When tech giants rival nation states

You can read a German version of this article here.

In the most recent report by the World Economic Forum (WEF) about likelihood and impact of global risks, most of the major challenges that humanity is and will be facing can be found. However, one is missing: Increasing tensions and open conflict between leading, supranational technology companies and nation states.

Awareness of that issue might not be very widespread yet, but the crack in the previously rather predictable and clearly framed relations between nation states and the business world is hard to miss. It’s becoming apparent that nation states and large corporations increasingly have trouble aligning their interests. At the same time, the possibilities to circumvent national laws, democratic processes and bureaucratic rules are becoming more numerous, thanks to globalization, the dynamics and nature of the Internet and the digitization of products and services. This applies particularly to internationally active technology firms.

Examples for these possibilities are, among others, massively successful tax avoidance schemes, the manipulation of public opinion through search engines and social networks, the mobilization of networks of users/customers as advocates for/against certain policies, or the moderation of user content on large platforms predominantly based on the organization’s cultural values and norms (such as Facebook’s or Apple’s policies against nudity).

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The incentives to make use of these and other capabilities increase each time a government is making request that a company perceives as inhibiting to its own strategic goals. The lists of cases fitting to that characteristic is getting longer all the time. The fight between Apple and the FBI about encryption deserves to be mentioned here of course, as well as Microsoft’s lawsuit against the U.S. government over data requests. WhatsApp and its owner Facebook are on bad terms with the Brazilian government. Uber is embroiled in more legal battles with government agencies than one can count. Google faces heavy antitrust investigations. Netflix has to deal with national censorship agencies.

Disagreements between state bodies and companies are nothing new in the modern economic history. What’s new is the concentration of power, capital and information at a few large corporations which leverage the potential of the Internet to grow beyond anything seen before. In a recent article, Foreign Policy published a composition of 25 companies which are considered more powerful than various countries. Many of them are comparatively young IT and Internet firms. These organizations will appear more aggressive in order to protect their interests and extend their influence, the more power they accumulate, the more global they act and the more capital is at stake. It’s fitting that CEOs of these giants nowadays cast themselves as statesmen.

The big question is where this development will lead. Is it possible that one day one of these companies might overturn a government? Could separatist movements arise in which a firm involved in a large-scale conflict with its “home country” plays a leading role? Are the billionaires from the technology sector pushing so hard into space because of the hope to one day being able to capture territory on another planet before a nation state can claim it?

These questions might first sound far-fetched. But if you continue the curve that you can draw based on the trends, market dynamics and tensions of the past 20 years, then what we are going to see in the future will not be an amicable agreement between giant enterprises and national governments. It might feel self-evident to assume that companies always subordinate themselves to the rules, laws and frameworks provided by nation states. But this is not a natural law. Things can change, when the interests are diverging too much and when most of a company’s activity has moved into the “cloud”, physically out of a reach from a certain government. Thus, serious conflicts between today’s ever-growing technology juggernauts and countries and their governments have to be expected. Depending on the outcome of the U.S. presidential election, we might see more of that already this year.

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