Data is increasingly perceived as the black gold of the twenty-first century and, despite its fundamental differences with oil, the ways in which it is governed are still not well understood.
Data, information, and big data all overlap as do the issues involved in governing them. Those issues range from the different countries data may be stored in, to how data is governed, and how fake news are handled. Such issues are complex as they involve governments, citizens, and companies alike, many of which operate in the private sector. Given the importance of how data is collected, stored, protected, used, and transferred over national borders, data is becoming an economic commodity, an arena for geopolitical competition, and the subject of new regulations. As a matter of fact, geopolitics is shaping technology whilst technology redefines geopolitics, as emerging technologies will change the productivity of both countries and companies.[1]
In this new, challenging environment, companies failing to establish appropriate strategies face the threat of losing business opportunities as well as emerging legal and financial risks. The potential for brand damage and reputational risk are also very high. In fact, companies’ data usage and protection stands at a critical balance between privacy and innovation.
Data governance can be seen under numerous points of view: legislating privacy and data use, regulating content and digital trade, addressing intellectual property rights (IPR), assuring cybersecurity, and practicing cyber diplomacy.
On the legal front, one of the challenges of regulation is that technology moves extremely fast, while government processes are slow, especially if the action sought requires an agreement between many nations. As a result, being late at issuing a regulation makes it obsolete, or worse, counterproductive. The European Union’s General Data Protection Regulation (GDPR), in force since May 2018, stipulates how data controllers and processors must collect and process data from EU citizens, regardless of where they're located. Despite differences at international level, the GDPR is being used as a template by other countries[2].
Moreover, there is no globally agreed upon definition for digital trade and, thus, no set of international laws to govern it. Key issues are treated differently in different trade agreements. For instance, most agreements cover physical goods and intellectual property but make no provision for digital goods.
This has implications on trade and taxes, too, as data localization — which explicitly aims to limit flows across borders by requiring companies to store and process data within national borders — could be seen as a non-tariff barrier, reducing efficiency by increasing costs and decreasing scale, spilling its effects over onto the entire global supply chain[3].
The practice of limiting data flows, or controlling them, is increasing. In fact, flows are increasingly blocked by governments, which seek to protect their country’s people, sovereignty, and economy. Digital protectionism could turn into “AI nationalism” as countries go beyond simply defending their data assets and try to build a data economy of their own.
In fact, starting with the 2013 intelligence leaks by Edward Snowden, which revealed widespread snooping by America’s spy agencies, governments have begun to increasingly understand the importance of data and, by extension, the data economy[4].
Another issue related to data and the economy around it is cybercrime, which is predicted to cost the global economy up to $6 trillion by 2021. Cyber intrusions threaten not only business operations and supply chains but also financial and communications infrastructure, national security, privacy, trade, and commerce. The costs of cyber espionage and cyberwarfare are hard to estimate, but these practices are widespread[5].
For instance, when it comes to Artificial Intelligence (AI), according to Julie Brill, Chief Privacy Officer at Microsoft, countries and companies respecting privacy in the context of AI will be the ones that will succeed and become the most competitive.[6] In the current information age, access to data tends to be a virtuous cycle: more data lets companies build better applications and technologies, which accelerates their profitability and, in turn, gather and use further data. Transposing such view to geopolitics, Indian Prime Minister Narendra Modi believes that “whoever acquires and controls” data will attain “hegemony”.[7] As a matter of fact, as world powers compete over technologies like AI, data is becoming key to gain an edge. Without data, companies and countries would not be able to fuel their AI systems and, since AI can advance to new levels through data, public policy around this topic is becoming a new geopolitical flashpoint[8].
The age we are living in presents geopolitical and ethical issues with complexity and speed that are beyond the reach of the existing global architecture. Geopolitics itself is changing the rules of the game for business, as what has really changed is the speed of change around critical risks, providing ever growing confusion for all actors, ranging from governments to businesses.
For the latter, the dynamics around reputation management and long-term resilience are particularly being transformed, meaning that businesses have to invest more on defense strategies than growth ones.[9] As we are addressing twenty-first century problems with a twenty-century mindset, approach and toolkit,[10]it is imperative for companies to rely on actors who are focused on dealing with global changes. Companies need to understand what is going to happen in the near future and be able to see around the corner. Only such insights will give them the confidence to make smart decisions quickly, as the companies that swiftly move and take action are the ones that benefit most from change.[11]
NOTES
[1] Geopolitical Face-Offs. Polarization is changing the politics of business, KPMG and Eurasia Group, pag. 10 (March 28, 2021)
[2] Treverton Gregory F., Data: Governance and Geopolitics (March 28, 2021)
[3] Treverton Gregory F., Data: Governance and Geopolitics (March 28, 2021)
[4] Governments are erecting borders for data (March 28, 2021)
[5] Treverton Gregory F., Data: Governance and Geopolitics (March 28, 2021)
[6] Foreign Policy Virtual Dialogue: The New Geopolitics of Data (March 27, 2021)
[7] Rosenbach Eric, Mansted Katherine, The Geopolitics of Information, Harvard Kennedy School, pag. 8 (March 27, 2021)
[8] Prakash Abishur, The Geopolitics of Data, (March 28, 2021)
[9] Is your business wired for geopolitical change? (March 28, 2021)
[10] Treverton Gregory F., Data: Governance and Geopolitics (March 28, 2021)
[11] Is your business wired for geopolitical change? (March 28, 2021)
Related Contents:
