Our Tech Policy Trends report, published at the beginning of 2021, explored contemporary trends in technology policy through a series of articles. As our team is busy surveying the technology sector environment for the Tech Policy Trends 2022 edition, we look back on a turbulent 2021, review the accuracy of our predictions and examine what has happened since.
The acceleration of digitalisation we have witnessed during the pandemic suggests that the digital economy will continue to play a key role in post-COVID-19 economic recovery. As a result, governments, international organisations, and industry stakeholders worked hard towards the formulation of digital policies that promote a responsible digital transformation. Yet, the pandemic has accelerated certain trends in the market, and exposed weakness in those unable to keep up. Several of the trends we highlighted last year are in this list.
Covid-19 and Tech Policy: Driving Digital Transformation (4/5)
2021 was a priority year for digital transformation for administrations around the world. Policymakers reaffirmed their push towards the digitalisation not only of business but also the public sector and put their money where their mouth is with considerable funds for digital such as the EU Recovery and Resilience Facility. Meanwhile, tech companies were ready to jump at the opportunities and offer their solutions. As vaccine roll-out brought down Covid-19 cases in some parts of the world, tech companies and policymakers returned to a business-as-usual relationship sooner than predicted in our trends. However, as predicted, digital legislation continues to be strongly underpinned by the pandemic, with, for example, initiatives on disinformation being spun out more swiftly and given more teeth.
Finally, the future of work has truly become the present. With many organisations embracing a hybrid working model for the foreseeable future, and with many workers needing to be upskilled or reskilled in the wake of furlough and the Great Resignation, tech for the workplace is now a central issue for all rather than a nice-to-have thought leadership piece for future consideration.
The Super Year for Sustainability and Climate Policy (3.5/5)
In our Tech Policy Trends for 2021 report, we predicted a ‘super year for sustainability and climate policy’. Indeed, while climate issues were headline-making, momentum on both climate ambition, such as setting new climate targets, and climate action (engaging governments in the policy process) was slow and haphazard. The momentum on updating 2030 targets for climate action by States has been largely stalled since May, with no major emitters putting forward stronger climate targets leaving the 2030 emissions gap barely changed. A lack of global momentum was somewhat countered by the EU’s adoption of a package of proposals to make the EU’s climate, energy, land use, transport, and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030. In the tech sector, 40% of the sector by revenue had joined the UN’s global Race to Zero campaign (requiring the adoption of science-based targets and clear pathways to net-zero). Confusingly, this did result in an expected uptick in environmental policy engagement with governments – with overall Tech company engagement on climate policy down in 2021. Green finance and the convergence of ESG reporting standards featured more prominently than we had anticipated and will be a big driver of sustainability policy engagement going forward. Overall, most companies remained wed to ‘business as usual’ trajectories in 2021, while an international hiring spree for sustainability professionals over the year indicates that companies are, however, gearing up for a change of direction in 2022. This means that with only seven years left to halve CO2 emissions governments and the business sector have their work cut out for them.
Social Justice Commitments Will Be Tested for Sincerity (2/5)
We predicted that 2021 would be the year that tech companies were really tested in their commitment to diversity and social justice. We were certainly right that Congress has been gridlocked on other issues – but that is always a safe bet. In the absence of government action on social justice, we have indeed seen continued pressure, but hardly a full-court press to get them to live up to their ambitious diversity commitments.
Companies like Amazon and Google have indeed made progress in diversifying their new hires and overall workforce. But they and others have still been hobbled by slow progress and occasional negative press. This trend may increase as they have even more time to meet commitments and inch close to self-imposed deadlines in future years.
In response, we have seen continued pressure from employee groups and halting progress towards unionisation, but not a step change. One factor holding back more progress and tempering activism may be increased attrition, especially among existing employees of colour. The Great Resignation may mean the most dissatisfied employees simply leave to seek greener pastures or more fulfilling occupations.
Finally, as more jurisdictions restrict police use of facial recognition, we have not yet seen the collapse of US big tech resolve to stay away from the facial recognition business. Our pessimism regarding Amazon in particular was perhaps unwarranted. Originally adopted for one year to prod Congress to take regulatory action, in May the company extended its moratorium on police use of facial recognition technology indefinitely.
