Technology, Globalization, and War

Vijay S L -

The snippet from my last daily update: Google acquires Mandiant mentioned technology being an overarching aspect and a critical factor when seen from within the precincts of a country's policies. It has been 15 days since Russia invaded Ukraine. We have already seen glimpses of the impact of the technology industry and how the dynamics of this war could permanently change everything about a technology's influence or spread.

Since the invasion, Western governments have announced an unprecedented number of sanctions to isolate the Russian economy from the benefits of being connected to the global economy. Government sanctions are an essential and expected way of stopping a country from doing the unwanted, and this has been the case to date. However, what has been different during this war is that technology has taken the front seat to have a significant impact. As a result, technology companies also announced their sanctions on Russia by stopping their operations entirely or partially. Other companies, too, did follow suit. Whether these sanctions from the private companies were politically motivated or a response to their employees requesting to suspend their operations in Russia for an unjustified invasion and save lives, the intent has shown their significant influence globally as countries have grown to rely on them.

Globalization and Technology

In 2005, Thomas Friedman, in his book - 'The World is Flat, argued that the world post-2000 is entering a new era of globalization that involves the free flow of trade between countries, utilization of each other's capabilities or specializations, or vastly available assets or rather the economic opportunities provided by different countries, and internationalization of labor and information. He had identified ten flatteners: workflow software, outsourcing, open-sourcing, offshoring, development, and expansion of sophisticated supply chains that span countries and others that would together stitch a new world that would be interconnected and interdependent. Thus more globalized.

Thomas Friedman was right in saying that the world was becoming more flat and globalized. Globalization enabled identifying and utilizing economic opportunities provided by different countries (e.g., cheap labor, raw materials, etc.), thus spreading a supply chain across other countries. Early 2000 also witnessed the advent of Internet 2.0 (Web2)and an unprecedented rate of emerging new technologies. Globalization helped disseminate these technologies worldwide and created more significant markets for businesses built on these technologies. With technologies aiding the emergence of new technologies and the supply chain and markets spread across different countries, globalization created interdependencies between countries. In addition, globalization helped countries reap the benefits of economic opportunities. Countries could provide specialized services or assets and learn about or access new technologies. China has been the biggest gainer of these dynamics.

In Web3 Conversations and NPM Corruption, I wrote how Web2 helped create centralized services that spread across geographies controlling demand, thus creating monopolies and digital or technology powers.

The centralized architecture of Web2 has nurtured and created companies such a Facebook, Amazon, Microsoft, and Google, which provide centralized services (e.g., cloud data storage, application hosting, etc.) upon which other businesses have housed their platform of services. This provision has translated into the democratization of the benefits furnished by the internet. As a result, people can access services universally with ever-growing convenience, leading to the proliferation of online applications. Furthermore, the evolution of the internet and its development to be the centralized web also paved the way for different technologies such as mobile devices, the internet of things, and others. This brought in more convenience to the internet users (consumers and businesses). The flip side is that with the introduction of centralized services - no doubt these services provided convenience and speeded up the maturity of the internet, they also created monopolization from the online services. The monopolization and centralized architecture have translated into risks and dependencies for the users.

As the monopolies grow in size and number, they certainly pull in more resources (both from the perspective of human resources and infrastructure), which certainly is useful in developing the services further to provide more convenience to the users; however, other initiatives or innovations could be limited, along with the influx of risks and dependencies.

When seen through the lens of these premises, the impact of sanctions announced by technology majors, such as Microsoft, Amazon, Facebook, and Google, is more pronounced. Imagine a Russian invasion of Ukraine before 2000; technology sanctions would not have made much difference.

Technology, China, and Russia

As mentioned earlier, China benefitted hugely from globalization. However, over the years, China, thanks to its Great Firewall effects, has been able to build alternatives to services provided by companies such as Microsoft, Facebook, Amazon, and others. Therefore, if China were to invade Taiwan tomorrow, there would be significantly less incentive to unleash sanctions by the companies mentioned earlier. China went with the philosophy that if a product or service provider is acting in concert with its opposition, it is always better to build alternatives, even if they are comparatively inferior. To this end, China initially endorsed copying the products and services, learning from them, and eventually bettering the originals. Russia hasn't been able to do the same, and thus, the effects of the sanctions are more influential. These sanctions have made the country a firewalled state, similar to China. However, Russia remains with very few or no alternatives.