The State of Digital Fragmentation (Digital Policy Alert)
6 Dec 2023 10:00h - 11:30h UTC
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Audience
Digital fragmentation is a pressing concern, with the divide between the US and China being a significant factor. This split limits people’s freedoms and opportunities, and there are concerns of a potential digital Cold War. Corporate-led cross-sector digital ecosystems further add to the problem of fragmentation.
Enforcement of laws and regulations is challenging. Many laws and regulations are individual-centric, focusing on individual rights and protections. However, the damages caused by digital fragmentation are often structural and community-centric, affecting small businesses, drivers, and farmers. This mismatch hampers enforceability.
The special relationship between the EU and the US with regards to the GDPR raises concerns of hypocrisy. Only EU citizens have the right to appeal violations within US systems, creating an imbalance in accountability and protection. This highlights the need for more equitable approaches to data privacy and protection.
The tension between the US and China poses a threat to collective systems. Trade law, on the other hand, is a well-structured and enforceable system that could address digital fragmentation.
Recent trade agreements consider sustainable development, encompassing economic, social, and environmental concerns. Vague formulations like “inclusion” in law-making hinder efforts to address inequalities.
The US’s withdrawal from proposals at the WTO raises concerns about further fragmentation. Alternative regimes by countries like India and Russia can impact fragmentation positively or negatively.
The US’s reluctance to engage in joint initiatives on e-commerce and data governance may be driven by the need to regulate big tech domestically. Implementation of micro-international law at the multilateral level is being questioned.
In conclusion, digital fragmentation stems from various sources including the US-China divide and corporate-led ecosystems. Enforcement challenges and the lack of equitable approaches raise concerns. Trade law and sustainable development provide potential solutions. Ambiguity in law-making and US withdrawal from proposals further complicate the issue. Alternative regimes and domestic regulation play a role. Navigating global cooperation and national interests is necessary to address digital fragmentation.
Andrin Eichin
Digital fragmentation refers to the growing concern in the field of digital policy and regulation. It is prompted by the increasing number of regulatory initiatives in the digital industry, which has historically operated with minimal oversight. In 2020, Digital Policy Alert identified 35 regulatory initiatives, a number that rose to 274 by November 2023. This surge in regulatory practices is considered a normal reaction to a previously unregulated field but has resulted in fragmentation.
The fragmentation occurs due to the development of domestic regulatory practices in different regions, leading to policies that may not effectively communicate or align with fundamental elements. This level and depth of fragmentation pose challenges to cooperation and coordination in the digital sector. The lack of effective communication between different regulatory universes hampers the potential for inspiration and alternative approaches. Seamless functionality and interoperability are hindered when services operate under different regulatory environments.
Standardization on a policy level is seen as a potential solution to address digital fragmentation. Efforts are underway to develop a framework convention within the Council of Europe that promotes regulation in a manner compliant with human rights. This initiative is viewed positively as it aims to harmonize policies and ensure a cohesive approach to digital regulation.
Digital fragmentation can have implications at the technical level, thereby exacerbating potential risks. Policy fragmentation can translate into technical fragmentation, which presents significant challenges to resolve. It is crucial to recognize that policy decisions can result in technical issues that are difficult to address once they arise.
The evolution of digital regulation is an ongoing process. The General Data Protection Regulation (GDPR) serves as a notable example in understanding digital fragmentation. Regulatory practices have learned from the challenges associated with GDPR and are incorporating the need to adapt and learn from those experiences. Moreover, countries outside the EU also reflect on and consider their own regulatory practices, often adopting relevant or effective elements. For instance, Switzerland recently implemented its own data protection law, incorporating aspects similar to the GDPR.
Enforcement of rules becomes easier when there is a larger enforcement group. Regional adoption of regulatory approaches can be highly efficient, especially for smaller countries. However, challenges arise when attempting to enforce rules against services operating in other influential countries, which can impede regulatory compliance.
The growing divide in regulatory universes between the US and China epitomizes the deep division in digital policies. This division not only impacts policies but may also lead to differences in digital services and technical standards. If these divisions persist or intensify, the challenges associated with digital fragmentation will be further exacerbated.
The Internet Governance Forum (IGF) process plays a crucial role in bridging the gap between micro-level experiences and macro-level discussions in the digital field. It facilitates multi-stakeholder engagement, involving academia, civil society, and industry, to enrich discussions and foster collaboration.
Regional initiatives, such as the AI Convention of the Council of Europe and Convention 108+, seek to broaden discussions beyond member states. Recognizing the importance of incremental steps, these initiatives contribute to bridging the gap between micro and macro levels. By adopting regional approaches, they facilitate the exchange of ideas and best practices, thereby promoting a more cohesive digital policy and regulatory framework.
