Tag Archives: internet and US interests

Who Controls Peoples’ Data?

The McKinsey Global Institute estimates that cross-border flows of goods, services and data added 10 per cent to global gross domestic product in the decade to 2015, with data providing a third of that increase. That share of the contribution seems likely to rise: conventional trade has slowed sharply, while digital flows have surged. Yet as the whole economy becomes more information-intensive — even heavy industries such as oil and gas are becoming data-driven — the cost of blocking those flows increases…

Yet that is precisely what is happening. Governments have sharply increased “data localisation” measures requiring information to be held in servers inside individual countries. The European Centre for International Political Economy, a think-tank, calculates that in the decade to 2016, the number of significant data localisation measures in the world’s large economies nearly tripled from 31 to 84.

Even in advanced economies, exporting data on individuals is heavily restricted because of privacy concerns, which have been highlighted by the Facebook/ Cambridge Analytica scandal. Many EU countries have curbs on moving personal data even to other member states. Studies for the Global Commission on Internet Governance, an independent research project, estimates that current constraints — such as restrictions on moving data on banking, gambling and tax records — reduces EU GDP by half a per cent.

In China, the champion data localiser, restrictions are even more severe. As well as long-established controls over technology transfer and state surveillance of the population, such measures form part of its interventionist “ Made in China 2025 ” industrial strategy, designed to make it a world leader in tech-heavy sectors such as artificial intelligence and robotics.

China’s Great Firewall has long blocked most foreign web applications, and a cyber security law passed in 2016 also imposed rules against exporting personal information, forcing companies including Apple and LinkedIn to hold information on Chinese users on local servers. Beijing has also given itself a variety of powers to block the export of “important data” on grounds of reducing vaguely defined economic, scientific or technological risks to national security or the public interest.   “The likelihood that any company operating in China will find itself in a legal blind spot where it can freely transfer commercial or business data outside the country is less than 1 per cent,” says ECIPE director Hosuk Lee-Makiyama….

Other emerging markets, such as Russia, India, Indonesia and Vietnam, are also leading data localisers. Russia has blocked LinkedIn from operating there after it refused to transfer data on Russian users to local servers.

Business organisations including the US Chamber of Commerce want rules to restrain what they call “digital protectionism”. But data trade experts point to a serious hole in global governance, with a coherent approach prevented by different philosophies between the big trading powers. Susan Aaronson, a trade academic at George Washington University in Washington, DC, says: “There are currently three powers — the EU, the US and China — in the process of creating separate data realms.”

The most obvious way to protect international flows of data is in trade deals — whether multilateral, regional or bilateral. Yet only the World Trade Organization laws governing data flows predate the internet and have not been thoroughly tested through litigation. It recently recruited Alibaba co-founder Jack Ma to front an ecommerce initiative, but officials involved admit it is unlikely to produce anything concrete for a long time. In any case, Prof Aaronson says: “While data has traditionally been addressed in trade deals as an ecommerce issue, it goes far wider than that.”

The internet has always been regarded by pioneers and campaigners as a decentralised, self-regulating community. Activists have tended to regard government intervention with suspicion, except for its role in protecting personal data, and many are wary of legislation to enable data flows.  “While we support the approach of preventing data localisation, we need to balance that against other rights such as data protection, cyber security and consumer rights,” says Jeremy Malcolm, senior global policy analyst at the Electronic Frontier Foundation, a campaign for internet freedom…

Europe has traditionally had a very different philosophy towards data and privacy than the US. In Germany, for instance, public opinion tends to support strict privacy laws — usually attributed to lingering memories of surveillance by the Stasi secret police in East Germany. The EU’s new General Data Protection Regulation (GDPR), which comes into force on May 25, 2018 imposes a long list of requirements on companies processing personal data on pain of fines that could total as much as 4 per cent of annual turnover….But trade experts warn that the GDPR is very cautiously written, with a blanket exemption for measures claiming to protect privacy. Mr Lee-Makiyama says: “The EU text will essentially provide no meaningful restriction on countries wanting to practice data localisation.”

Against this political backdrop, the prospects for broad and binding international rules on data flow are dim. …In the battle for dominance over setting rules for commerce, the EU and US often adopt contrasting approaches.  While the US often tries to export its product standards in trade diplomacy, the EU tends to write rules for itself and let the gravity of its huge market pull other economies into its regulatory orbit. Businesses faced with multiple regulatory regimes will tend to work to the highest standard, known widely as the “Brussels effect”.  Companies such as Facebook have promised to follow GDPR throughout their global operations as the price of operating in Europe.

Excerpts from   Data protectionism: the growing menace to global business, Financial Times, May 13, 2018

The Nationalization of Internet

Seeking to cut dependence on companies such as Google, Microsoft, and LinkedIn, Putin in recent years has urged the creation of domestic versions of everything from operating systems and e-mail to microchips and payment processing. Putin’s government says Russia needs protection from U.S. sanctions, bugs, and any backdoors built into hardware or software. “It’s a matter of national security,” says Andrey Chernogorov, executive secretary of the State Duma’s commission on strategic information systems. “Not replacing foreign IT would be equivalent to dismissing the army.”

