Russia’s aggression against Ukraine has sent a shockwave through Europe’s defense and security architecture. Germany, the European Union’s wealthiest member state but also a notorious laggard when it comes to defense spending, has now embarked upon a path that may well turn it into Europe’s preeminent (conventional) military power. But this war in Europe is also catalyzing a global and uncompromising bid for technology leadership that is set to define geopolitical competition well into this century. Immediate repercussions include intensified efforts on the part of Russia to isolate its internet sector and severe sanctions on Russia’s access to foreign technologies. From a strategic vantage point, the war is accelerating the ongoing shift toward a world where geo-technological spheres define how digitalized societies and economies interact. As this world takes shape, Germany, the EU, and their democratic partners must jointly develop strategic responses to six key trends that are shaping the international technology policy landscape.
Reshuffling of Tech Interdependencies
First, tech interdependencies are being reshuffled as states seek to bolster competitiveness through industrial policies and securitize access to cutting-edge technology. The concentration of global semiconductor production in East Asia—particularly Taiwan—is driving the use of multibillion-dollar subsidies and generous tax cuts to encourage supply chain diversification and on-shoring. The $52 billion US CHIPS for America Act could pass Congress this year, and the European Commission recently proposed its own €43 billion EU Chips Act. China is continuing to push for greater insulation from international technology chokepoints. It is embedding its ambitious tech-industrial policy in a wider rebalancing of its economy towards domestic consumption through what it terms a “dual circulation” model. Countries are also tightening their grip on homemade cutting-edge technology, with the United States, the EU, China, and other key players expanding export controls and investment screening provisions on dual-use technologies.
Heightening Risk of Regulatory Fragmentation
Second, diverging regulatory preferences as well as pace are heightening the risk of regulatory fragmentation in the transatlantic digital economy. The EU is spearheading what may turn out to be the most substantial rewriting of digital rules this decade. Its Digital Markets Act (DMA) and Digital Services Act (DSA) are ambitious attempts at clawing back control from tech giants, limiting their market power as gatekeepers, and regulating content on their platforms. Both are likely to be passed before the French EU Council presidency ends in June—and more acts, including on artificial intelligence (AI), are in the legislative pipeline. US regulators have started to close in on big tech firms and there has been some alignment with the EU in areas like AI regulation. The EU and US have also announced that they have agreed in principle to a new framework for cross-border data flows. Nevertheless, considerable political and legal uncertainty persists and regulatory fragmentation remains the key challenge to a more integrated transatlantic digital economy. Moreover, different US priorities around the upcoming midterm elections could accentuate the difference in regulatory pace between the two partners.
Territorialization of the Global Internet
Third, pressures for the territorialization of the Internet will mount. For democracies and their highly globalized economies, a continuing erosion of global connectivity is a pervasive challenge. But the transnational nature of the Internet—its decentralized development and administration—clashes with some states’ preference for sovereign control over information flows and political expression. Just weeks before the invasion of Ukraine, China and Russia jointly clarified that they would deem unacceptable “any attempts to limit their sovereign right to regulate national segments of the Internet and ensure their security.” Indeed, Russia is reaching an advanced stage of setting up a largely autonomous Russian Internet (Runet). Internationally, Russia, China, and several other countries are flanking such domestic policies with increasing efforts to shift governance functions away from multi-stakeholder bodies and toward the intergovernmental International Telecommunications Union (ITU). This year, the divide over how the Internet should be governed will concretize in the showdown between US and Russian candidates for the post of the ITU Secretary-General.
