Below are the key macroeconomic trends impacting the splinternet theme, as identified by GlobalData.
The Russian-Ukrainian conflict has widened the gap between competing digital spheres. This chasm reflects the distrust and dysfunctionality of international relations, from the risk of cyberattacks to the growing competition between the United States and China, with the associated technological decoupling. Competing visions risk hindering the development of international governance in various digital segments, from cyberspace to internet infrastructure to emerging technologies.
India has taken a pragmatic view of the internet, engaging with actors from different sides of the policy debate, depending on the area of technology governance. On the one hand, its draft personal data protection law mirrors the principles of the EU’s General Data Protection Regulation (GDPR), suggesting a potential preference for the Western approach to data security. However, in India, internet access was repeatedly cut in January and February 2021 as farmers took to the streets to voice their opposition to agricultural reform plans.
Additionally, India has banned 321 Chinese apps including TikTok since political tensions with China increased in 2020 following a border clash. India believes user data was being sent through the apps to servers in China, allowing the data to be collected and analyzed by what the country described as “elements hostile to the sovereignty and integrity of India and for activities detrimental to national security”.
Amid Russia’s invasion of Ukraine, Moscow seems determined to cut itself off from the rest of the digital world and accelerate the creation of a sovereign internet. In March 2022, media watchdog Roskomnadzor banned Facebook and Instagram and restricted Twitter, saying the platforms discriminated against Russians by imposing content restrictions on state media, such as Russia Today and Sputnik.
Russia’s growing isolation is likely to hamper the country’s tech industry for a long time, as Western sanctions will cut off imports of essential goods and services. Several companies, such as Microsoft, Apple, Samsung, Oracle and Cisco, have refused to sell to Russia or have gone out of business. Given the lack of a strong domestic manufacturing industry, Russia will increasingly depend on Chinese equipment and expertise to develop next-generation technologies.
Environment, social and governance (ESG)
With autocratic regimes entrenched in their own narratives backed by national media, the splinternet will see business leaders increasingly forced to divest from autocrat-run businesses and countries. The invasion of Ukraine and the increased isolation of Russia are good examples of the types of ESG issues that investors may face if they hold stakes in countries linked to human rights abuses. As the war in Ukraine unfolds with increasing casualties and economic damage, ethical issues are beginning to weigh on foreign investors and their financial decisions.
In China, private companies under tight state control, including Tencent, ByteDance and Sina, play a crucial role in spreading false official information about the invasion of Ukraine, raising compliance issues complex to corporate investors. These platforms promote the Kremlin narrative of the Ukrainian attack while suppressing pro-Kyiv posts.
The Financial Times reports that investing in Chinese platforms is becoming problematic from a social responsibility perspective, as funds with tech holdings in China come under pressure due to investors’ ESG concerns.
This is an edited excerpt from Splinternet – Thematic research report produced by GlobalData Thematic Research.