The Open Internet on the Brink: Geopolitical Cooperation Is Falling Short

Technology Policy Internet Policy

The Open Internet on the Brink: Geopolitical Cooperation Is Falling Short

Paper
Posted on: 30th September 2021
By Multiple Authors
Andrew Bennett
Senior Policy Analyst
Melanie Garson
Policy Lead, Internet Policy Unit
Bridget Boakye
Policy Lead, Internet Policy Unit
Max Beverton-Palmer
Director of the Internet Policy Unit
Akos Erzse
Associate, Government Advisory
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    Key Points

    • Liberal democracies have failed to cooperate on protecting the future of the internet from authoritarian challengers.
    • Despite shared values, cooperation is not as simple as commonly assumed. The EU and US, in particular, have competing policy objectives across a range of global technology policy issues.
    • While China is often framed as a common threat for liberal democracies, it is not a monolith: it is a partner, competitor and adversary all at once. This requires a strategy that distinguishes between issues of collaboration, competition and confrontation rather than reverting to inaccurate cold-war narratives.

    Instead of putting up a united front against the rising tide of internet authoritarianism, the world’s liberal democracies have retreated inwards, prioritising battles about their own internet sovereignty over long-term protection of the open internet. Not only does this give free rein to authoritarians, it also undermines the credibility of liberal countries when they criticise other states for more restrictive internet policies, be it data-localisation requirements at one end of the spectrum, or full internet shutdowns at the other.

    Why is cooperation and long-term thinking failing? First, although the US and EU are often natural allies, their objectives across a range of tech policy issues have historically been further apart than is commonly assumed. Second, the institutions designed to shape the future of the internet – both domestic government departments and international bodies – are ill-equipped to deal with an increasingly complex governance environment.

    Clashing Objectives

    Clashing Objectives

    As internet companies grow, serving millions of users around the world, the need for global alignment on regulatory standards has increased. To that end, the liberal democracies of the US and EU have long seemed like they should be natural partners on technology policy. Until recently, though, transatlantic debates about global standards on tax, data privacy, competition and content moderation saw few signs of progress. This is because, across many long-term issues, they have had fundamentally different geopolitical incentives and regulatory philosophies.

    The US is home to several major tech champions. Many of these are vertically integrated multinationals that are systemically important to the global internet economy. Google, for example, provides both user-focused applications and core infrastructure services. In contrast, while there are some large tech companies based in the EU, they do not have the same sort of geopolitical leverage from which the US benefits. This is a fundamental source of tension, creating battles over so-called digital sovereignty, data localisation and privacy.

    For example, since the EU’s Court of Justice struck down the EU–US Privacy Shield (a transatlantic data-transfer framework), negotiations have stalled on a new deal to limit US intelligence agencies’ access to EU data. In turn, the EU has been exploring data-localisation requirements and a European cloud infrastructure, which is out of step with more liberal data storage and transfer approaches in the US, UK, Australia and Japan.

    Many in the EU also still see competition investigations against US tech companies as a crucial lever to reclaim some influence on the world stage of global tech policy. This has had pushback in the US, with the Digital Trade Caucus encouraging President Biden to resist this “targeting of American companies”.

    These tensions reflect broader philosophical differences. While the US is generally most concerned with avoiding bans on pro-competitive behaviour, the EU is focused on regulating anti-competitive practices. Similarly, Eric Schmidt, chair of the US National Security Commission on Artificial Intelligence and former CEO of Google, recently criticised current EU proposals on AI transparency as prioritising regulation over innovation, illustrating the competing priorities on each side of the Atlantic.

    The result: US–EU cooperation is much less assured than is frequently assumed. However, US attitudes towards tech regulation have shifted with the change in administration. There are now discussions around a global tax deal and a new federal privacy law while the Federal Trade Commission (FTC), under new chair Lina Khan, has launched several antitrust lawsuits against large technology companies. Whatever the merits of these individual steps, they have had the effect of bringing the positions of the US and EU closer together and improving prospects for cooperation.