Cyber Diplomacy at a Crossroads
Fourth, amidst the growth of cyber capabilities as a destabilizing force in international security, the norms and rules for how to govern them are now at a crossroads. In the past, a sequence of six UN Governmental Groups of Expert (GGE) has worked toward defining norms of responsible state behavior and affirmed the applicability of international law to cyberspace. In 2019, the UN Open-Ended Working Group (OEWG) was established as a de facto parallel track to the GGE, mainly on Russia’s initiative. The agreement on the OEWG’s final report reached less than a year ago marked the first time that consensus, including on language and recommendations from the GGE, has been reached in a process open to all UN member states. However, major divergences on the way forward remain, particularly on questions of implementation and multi-stakeholderism in the ongoing diplomatic initiatives. A French-Egyptian Program of Action aimed at invigorating cooperation in a permanent United Nations forum is at risk of fading into obscurity if not urgently advanced this year. Above all this looms the possibility that Russia further escalates its use of cyber capabilities against Ukraine and—possibly inadvertently—other countries, which would weigh heavily on the prospect for progress on cyber diplomacy at the United Nations.
Politicization of Technical Standards-Setting
Fifth, technical standards-setting is undergoing increasing politicization—which comes with both economic and security implications. Countries like Germany, the US, and the United Kingdom have traditionally been the main contributors to international standards-setting bodies like the International Standards Organization and International Electrotechnical Commission. However, China, in particular, has been highly successful at positioning its experts in standards working groups and technical secretariats. Importantly, China’s state-centric standardization system has allowed it to expand influence strategically in critical domains such as artificial intelligence and 5G networking. Dwindling influence, however, is not just an economic, but also a security factor. Standards can affect privacy protection and enshrine cyber vulnerabilities that become unknowingly adopted around the world. The EU’s response in the form of a standardization strategy in February this year demonstrates that the geopolitics of standards will be a defining pillar of the tech strategic landscape in the years to come.
Infrastructure-Based Spheres of Influence
Sixth, battles over infrastructural spheres of technological influence are intensifying. The US, China, and the EU are all working to leverage the world’s unmet infrastructure needs to anchor their technology, rules, and values. The digital component of China’s Belt and Road Initiative (BRI) seeks to connect dozens of countries through Chinese fiber optic cables, satellite navigation systems, and 5G cellular networks. China’s national technology and telecommunications champions—Huawei, ZTE, China Telecom, and others—are providing ICT infrastructure across the Africa continent, with data centers and smart city technology rolling out in more than a dozen countries. Western democracies have reacted to Chinese ambitions, including through the 2019 US Blue Dot Network (BDN), the 2021 EU Global Gateway, and the G7’s Build Back Better World (B3W) initiatives. However, the competition over who shapes global technology adoption has only just begun, and democratic countries will have to show how these initiatives can interlock to form a common strategic response.
Time to Operationalize Democratic Technology Cooperation
As policymakers in Germany, the EU, and partner countries face this tide of geo-technological challenges, they require strong institutional foundations to further international technology cooperation. In recent years, such foundations have been emerging, notably through the EU-US Transatlantic Trade and Technology Council (TTC), the Organization for Economic Co-operation and Development (OECD), and the Group of Seven (G7), where last year’s UK presidency emphasized the group’s potential to address critical concerns like communications infrastructure, cross-border data flows, and international standards-setting.
This year, the concurrence of the German G7 presidency and French EU Council presidency means that Europe has a window of opportunity to invigorate and co-shape the trajectory of this democratic tech space. With the second meeting of the EU-US TTC to be held in France in May of this year, the European Union will also be in the position to proactively advance transatlantic technology cooperation. Priority issues will encompass the securing of supply chains—including for rare earths metals whose supply is affected by the war in Ukraine, common principles for export controls and investment screening, and cooperation in key technology domains like artificial intelligence and 5G/6G connectivity.
In the broader picture, the imperative is now to operationalize this emerging tech institutional complex in support of substantial and timely alignment. This requires working out a division of labor between international fora. And it will entail difficult political choices about how to fit national responses to geo-technological challenges into a joint, coherent, and strategic vision.
David Hagebölling is a Research Fellow in the Technology and Global Affairs Program at DGAP and at the Chair for Internet Technologies and Systems at the Hasso Plattner Institute (HPI).