Since last year, Russia has required foreign internet companies to store Russian clients’ data on servers in the country. In January 2016 the Kremlin ordered government agencies to use programs for office applications, database management, and cloud storage from an approved list of Russian suppliers or explain why they can’t—a blow to Microsoft, IBM, and Oracle. Google last year was ordered to allow Android phone makers to offer a Russian search engine. All four U.S. companies declined to comment.

And a state-backed group called the Institute of Internet Development is holding a public contest for a messenger service to compete with text and voice apps like WhatsApp and Viber. Russia’s Security Council has criticized the use of those services by state employees over concerns that U.S. spies could monitor the encrypted communications while Russian agencies can’t,,

On Nov. 10, 2016, Russia’s communications watchdog said LinkedIn would be blocked for not following the data-storage rules….. That same day, the Communications Ministry published draft legislation that would create a state-controlled body to monitor .ru domains and associated IP addresses. The proposal would also mandate that Russian internet infrastructure be owned by local companies and that cross-border communication lines be operated only by carriers subject to Russian regulation…

The biggest effect of the Kremlin’s internet campaign can be seen in the Moscow city administration, which is testing Russian-made e-mail and calendar software MyOffice Mail on 6,000 machines at City Hall. The city aims to replace Microsoft Outlook with the homegrown alternative, from Moscow-based New Cloud Technologies, on as many as 600,000 computers in schools, hospitals, and local agencies….“Money from Russian taxpayers and state-controlled companies should be spent primarily on domestic software,” Communications Minister Nikolay Nikiforov told reporters in September. “It’s a matter of jobs, of information security, and of our strategic leadership in IT.”

Excerpts from Microsoft Isn’t Feeling Any Russian Thaw, Bloomberg, Nov. 17, 2016

For Money and the State: the internet

internet advertising. image from wikipedia

Rarely has a manifesto been so wrong. “A Declaration of the Independence of Cyberspace”, written 20 years ago by John Perry Barlow, a digital civil-libertarian, begins thus: “Governments of the Industrial World, you weary giants of flesh and steel, I come from Cyberspace, the new home of Mind. On behalf of the future, I ask you of the past to leave us alone. You are not welcome among us. You have no sovereignty where we gather.”

At the turn of the century, it seemed as though this techno-Utopian vision of the world could indeed be a reality. It didn’t last… Autocratic governments around the world…have invested in online-surveillance gear. Filtering systems restrict access: to porn in Britain, to Facebook and Google in China, to dissent in Russia.

Competing operating systems and networks offer inducements to keep their users within the fold, consolidating their power. Their algorithms personalise the web so that no two people get the same search results or social media feeds, betraying the idea of a digital commons. Five companies account for nearly two-thirds of revenue from advertising, the dominant business model of the web.

The open internet accounts for barely 20% of the entire web. The rest of it is hidden away in unsearchable “walled gardens” such as Facebook, whose algorithms are opaque, or on the “dark web”, a shady parallel world wide web. Data gathered from the activities of internet users are being concentrated in fewer hands. And big hands they are too. BCG, a consultancy, reckons that the internet will account for 5.3% of GDP of the world’s 20 big economies this year, or $4.2 trillion.

How did this come to pass? The simple reply is that the free, open, democratic internet dreamed up by the optimists of Silicon Valley was never more than a brief interlude. The more nuanced answer is that the open internet never really existed.

[T]e internet, it was developed “by the US military to serve US military purposes”… The decentralised, packet-based system of communication that forms the basis of the internet originated in America’s need to withstand a massive attack on its soil. Even the much-ballyhooed Silicon Valley model of venture capital as a way to place bets on risky new businesses has military origins.

In the 1980s the American military began to lose interest in the internet…. The time had come for the hackers and geeks who had been experimenting with early computers and phone lines.  Today they are the giants. Google, Apple, Facebook, Amazon and Microsoft—together with some telecoms operators—help set policy in Europe and America on everything from privacy rights and copyright law to child protection and national security. As these companies grow more powerful, the state is pushing back…

The other big risk is that the tension between states and companies resolves into a symbiotic relationship. A leaked e-mail shows a Google executive communicating with Hillary Clinton’s state department about an online tool that would be “important in encouraging more [Syrians] to defect and giving confidence to the opposition.”+++ If technology firms with global reach quietly promote the foreign-policy interests of one country, that can only increase suspicion and accelerate the fracturing of the web into regional internets….

Mr Malcomson describes the internet as a “global private marketplace built on a government platform, not unlike the global airport system”.

Excerpts from Evolution of the internet: Growing up, Economist, Mar. 26, 2016

+++The email said Google would be “partnering with Al Jazeera” who would take “primary ownership” of the tool, maintaining it and publicizing it in Syria.  It was eventually published by Al Jazeera in English and Arabic.