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LAUSANNE: Although ByteDance is getting closer to its TikTok deal with Oracle and Walmart, the global tech industry is getting more confusing than ever.
The forced sale of TikTok and the US threat to shut down WeChat last week represent an unprecedented attack on global connectivity, which has delivered wonders to the human race in recent decades.
But the seemingly unstoppable growth of big technology is in fact in danger of being curtailed by interventionist politicians in many parts of the world.
THE TIKTOK SAGA
This has been illustrated throughout the TikTok saga. US President Donald Trump had threatened to ban TikTok in the US, citing national security concerns, unless its US operations were majority owned by a US company.
But Beijing banned the sale of TikTok to US companies, even though the ban ran the risk of ending the application of short videos in the United States.
So, Oracle struck a deal with TikTok to become their “trusted technology provider.”
This agreement is essentially a joint venture, allowing Oracle to review TikTok’s source code and software to ensure that there are no back doors allowing the Chinese government to access the data of US citizens, which is stored locally in the US And they are backed by Singapore.
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The outcome of the agreement is uncertain and is being reviewed by the US administration. Beijing also has the right to veto.
The TikTok logo is displayed on the smartphone while standing on the US flag in this illustrated photo taken on November 8, 2019 (Photo: REUTERS / Dado Ruvic).
The TikTok crisis is a warning that the past decades of rapid global tech growth may be over, for everyone’s determinant.
The rise of the Internet has been the foundation of all recent technological advances, allowing the exchange of ideas and the opening of business opportunities around the world.
The diffusion of knowledge and ideas, for the first time in the history of humanity, is emancipated from libraries and archives.
Tech companies can invest precisely because people are connected. Within corporate labs, researchers from the US, Japan, China, and India share the same source code on open platforms. Exponential technologies don’t come without exponential collaboration.
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The TikTok mess underscores how tech companies now need to spend more energy not just building the best product, but navigating political minefields.
Here’s what TikTok has had to do to avoid becoming a victim of the new Cold War between Washington and Beijing, including increasing investment in data storage outside of China in a failed attempt to allay national security concerns. from the United States.
THE ECONOMY OF IT
However, that’s not all that poses a threat to the growth of technology. With digital walls rising in many places, the global Internet is rapidly fragmenting.
However, the economics of the technology sector does not compute for the balkanization of broadband networks. With limited scale, investments in content production will be reduced, services that were free will become expensive to provide and consume, and access to the world will be reduced to limited local spaces.
READ: Comment: Will the TikTok saga in the US lead to the breakdown of the internet industry?
READ: Comment: India’s latest digital tax complicates its relations with the US.
In a geographically fragmented digital world, a market of billions of users will only be possible where there are billions of people: in China and India.
Google is among the global tech giants vying for a share of India’s huge market AFP / MANJUNATH KIRAN
Over the past few decades, per capita income has been high enough in many economies for people to buy expensive technology: phones for $ 1,000 or more and a wide range of accessories and services.
However, Big Tech can no longer take it for granted. Rising unemployment and inequality in the pandemic recession depletes the purchasing power of large and increasingly old middle-class segments in the West and China.
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Advertising revenue has also declined as businesses struggle to stay afloat due to disruption caused by the pandemic.
The increasing use of technological solutions and artificial intelligence (AI) will further increase the pressure on the job market. If workers are replaced, their income will fall. The technological utopia without access, scale and income seems like a dystopian suburb.
BLACK LIST IS THE WRONG APPROACH
Blacklisting companies, as the United States has threatened to do with TikTok and WeChat, could become a debilitating scourge spreading across the globe. A year ago, the United States government was drawing up its commercial blacklists.
Most notable is Huawei’s blocking access to semiconductor chips. However, such a ban has not only strengthened China’s determination to become technologically independent, but US companies, such as telecommunications products maker Qualcomm, may lose about $ 11 billion in sales.
Watching from corporate boardrooms, creating blacklists is a loss for everyone.
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Divided between its American ally and a rising China, Europe will soon find itself embroiled in this cold war. Europe and the UK are still deciding what to do with Huawei, but another flood of requests to terminate business with other companies caught in trade disputes seems likely.
Huawei, the Chinese tech giant that is a major player in smartphones and 5G wireless networks, is among the companies targeted by President Donald Trump, citing national security AFP / DANIEL LEAL-OLIVAS
Ultimately, this will increase red tape everywhere, further slowing Big Tech’s global ambitions and putting a straitjacket on innovation.
Our dream of a technological utopia runs the risk of being thwarted by a new era of political intervention.
Howard Yu is a LEGO Professor of Management and Innovation and director of IMD’s flagship program, the Advanced Management Program. Patrick Reinmoeller is Professor of Strategy and Innovation at IMD Business School in Switzerland and Singapore.
This commentary is part of a CNA-IMD Business School bi-weekly series on leadership and business topics.
