Tags: Internet | information | freedom | borders

Balkanized Internet Threatens World Economy

Balkanized Internet Threatens World Economy

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Wednesday, 17 August 2016 06:00 AM Current | Bio | Archive

The Internet is losing its “Inter” as digital borders block international data flows. This is bad news for technology companies — and most everyone else.

It was 1984 when Stewart Brand coined the phrase, “Information wants to be free.” His point: technology empowers individuals by giving access to once-hidden knowledge.
That’s mostly what happened for the next two decades. We went from solo computers, to networked computers, to an almost worldwide Internet.

Now whatever data you may want is not far from your fingertips — but your fingers might have to poke through a wall to get it.

I wrote last year that Edward Snowden Killed the Global Tech Dream. By exposing aggressive U.S. government data collection, he proved wrong anyone who thought the world could share this valuable resource.

We can’t share it. And increasingly, we’re not even trying.

Multinational companies are in an impossible box. They have to comply with governments everywhere they operate, while also pleasing customers who want their data secured from those same governments.

We see the result as U.S. companies lose business. China is the first example.

The Uber ride-sharing app is leaving China because it can’t compete with native-born alternatives. Apple, which entered China with much fanfare just two years ago, is losing ground there as young Chinese prefer less expensive Huawei and Xiaomi smartphones.

The latest wrinkle: Those same Chinese companies are learning they can’t compete in the U.S., either. An Aug. 10 New York Times report said well-known giants like Alibaba, Baidu and Tencent rely almost entirely on domestic revenue. Their attempts to expand into other countries haven’t worked.

Now, this isn’t necessarily bad. China is a big country with plenty of room for local companies to grow within their own borders. U.S. and European companies can likewise make good money within theirs.

The problem is that share prices of all these companies assume they can reach other global markets. That is a flawed assumption with the world balkanizing into small, insular markets.

Just as they are raising barriers to immigration, governments are regulating and even stopping data flows. I see no sign this trend will reverse and many signs it will intensify.
We’ll still be able to buy advanced technology at surprisingly low prices – but they will tap into a much shallower pool.

Technology stock prices don’t reflect this yet. They will.   

Patrick Watson is an Austin-based financial writer and senior editor at Mauldin Economics. Follow him on Twitter @PatrickW

 

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The Internet is losing its "Inter" as digital borders block international data flows. This is bad news for technology companies - and most everyone else.
Internet, information, freedom, borders
420
2016-00-17
Wednesday, 17 August 2016 06:00 AM
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