    Figure 11 – The policy objectives challenging the assumption that cooperation between the US and Europe is certain

     

    Cooperation prospects
    (pre-Biden)

    Cooperation prospects
    (post-Biden)

    EU objective (current)

    US objective (current)

    Comments

    Tax

    Raise more revenue; achieve fair agreement

    Protect US tech sector while raising revenue for new infrastructure

    US incentives have changed with plans to raise domestic corporation tax, making a global tax deal possible. US remains opposed to unilateral digital taxes

    Data Privacy

    Export privacy standards; reclaim sovereignty

    Limit the compliance duty barriers to innovation; retain sovereignty

    US–EU Privacy Shield negotiations stalling, though California’s CCPA is aligned with EU’s GDPR and new Data Protection Agency mooted in US

    Competition

    Regulate against anti-competitive practices, including focus on ex-ante

    Tackle size and power of big tech (bipartisan consensus now that these firms are too big)

    US–EU Trade and Technology Council includes antitrust talks, with new FTC commissioner closer to EU position on competition. Contrast from previous US admin’s tacit protection of domestic tech sector

    Content Moderation / Intermediary Liability

    Digital Services Act will impose greater responsibilities on Very Large Online Platforms (VLOPs)

    Liability protections, such as Section 230 of the US Communications Decency Act, have become politicised

    Prospects for cooperation unclear

    Cybersecurity

    Protect itself and supply chain

    Protect itself and supply chain

    US and EU share common adversaries (state and non-state)

    Key:

    Cooperation very unlikely

    Cooperation possible

    Cooperation highly likely/already existing

    Source: TBI

    China Is Not a Monolith

    China Is Not a Monolith

    Tensions between China and the West are often described as a new cold war. This narrative is understandable, but misplaced. As this report has described, China’s expanding authoritarianism does pose a great challenge to the future of the internet and liberal world order. However, so far, this has not been a sufficient threat for the US and EU to put aside any other differences and focus solely on resisting China. This is illustrated by recent EU–US disagreements over the ratification of the EU–China Comprehensive Agreement on Investment (CAI). While this is now faltering, and Italy has committed to review its Belt and Road Initiative deal with China, the EU remains wary of getting into a full trade war.

    The truth is that binary narratives simply framing China as a common enemy are insufficient to encourage widespread agreement. China is not a monolith: it is a partner, competitor and adversary all at once. As we set out last year, responding to this reality requires a three-part strategic framework based on cooperation, competition and confrontation.

    Applying this strategic framework to issues in internet geopolitics can help to cut through a debate that is often overly simplistic:

    Figure 12 – The 3Cs: a framework showing how the West can manage China’s growing influence

       

    Principle

    Reasoning

    Application to Internet Internationalism

    Cooperation

     

    Reserve space to cooperate with China to benefit the global commons and ensure long-term stability

    China is a major power and a key decision-maker in global affairs

    Cooperating with China is critical to addressing key transnational challenges

    Internet infrastructure in Africa

    Technology supply chains (for example, semiconductors and submarine cables)

    Competition

     

    Preserve the West’s competitive edge in technology and innovation

    Technology and innovation can generate economic prosperity domestically as well as geopolitical leverage internationally

    Attracting the best talent internationally can also generate strong soft power culturally

    Protecting multi-stakeholder bodies and resisting authoritarian technical standards

    New semiconductor foundries

    Investment in access infrastructure such as 6G

    Confrontation

     

    Speak out against China’s human-rights violations domestically and growing international aggression

    Protect the international community’s norms, interests and values

    Cybercrime and warfare

    Authoritarian technologies, for instance, surveillance and repression tools used domestically and exported internationally

    Source: TBI

    Chief among the cooperation priorities is improving internet connectivity in Africa. Not only is closing the digital divide a moral obligation, it is also in the interests of every country in the world to expand the global internet economy. It would also only cost 0.02% of OECD countries’ annual Gross National Income (GNI).

    Figure 13 – Economic benefit versus cost of achieving universal internet access by region (excluding devices)

    13

    Source: The Progressive Case For Universal Internet Access, TBI

    The US, EU and others cannot force China out of this market or broader governance fora entirely, and nor do they want to or need to. While managing China’s growing influence is necessary, trying to isolate it entirely would put at risk other areas of cooperation or investment that China could provide. The goal should therefore be about making the market for infrastructure financing more competitive, rather than simply treating emerging economy infrastructure as a proxy battle. Establishing a foothold could also give liberal states insight into infrastructure projects and provide some challenge as well as an alternative option to low- and middle-income countries concerned about technologies provided by Chinese companies.

    Charts created with Highcharts unless otherwise credited.

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