US Embraces Multilateralism as China Doubles Down on Tech Ambitions Regime (4.5/5)
Under the Biden Administration, “America is back”. The US has continued its hard stance against China, though in a more pluralistic manner than the previous administration. Aside from re-establishing US involvement at UN and related bodies, the US has also increased its presence in particular regions such as the Indo-Pacific. The US has announced a new defence alliance in the Indo-Pacific region with Australia and the UK dubbed “AUKUS”, and has also noticeably stepped up efforts to engage the Southeast Asia region in cybersecurity and vaccine diplomacy. Southeast Asia has become a key region amidst US-China tensions.
Competition has intensified in the tech sector between the US and China. China is crystallising its tech sector regulations to ensure that it grows sustainably, primarily by establishing laws to protect data and clamping down on monopolistic practices. Interestingly, these regulatory actions are mainly targeted at China’s own tech firms, which has led to inquiries and large fines on several big Chinese companies. Aside from regulations, China is also looking to make its tech supply chains less reliant on foreign technologies and more self-sufficient through its dual-circulation strategy. One such strategic technology that China seeks to develop locally is its semiconductor manufacturing capabilities, where China has poured in large amounts of investment and funding.
Frictionless Data: Escaping the Gravity of Regulation (0/5)
In early 2021, we penned a piece inspired by the obvious frustration of a tech sector that is used to all data being free, and moving and breaking things faster than regulators can catch up with them.
Looking at some of the more outlandish new concepts and start-ups seeking to circumvent the gravity well of spiralling data governance rules around the world, we speculated that industry and tech founders increasingly be looking for clever work arounds and the grey spaces between jurisdiction-based rules to run their services.
The reality is that high flying efforts to avoid data regulation by launching data centres into space or sinking them into the ocean – while always long term plays – are far from revolutionising the industry (though we were correct in our passing comments that Silicon Valley CEO Bond villain-like antics of launching themselves into space were at hand).
If anything, we have seen that the gravity of nation state-based data regulation is hard to escape. In response, the big tech leaders are simply building out the infrastructure to comply. Cloud leaders Oracle, Microsoft, Google, and AWS have all added new cloud regions down to the level of ever smaller markets from Norway to New Zealand, while Salesforce has launched a new service level localisation capability in several markets.
All the while, painstaking negotiations to replace the EU-US Privacy Shield have continued to try to break down barriers. The grinding progress has highlighted another old Silicon Valley standby: simply failing to comply and hoping regulators will look the other way.
Global Antitrust Takes Centre Stage (4.5/5)
In our Tech Policy Trends 2021 report, we predicted that antitrust policies would take centre stage in 2021 across various markets globally. Indeed, we saw that the antitrust issue went into overdrive. South Korea introduced the very first regulation that prohibits the use of a particular payment system on developers – targeting Apple and Google. China’s authorities also started its campaign against monopolistic behaviour and imposed large fines on its domestic players like Alibaba and Meituan to reign them in. In Europe, among other antitrust issues, Google now faces calls from competitors who are calling for the Digital Markets Act (DMA) to address Google Search’s dominance. While in the US, legislators are deliberating the Ending Platform Monopolies Act that seeks to stop dominant platforms’ abilities to leverage power across multiple business lines. However, we docked off 0.5 points – the earlier article predicted the DMA to potentially set the tone for antitrust policies. Instead, what we have seen are individual markets developing their own approach to address antitrust issues. The South Korean example stated above is one example. Another example is Australia’s news media bargaining code that is quite novel in its approach. Moving forward in 2022, it is likely we may see a continued divergence in antitrust issues given that markets are dominated by different players in each economy.
DSA and Section 230: Shifting Intermediary Liability Regime (4.5/5)
As predicted, policymakers in the European Union have been busy reviewing, negotiating, and re-drafting the proposed Digital Services Act for the last nine months. However, despite a willingness to finalise the rules imminently, deep political differences remain between political groups and member states delaying any potential agreement. Key issues include rules for online marketplaces, targeted advertising, and enforcement.