Overall, addressing digital fragmentation requires a multidimensional and polycentric approach to governance in the digital sector. It necessitates innovative approaches, multistakeholder engagement, and technical expertise to understand the implications of digitalization. However, creating a comprehensive framework to tackle the challenges posed by digital fragmentation is a complex task. It requires careful consideration of acceptable practices while acknowledging the difficulties in implementing intricate ideas and anticipating potential obstacles.
Pilar Fajarnes Garces
The analysis provides a comprehensive examination of the issue of fragmentation in the digital economy and data governance. It explores various perspectives, highlighting the negative impacts of geopolitical fragmentation on global challenges and inequality. The speakers argue that the trend towards more inward-looking policies is paradoxical because global challenges have a global reach, and addressing them requires cooperation. They emphasize the interconnected nature of global challenges due to digitalization, which underscores the need for collaborative solutions.
The analysis also focuses on the fragmentation that occurs between those who can engage and participate in the digital economy and those who cannot. This inequality is seen as a significant concern, with substantial disparities and data divides beyond mere connectivity. The fragmentation of regulations is explored, with different influential regions adopting varying approaches to data governance. This divergence of regulations is attributed to countries’ differing policy objectives, such as the United States basing its regulation on the free market economy, China prioritising government control of data, and the European Union being a regulatory leader based on individual rights.
Furthermore, the analysis highlights the global expansion of digital corporations and the lack of global regulation as problematic. It argues that this expansion, without proper regulation, poses challenges to various aspects, including peace, justice, and strong institutions. The analysis emphasises the different policy objectives and institutional capacities of countries in the digital economy and data governance. It acknowledges that each country will have its own approaches, leading to the fragmentation of regulations.
In terms of data governance, the analysis emphasises the need for dialogue and finding common ground for global data governance. It acknowledges the current landscape of regulations as a patchwork of divergent regulations and emphasises the impasse in reaching a consensus. It suggests that data should flow as freely as necessary and possible while addressing risks and ensuring equitable sharing of gains. The multi-dimensional nature of data governance beyond just trade is highlighted, including non-economic dimensions such as privacy and human rights.
The representation of developing countries in data governance is a crucial concern. It argues that existing data governance regimes limit inclusivity and representativeness, especially for developing countries. The need for flexibility in international policies and consideration of the international context in national policies is stressed. The analysis suggests that benefits derived from data should be equally shared through domestic policies aligned with each country’s objectives.
The analysis also explores the consequences of fragmentation in the digital space, particularly in the context of geopolitical fragmentation. It observes that the fragmentation in the digital space reflects the general geopolitical fragmentation, primarily between China and the United States. Environmental sustainable digitalization, trade, and development are identified as dimensions affected by this geopolitical fragmentation.
Another significant aspect discussed is the role of critical minerals in the digital technologies domain. It notes that digital technologies, despite being virtual, rely on materials and minerals. The concept of “critical minerals” is becoming increasingly politically charged and adds further complications to the digital technology sphere.
Observations are made regarding the need to extend data governance beyond just the trade regime, as data has non-economic dimensions. The analysis recommends exploring more encompassing ways of doing things in international law, suggesting the adaptation of approaches rather than directly transposing them from one country to another. Inconsistencies between domestic and foreign policies, such as those of the USA and the European Union, are noted and questioned.
The importance of considering the interdependence of micro and macro perspectives is stressed, as they exist in a complex, interconnected world. It emphasises that a loss of perspective occurs when one considers only a small part without considering its broader context.
The analysis concludes by advocating for a new, innovative approach to global governance that is multilateral, multi-stakeholder, and multi-dimensional. It argues that old ways of thinking may not suffice in the new world with evolving dynamics. The analysis acknowledges the ongoing necessity of regulations and policies from governments but underscores the importance of involving the views of all relevant parties and leveraging different types of expertise to comprehensively address digitalization in development.
Katrin Kuhlmann
The digital economy is undergoing rapid change and innovation, leading countries and regions to design laws that can effectively respond to these developments. This has resulted in fragmentation in the digital economy as different jurisdictions strive to adapt their legal frameworks to the evolving digital landscape. This fragmentation should be seen as a sign of active engagement with the challenges posed by the digital domain rather than a negative aspect.
One argument emphasises the need for adaptable, flexible laws in the digital economy. The constant evolution of digital ecosystems necessitates legal frameworks that can keep pace with technological advancements. The argument highlights that the perfect system designed today can become obsolete tomorrow due to the dynamic nature of the digital world.
However, challenges exist in the current data protection system in Europe, particularly with the implementation of the General Data Protection Regulation (GDPR). While the GDPR is designed with human rights in mind, many small businesses find compliance difficult. Additionally, certain countries are indirectly compelled to adopt GDPR to continue doing business with Europe. This highlights the need to balance human rights protection with practicality and ease of implementation for individuals and small businesses.
