may in fact undermine the globalizing effects of
earlier breakthroughs. To date, many new developments are simply buzzwords to
most consumers, so it is important to break down what the new set of
technological developments will encompass. They can be grouped into six broad
areas. The combinations of these technologies may well form the basis of what
some have described as the Fourth Industrial Revolution.
- Computing and storage, both of which will increasingly migrate to remote servers (the “cloud”), bringing down the cost and increase the scale of data storage. This could have potential implications for security and communications, especially features such as distributed record-keeping (blockchain) and new developments in data storage.
- Telecommunications, specifically the developments of a fifth generation (5G) of infrastructure, which may operate up to 20 times faster than existing systems, with low latency (delay in data communication). This will enable a vast array of applications, including driverless cars and machine-to-machine communications.
- Artificial intelligence, specifically machine learning, which involves fast and accurate pattern recognition by feeding vast troves of data to computers in order to “teach” them. This can then be applied to language, visual imagery, and other domains to resemble a form of intelligence.
- Automation, including the online integration of physical objects: cyber physical systems (CPS) or the “internet of things” (IoT). Think health monitors, remotely-managed factory robots, or internet-enabled security systems.
- Manufacturing, including in materials, optics, sensors, and additive manufacturing (“3D printing”).
- Energy, particularly renewable and mobile energy sources and smarter management systems.
When combined, these changes are already beginning to
affect every aspect of globalization. The emerging sectors in which this will
be felt directly by consumers include social media for information, financial
technologies (“fintech” e.g. digital payments) for capital flows, e-commerce
(both wholesale and retail) for goods trade, e-services (including peer-to-peer
businesses, automation, and digital identification) affecting mobility and
social services, and changes to the sourcing and management of energy. Most
“unicorns”—start-ups valued at over $1 billion—would fall in one or more of
these domains. Consider QQ, Stripe, Rakuten, Oyo, or Tesla. Today’s tech giants
are already investing heavily in future technologies from which start-ups are
benefiting: Google in machine learning, Samsung in 5G, Amazon and Alibaba in
automation, and so forth.
Three Approaches to Data
Underlying most—although not all—of these changes will be
a simple philosophical choice: Who will own, control, and manage users’ data?
Access to data will ultimately determine the quality of products and market
share. Decisions on whether private companies, the state, or users themselves
have ownership over individuals’ data will have tremendous implications for the
future of the global economy and for geopolitics.
Broadly, three different approaches to this issue have
emerged. In the United States, major companies like Facebook, Netflix, Google,
and Amazon retain access to vast amounts of consumers’ data which they have
successfully monetized. This reflects a culture in which private sector-led
innovation predominates, with a focus on research and development, design, and
marketing. This model has allowed the U.S. tech sector to retain its
international competitiveness (the five most valuable publicly traded companies
today are U.S.-based tech firms), although often at the expense of consumer
rights and privacy.
A second model is embodied by the European Union, in
which citizen and consumer rights are given priority, even at the cost of
companies’ competitiveness. The European Union’s General Data Protection Regulation
(GDPR), which gives individuals control of their personal data, best captures
this ethos.
The biggest change, however, is the emergence of a third
model in China, defined by a form of state-backed technological competition in
which the government has greater access to citizens’ data. When combined with a
protected market and significant financial resources, Chinese firms such as
Huawei, Tencent, Alibaba, ZTE, and Xiaomi are now able to compete with U.S. and
European tech giants. In certain areas, digital payments and 5G, Chinese firms
have surged ahead of competitors from other countries.
Although all three models reflect a tendency to promote
national champions—based on the comparative advantages of U.S., European, and
Chinese societies—the dynamics that underpinned the iPhone phase of
globalization is fraying. The likely outcome is a more fractured and
competitive technological landscape. This could well mark the emergence of what
one European economist recently called the “Huawei phase” of globalization: a
phase that could in fact witness globalization’s retreat.
The Re-securitization of Technology
The geopolitics of these emerging technological
developments are already being felt. China continues to project the benefits of
its model. Beijing is no longer content to restrict it to its own territory:
For the continuing success of a firm like Huawei, it will have to be able to
compete in the global marketplace.
This is resulting in a backlash. Europe is opting to
double down on its approach, and regulate tech companies into submission. By
contrast, the United States has adopted a more confrontational attitude,
including cracking down on exports of technology in 14 critical areas. 5G
telecommunications—an area in which U.S. firms are non-competitive—has become a
priority political issue for the White House, which has explicitly targeted
Chinese companies such as Huawei. This is motivated less by concerns about
spying, but rather by the belief that 5G will soon underwrite a wide array of
critical infrastructure—port management, transportation fleets, and electrical
grids. Consequently, giving a foreign state-backed company access to the
backbone of one’s economy is a non-starter. Other countries, such as Japan and
Australia, have reached similar conclusions. As these decisions are already
making clear, the re-securitization of technology is underway.