Similarly, policymakers in the United States have continued to agree that online platforms wield too much power and have sustained interest in legislative solutions; many related proposals have been introduced in the current Congress over the last nine months. However, there is significant partisan disagreement about what exact measures should be taken to implement updated competition policies, online consumer protection laws, and intermediary liability rules (Section 230), which is preventing quick movement on any proposals. Additionally, Congress and the Biden administration both face competing priorities such as the US-China competition and infrastructure spending that have derailed greater prioritisation of platform regulation in the first year of Biden’s presidency.
While the EU continues to push for its pro-regulatory agenda compared to the US’ traditional laissez-faire approach, the recent launch of the EU-US Technology & Trade Council will provide further opportunities for both blocs to align their visions on platform regulation. Additionally, black swan events such as Facebook Whistleblower Frances Haugen’s claims (including her damning testimony to the US Congress) have further galvanised transatlantic desire to regulate online platforms.
E-Commerce Takes a Leap into the Future (4/5)
Following the acceleration of e-commerce prompted by Covid-19, 2021 was a record year. Recent news regarding significant investment in logistics, workforce and warehouses hint that Amazon expects a bullish Q4. Still, as last year’s prediction detailed, the phenomenon went beyond the North American giant. In Latin America, Mercado Libre cemented its position as the region’s most valuable company and maintained its robust expansion in financial services. In India, Flipkart reassured its footing and is competing head-to-head with Amazon for Q3 and Q4 sales. Similar news can be found weekly regarding regionally strong e-commerce players.
As we stated one year ago, the phenomenon quickly grasped the attention of regulators and policymakers worldwide. The Biden administration appointed Lina Khan, a staunch critic of Big Tech, as the Federal Trade Commission’s Chair, which accelerated discussions about dealing with the digital economy. Still, countries in many regions, including Latin America, did not move as fast as expected, perhaps cautious of affecting economic activity in a critical year. Finally, it may be argued that China was the country that most rapidly moved against its e-commerce giant, as regulators aimed for breaking up Alipay, the flagship payment platform of the Ali Baba group.
Open RAN goes Mainstream (4.3/5)
In our Tech Policy Trends 2021 report, we predicted 2021 was the year Open RAN would become mainstream. If anything, Open RAN has now become this catch-all word for all disaggregated networks, perhaps to the detriment of people focusing on open core or other layers of the network. What didn’t resolve as quickly as we’d hoped was a clear plan from governments. The UK and EU have moved furthest. London turned its headline commitment of £250M into a £30M FRANC fund, along with officially launching SONIC and NeutrORAN. The EU has issued some initial funding calls, albeit more modest than we’d anticipated. Some member states have gone further: France’s Plan de Relance (recovery plan) contained €750M for telecom innovation. European operators have also formed the Open RAN Memorandum of Understanding Group, sending strong signals to vendors that this is worth their substantial investment. In the US, our prediction is beached along with the competing, whale-sized infrastructure plans in Congress. With money allocated by the National Defence Authorisation Act 2021, legislators have so far failed to reach agreement on releasing the funds for agencies to start disbursing. If the congressional deadlock resolves itself before the new year, we’d give ourselves 4.8.
Regulators Wake Up to Network Virtualization (4/5)
In our last Tech Policy Trends publication Access Partnership forecasted increased regulatory attention on the virtualisation of networks disrupting the telecommunications industry. We noted that the regulatory changes would likely happen over several years, but that some regulatory frameworks would be adjusted already in 2021.
These adjustments have been particularly evident in Europe over the last year, where regulators have expanded and renewed network security regulations to better address the new kinds of risk faced by virtual networks. Many EU Member States have transposed the European Electronic Communications Code – expanding the legal definition of telecoms provider– to include connectivity providers operating only software, subjecting these to network security requirements. We have also seen the NIS 2 Directive, an update on the first EU-wide cyber security legislation, continue its way through the legislative process in the European Parliament. NIS 2 would expand the scope of the old Directive to include ‘digital infrastructure’ as essential entities.
As regulators in Europe and elsewhere are waking up to the virtualisation of telecoms and the new security challenges this poses, we are likely to see further changes to telecom frameworks around the world in 2022.