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.

Internationally, food security is under threat from drought, while agriculture is subject to thin margins and complex global trade. There is also pressure to do more with less to ensure food security for the global population. Because of this, farmers are driven to get the most out of every harvest, even if that short-term focus may have long-term ill effects on the soil and their yield. Farmers in the U.S. are now turning to Ag-Analytics, a leader in AI solutions, to help address these concerns. Sharing Microsoft's goal to help monitor, model and manage Earth's natural resources with cloud and AI, the company brings precision agriculture to fruition in a platform that helps farmers leverage data to make decisions. Read more on Microsoft on the Issues.

Are The US and China on Collision Course in The South China Sea? Senator Chris Coons talks about China's ambitions for a blue water navy and what it means for US security.

Watch The Full Interview

As topsy-turvy as global politics has been over the past several years –Brexit, Trump, the rise of anti-establishment leaders in France, the Philippines, Italy, Pakistan, and Brazil, the surge of the European far right and so on – it's all unfolded during a time when the global economy was actually doing pretty well.

So what happens when the inevitable recession hits? Earlier this week, markets suffered their worst day of the year as investors confronted that question.

Germany's economy, the world's fourth-largest, is shrinking. China's factories are churning at their slowest rate in 17 years. The trade fights between the US and China, the US and Europe, and South Korea and Japan involve countries that together account for half the global economy. And worries about a chaotic British exit from the EU aren't helping either.

Even more worrying than these individual trends, through, is that the zero-sum politics driving all this disruption might also make a global economic swoon harder to get out of.

During the last big economic crisis in the wake of the 2008 financial meltdown, the world's major economies were able to compromise and coordinate their responses to the recession in ways that avoided an even deeper downturn.

In today's more cutthroat political environment, that kind of cooperation is a lot less likely -- particularly if a downturn fuels even more of social and political polarization within countries that has empowered economic nationalists in the first place.

We're not in a recession yet. But buckle up, because when the next downturn hits, politics is going to make it harder to contain the pain.

President Trump pays homage to a 1980s New York legend to explain his trade policy.

A pivotal weekend in Hong Kong – Some 300,000 demonstrators are expected at Hong Kong's Victoria Park on Sunday, in the 11th straight week of protests. Chaotic and partly violent demonstrations shut down Hong Kong International Airport this week, and tensions are high. Chinese paramilitary forces are reportedly drilling on the mainland close to the Hong Kong border. Xi Jinping, the president of China, knows a military crackdown would cripple Hong Kong's reputation as a stable financial center and could hurt the Chinese economy more broadly. But he may eventually conclude he has little choice but to snuff this out before other restive regions of China get similar ideas. The tenor of the marches this weekend will offer a clue about which way it's likely to go.

Maduro's crackdown on the military – One reason Venezuelan President Nicolas Maduro has survived an economic collapse, a popular revolt, assassination attempts, and a failed coup by opposition leader Juan Guaido is that the military brass has stuck with him. For one thing, they are tied to the regime's lucrative illegal businesses and black market schemes. But there's also now a stick to go along with that carrot: The New York Times describes Maduro's "growing reliance on torture" and purges of military officers – including alleged coup-plotter Captain Rafael Acosta, who died after being beaten and electrocuted to in a Venezuelan military hospital. We are watching closely to see if there is a point where Maduro screws up the calibration of carrots vs sticks and finds himself at the business end of a rifle in the Miraflores palace.

Trudeau's woes – In many ways Nicolas Maduro's polar opposite, Canada's prime minister has a lot going for him: dreamy good looks; a decent – if not overwhelming – majority for his Liberal Party in Parliament; and a generally safe, resource-rich country with millions of lakes, friendly people, big skies and (relatively) small problems. But earlier this week, an independent ethics commissioner ruled that the prime minister had breached the country's conflict of interest laws earlier this year when he pressured prosecutors to ease off of a bribery investigation of a major Canadian construction firm, because of fears about job losses. Trudeau has accepted the report's findings, but isn't resigning. We're watching to see how this simmering scandal affects Canada's upcoming national elections in October.

Something your salmon friends will never believe – You are a salmon. You are trying to get upriver so you can mate and die. Also you must avoid bears and bald eagles. Now there is a dam in your way of your favorite river. This is a problem. You pause an— WHAT IS HAPPENING. SUDDENLY YOU ARE BEING SHOT THROUGH A PNEUMATIC TUBE AND… just look at this thing.

What We're Ignoring

Japanese robotic tails Researchers at Japan's Keio University have developed a wearable robotic tail that they say could help elderly people and others with balance problems steady themselves. Look, we know that managing an ageing population is one of Japan's most pressing challenges. We also know that automation is one way that countries with shrinking workforces can better support a growing population of retirees. But giving people tails seems like a less efficient way to address these problems than, say, tweaking immigration policy ever so slightly to bring in more young workers, no?