The Future of Big Tech
Without our beloved tech giants, it’s hard to imagine what the 21st century would look like. The emergence of which have catalyzed an interdependent array of political and economic systems which have aided the process of globalization by providing goods and services which open up communication and productivity channels. However, while these tech giants have had a profound impact on the past, the more important question is what will the future hold for these tech giants. In my opinion, the answer to this question revolves around the political concept of sovereignty.
Sovereignty is often regarded as a state’s ability to exercise authority within its borders. In the recent age of global politics, it’s been widely recognized that states have been losing their sovereignty to a range of non-state actors; most prominently through multinational corporations (MNCs). When we narrow down even further to tech multinationals, we see this notion amplify. The erosion of sovereignty from these firms can be both advantageous to the host state as they can be disruptive. States have and will continue to see this trend occur through 3 major factors, the first of which can be attributed to a stark growth in R&d budgets.
Increased R&d budgets
As demand has surged throughout the 21st century for technological products, these firms have been forced to innovate and rise to the challenge of meeting consumer preferences. The result is a virtuous cycle where tech firms enjoy inelastic demand that leads to exponential scalability. Over the years, these firms have grown to eclipse not just the earnings of top corporations but even the GDP of countries. Take Apple, at the start of 2020 it was reported to have a Market Capitalization of 1.3 Trillion Dollars. That’s more than the GDP of countries such as Indonesia, Mexico, and Saudi Arabia. But these enormous valuations often translate over to enormous budgets.
Budgets that birth projects that can potentially erode the sovereignty of a state. To get an idea of this, let’s take a look at the aerospace industry. 50 years ago, the thought of a private firm launching a rocket into space was laughable. However, in today’s era, we see the contrasting situation. In May 2020, NASA relied on Elon Musk’s SpaceX to send US astronauts to the ISS. What unfolds is the most economically developed nation on the planet having their aerospace industry run by private corporations. However, private firms don’t always impede on state sovereignty for the better, at times the result can be quite polarizing.
Control Over Media
In recent years, there has been a stark proliferation of monetization across social media platforms. In 2016, we saw election meddling take place by various non-state actors, most prominently were the “Russian Trolls” who tried to amplify the partisan divide in the US. In addition to this, we saw the rise of political propaganda being advertised through platforms such as Facebook. Since these events, Facebook, Twitter, Google as well as other tech giants have allocated their budgets to monetizing content to prevent similar occurrences.
However, these tech giants have arguably been able to exercise their power and erode nation-state sovereignty as a justification for monetization. Today, we are witnessing who is often referred to as the most powerful man on the planet having his Tweets and messages censored by social media platforms such as Twitter. Signifying that tech MNCs will control the future of media and communication is regulation does not impede.
Data Sovereignty as a justification for political agendas
With growing privacy concerns, consumers are starting to take heed of the fact that tech companies might have more access to their personal information than they may want them to. However, local data stored within local firms is one concept, local data stored within foreign firms can be a direct erosion of data sovereignty. What this has led to from state governments is not a slap on the wrist but complete annexations from their economies. This was seen through the US and UK banning the Chinese Phone company Huawei or by Tiktok being banned in both India and the US. This makes us question whether these preliminary actions are being taken for the sole purpose of data sovereignty protection or as a justification for geopolitical agendas. With rising concerns of another cold war emerging between China and the US, will this conflict be fought through the economic channels of protectionism?
How will these actors react in the future?
Governments generally wish to maintain a certain level of sovereignty within their borders. However, they also have macroeconomics goals to fulfill, and generally speaking, these tech firms are valuable components of their economy. To prevent the foreign impediment of tech MNCs, these states will act in ways a lot more subtle than seen with China; through domestic protectionism. This is already being seen through Amazon, for the entirety of 2018 and 2019, they paid 0$ in US federal income tax. Was this controversial act a way for the US government to foster the growth of Amazon? Allowing these local tech giants to grow and take advantage of scaling will diminish the need for foreign firms to enter the market, simply because they will not be able to compete.
In conjunction with the growing of local tech firms, we will also see governments place tightened regulations on foreign tech firms. To maintain a sense of diplomacy, these regulations will work in justification for geopolitical actions and the protection of data sovereignty. Could we be living in a future where each state is home to a hegemonic tech giant?
Aware that governments will play a larger role in the tech industry, these states will have to act in accordance if they wish to stay potent. Tech MNCs in foreign states will have to find ways to avoid being regulated, this will be seen through breaking apart their firms to avoid market monopolisation. The implications may even reach local corporations, they may want to stop depending on singular tech firms given the uncertain nature of the industry, this will lead to increased diversification. With increased government regulation of dominant tech firms and less dependency on them from other corporations, we may see a future opening for smaller scale firms to make a presence in the tech industry.
There is no doubt that the demand for the tech industry will stay prevalent. We may not need to ask ourselves what these firms will earn but instead where they will earn it. From my opinion, we will be standing in a world of state specific tech hegemonies who supply a diversificated range of services. This will be accompanied by the emergence of smaller scale tech firms who are relied upon by corporations to mitigate the uncertainty of geopolitics.