There is no better template for the state of the world than the technology industry. In the highly globalized world of the mid 2000’s, Google
Multipolar tech world
Technology is interesting in many other respects, but the one I find thrilling is the way it now crosses into every domain – politics, economics, markets and society. It arguably is more pervasive than the new technologies of prior periods of globalization – such as the steam engine and railways (though the technology sector will never match the 60% share of the market capitalization of the US market that railways enjoyed in 1900).
It is not surprising then that there is a broad feeling that tech is too big for its boots. Economically, e-commerce firms like Amazon
The technology industry, in the USA, India and China, has become the locus of wealth inequality – creating vast fortunes for tech owners. Moreover, tech giants vastly distort both entrepreneurship and innovation. During the testimony of the CEO’s of the large US tech firms to Congress it was suggested that Facebook had adopted a strategy of stifling competitive threats by buying them. The same might be true of other tech behemoths.
If so, the danger here is to stunt the growth of new tech eco systems, to distort innovation in that new companies are built for ‘takeover’ rather than to solve new industry problems, and to hoard the fruits of innovation within a few corporations.
The ‘what to do about tech’ should be clear to anti-trust lawyers and economists concerned with monopoly power. To this end, breaking up the large technology companies in the same fashion as the dismantling of Standard Oil in 1911 or even the Glass-Steagall act of 1933 is an option. Another approach would be to embargo tech giants buying smaller companies so as to give new tech ecosystems a chance to thrive (note how the US failed to develop a 5G ecosystem).
Recovery and Resilience
A more likely option is to leave the tech monoliths in place but tax them (and possibly their owners) and harvest the fruits of their superstructures. Ideally this revenue would be funnelled to education, digital literacy and cybersecurity. Even the EU sees this opportunity, and plans to fund part of its recent Recovery and Resilience plan with a digital tax – though implementing this will be difficult.
What to do about tech is less clear if you are a politician – technology has replaced television and radio as the way of reaching hearts and minds, the tech community is a source of donations, and in a multipolar world it is a strategic, security related asset. In that context one option is to deepen the ties between the state and the technology complex, as China is doing.
If anything, the signs are that the US will follow the Chinese model, notably so with suggestions that Microsoft
If the relationship between American tech monopolies and the state is to become even more symbiotic, it will still have rules. One for example is that in areas where the state has a monopoly, tech will not be allowed to encroach. The best illustration here is the role of the dollar and the failure of Facebook’s Libra payment system to take off. Another consideration is what vision the large technology companies have for the US – many of them may well prefer a more data intensive world, where technology is even more deeply embedded in governance…which again takes the US towards China’s model.
Where will this leave Europe? By default of not having managed to create its own tech giants (and I am skeptical that it will be able to do so soon) the EU can focus on raising the standards on data protection, digital identity and payment systems. It needs to also make real progress on capital markets union and on incentivizing tech entrepreneurs at a pan EU level so that companies like Stripe can thrive in Europe. If it doesn’t it may become a tech colony, and a paradise for non-tech industries, from tourism to wine to good food!.