The Geopolitics Of Technology In 2019: (Innovation) Winter Is Coming

Last year, two big stories dominated the increasingly important intersection of politics and technology: a cold-war-like confrontation between the US and China over the future of advanced technologies like artificial intelligence, and a broad backlash against the growing power of digital technology firms.

In both cases, governments responded by erecting new barriers to the flow of information and technology across borders. In 2019, that may create a set of more fundamental and lasting problems (see Eurasia Group's Top Risk #6), as governments risk stifling innovation by responding disproportionately.

Here's how it could happen:

National security: For China hawks in the Trump administration and Congress, keeping advanced US technology out of Chinese hands – and Chinese technology out of sensitive US telecommunications networks and other critical infrastructure – is an urgent priority. That's already led to tighter oversight of Chinese investments in US tech firms and a big drop in the flow of Chinese money into Silicon Valley. The next step for the administration is to finalize new export controls that will make it harder for US companies working on sensitive technologies to ship them to China or partner with Chinese firms.

These new strictures have bipartisan support, so they'll remain in place regardless of any eventual trade deal between the US and China. Beijing, for its part, is more determined than ever to break its reliance on the West for the basic technologies it will need to prosper in the future. This is a technology divorce, and it's going to crimp the flow of money, ideas, and talent between the two countries.

The "Techlash" comes home: Silicon Valley was left reeling in 2018 by a series of massive data breaches and growing outrage over the use (and abuse) of internet users' personal information. This year, regulators around the world will take powerful tech giants to task. Europe is likely to bring the first big enforcement cases under its tough new data protection laws, with the potential for massive fines against companies that fail to adequately protect users' personal information.

Even the US, which has long taken a hands-off approach to digital privacy, is finally getting serious about regulation. With Democrats back in charge of the House, Congress looks increasingly likely to take up some kind of national privacy reform this year. As digital privacy regimes and other forms of tech regulation multiply around the world, it's going to become harder to operate as a global tech company. That's a problem in a sector whose business models rely on leveraging the scale of vast troves of data.

Wait a minute, skeptics might say: Strategic competition between the US and the Soviet Union during the Cold War put a man on the moon and led to massive advances in nuclear technology. True, but imagine how much more both sides would have benefitted if they'd worked together.