The fragmentation of every part | MIT Expertise Evaluate
The rise of technonationalism. Different regulatory systems. The spread of “walled gardens”. Polarization like nothing we’ve seen before. The convergence of several trends is poised to completely fragment our real and digital world. For businesses, this poses a variety of new risks, from cybersecurity threats to reputational risks, which in turn require new responses and approaches.
The Technonomic Cold War
A “technonomic cold war” is already underway – an ongoing, often invisible state of conflict at the interface between technology and geopolitics.
The competition for the dominance of the next generation of technology infrastructures such as electric vehicles, 5G networks and quantum computers is getting tougher. It is a high-stakes competition and the countries that set the rules for these technologies could take advantage of significant economic advantages, just as the United States pioneered the personal computing and Internet for several decades.
At the same time, populist and nationalist leaders were on the rise in much of the world. These leaders have protectionist and interventionist instincts and a willingness to defend themselves against established norms. This combination has resulted in unconventional tools being used to favor domestic businesses – not just tariffs and trade wars, but business bans and new forms of cyberattacks such as B. Disinformation with weapons.
All of this leads to the division of both the real world (e.g. trade, labor mobility and investment) and the digital world (e.g. technical platforms and standards). In this fragmented future, companies that were used to operating on a global stage will instead limit themselves to operating in the spheres of influence of their home countries. (For more information, see “Techonomic Cold War” in EY’s Megatrends 2020 report and “Technonationalism” issue of MIT Technology Review.)
Regulators aren’t the only ones fragmenting the digital world. Tech companies have largely done this themselves.
Deviating articles of association
Technology platforms are the foundational infrastructure today, increasingly inextricably linked to the economies and societies in which they exist. On these platforms, citizens increasingly receive news, hold political debates, network professionally and much more.
While tech companies may be trying to create seamless, integrated global platforms, they are actually delivering their offerings in very different societies. The US social contract is fundamentally different from that of China, Saudi Arabia or even the European Union (EU). As a result, governments and regulators in various markets have tried to redesign tech platforms along the lines of their articles of association. An early example was China, which developed its own platforms that fit its social contract better than offers developed in the US.
In the meantime, the EU has become increasingly active and visible in regulating technology. The most famous recent example, the General Data Protection Regulation (GDPR), is a forerunner of the things to come. GDPR deals with data protection and privacy, but there are much bigger regulatory issues, from the explainability of algorithms to the safety of autonomous vehicles (see EY’s Bridging AI Trust Gaps report for more information). As these technologies mature and become more prominent in people’s lives, expect governments in different regions to regulate them more actively. Over time, increasingly complex regulatory issues and different ideologies will create either separate platforms or platforms that supposedly have the same name but offer radically different user experiences in different regions.
Regulators aren’t the only ones fragmenting the digital world. Tech companies have largely done this themselves. Walled gardens – closed, self-contained technology platforms or ecosystems – endure because they’re good for the bottom line. They enable companies to get more value from customers and their data while delivering a more curated user experience. In recent months there has been increasing fragmentation of “over-the-top” media streaming services, with individual studios and networks developing their own subscriber platforms. Instead of streaming platforms that have hosted content from a variety of creators, platforms provide exclusive access to their own content, fragmenting the streaming media experience.
It’s no secret that political polarization has increased alarmingly and that social media platforms – while not solely responsible – have fueled the trend. Filter bubbles in social media platforms have allowed misinformation to spread, and have given platforms the difficult and unenviable task of monitoring the truth.
As worrying as it may be, everything we’ve seen so far may be nothing compared to what lies ahead. As social media platforms become more active to curb the flow of misinformation, their suppliers are looking for new houses that are policing-free. In the weeks since the recent U.S. presidential election, a growing number of Trump voters have begun to abandon popular social media platforms for alternatives like Parler and Telegram. Until the next presidential election comes up, it is not far-fetched to expect today’s social media filter bubbles to be replaced with entirely separate social media platforms aimed at conservatives and liberals.
At this point we will have moved from an era of polarization to an era of hyperpolarization. If you are concerned that social media platforms are doing too little to contain misinformation, imagine how much worse it will be with platforms that don’t even try.
Risks and Challenges
The technonomic cold war requires a new approach to cybersecurity. “Companies need to protect themselves not only from malware and phishing attacks, but also from disinformation with weapons,” says Kris Lovejoy, EY’s leading global cybersecurity consultancy. “We have seen disinformation used to attack elections, but there is no reason why it could not be used to target businesses. Most organizations today don’t have the safeguards they need to move on to the next frontier in cybersecurity. “
A second challenge is a lack of transparency. Commerce thrives on transparency, but instruments such as corporate bans are opaque and seemingly arbitrary. To the extent that these tools undermine transparency, they create uncertainty for companies.
The regional fragmentation of platforms through regulation and differing articles of association increases the complexity of compliance and the risk of non-compliance. Beyond mere compliance, companies are exposed to significant brand and reputational risk when consumers consider platforms to be incorrectly aligned with social values.
A hyperpolarized future will create some of the greatest challenges of all. The loss of the last weak bridges between our different echo chambers would threaten everything from social stability to the future of democracy to the existence of a common reality.
This content was created by EY. It was not written by the editorial staff of MIT Technology Review.