Different countries have adopted unique approaches to digital policy based on their local contexts and priorities. For example, New Zealand requires consultation with indigenous communities for changes in digital rules, Singapore focuses on regulatory sandboxes, and Australia and Brazil have tailored provisions for small businesses. These examples underscore the importance of considering diverse perspectives and accommodating different needs when designing digital policies.
Furthermore, there are various conceptions of data governance and data localization. Some countries, like the US and China, approach data localization from a national security perspective, while Estonia has established a digital embassy in Luxembourg for neutral data infrastructure. This reflects the evolving understanding of data governance and the need for flexible approaches.
Inclusion, transparency, and flexibility are also highlighted as crucial elements of digital policies. Several trade agreements, such as the United States-Mexico-Canada Agreement (USMCA) and the African Continental Free Trade Area, have provisions for review and revision, allowing for flexibility in adapting to changing digital landscapes. Additionally, specific provisions tailored for small businesses and consultation with affected groups are essential to ensure inclusive policymaking.
The interconnectedness of digital development with other areas, such as energy and climate, should not be overlooked. For instance, the EU-African, Caribbean, and Pacific (ACP) agreement addresses the digital divide and the connection between digital development and energy. This recognition of interdependencies between sectors can lead to more holistic and sustainable approaches to digital development.
Katrin, an advocate for bottom-up approaches in digital policymaking and international trade agreements, emphasises the importance of inclusion and flexibility. She highlights the need for trade agreements to have built-in flexibility provisions, address gaps in digital inclusion, and consider innovative approaches to data governance and digital policies. These principles can serve as models for global policymaking.
While fragmentation and diverse regulation can promote innovation, there is also a concern about dominant market players shaping the dialogue and pushing their models through trade agreements. Thus, international law is seen as a framework that allows countries to tailor their own systems, promoting interoperability, mutual recognition, and alignment.
Another important aspect highlighted is the need for clarity and precision in defining terms related to social dimensions. This ensures better results and avoids vagueness that may hinder a stronger social dimension within digital policies.
The analysis also observes the skepticism of the U.S. administration towards big business governing and shaping the dialogue, indicating a shift in approaches from the previous administration. Additionally, there is a lack of discussions about important issues within the U.S., limiting the engagement of civil society.
There is a call for a micro-international economic law that takes a ground-level and granular approach. This approach can uncover innovations and differences in law that might be overlooked otherwise.
Flexibility in negotiations and policymaking is advocated for, with an emphasis on the need for small businesses to understand the potential impacts of trade negotiations on them. Micro and macro levels should work hand in hand for the effective implementation of digital policies.
Lastly, the analysis highlights the importance of more granular approaches and the inclusion of experiences and models from different countries in the development of digital networks. It suggests the need for solutions that are based on a more detailed understanding of the issues at hand and involve a wider range of stakeholders.
In conclusion, the digital economy is experiencing rapid changes, and countries are designing laws to respond to these developments. Fragmentation in the digital economy should be seen as a positive sign of countries actively engaging with the challenges posed by the digital domain. Adaptable and flexible laws are needed to cope with the evolving digital landscape. However, challenges exist in the current data protection system, different countries have adopted unique approaches to digital policy, and various conceptions of data governance and localization exist. Inclusion, transparency, and flexibility are crucial elements of digital policies. The interconnectedness of digital development with other areas, such as energy and climate, should not be overlooked. Katrin advocates for bottom-up approaches in digital policymaking and trade agreements, highlighting the importance of inclusion and flexibility. While fragmentation and diverse regulation can promote innovation, there is a concern about dominant market players shaping the dialogue. Clarity and precision are needed in defining terms related to social dimensions, and a micro-international economic law is called for. Flexibility in negotiations and policymaking is required, and micro and macro levels should work together for effective implementation. Granular approaches and the inclusion of experiences from different countries are essential in the development of digital networks.
Moderator
The analysis examines various aspects of digital policy implementation and its impact on different regions. It highlights that Europe has a well-defined approach to digital policy, focusing on data protection as a human rights-based approach. However, it notes that this approach is more state-centered than individual-centered. On the other hand, California has adopted certain aspects of Europe’s approach but faces challenges in allowing individuals to assert their data rights. The General Data Protection Regulation (GDPR) is discussed as a policy that places a significant compliance burden on small businesses. Despite this, countries generally adopt GDPR to facilitate business with Europe. This raises concerns about the feasibility and impact of GDPR on small businesses.
The analysis also explores the differing perspectives on data governance and localization. Larger economies like the US and China view data governance and localization as matters of national security. Conversely, smaller countries like Estonia have embraced innovative approaches, such as storing data in a “digital embassy” for added security.
The importance of inclusion, flexibility, and consultation in domestic digital laws is emphasized. For instance, New Zealand mandates consultation with indigenous communities when making changes to digital regulations. The analysis also highlights the significance of tailored provisions for small businesses, citing examples from Australia and Brazil. Additionally, regulatory sandboxes in Singapore are seen as promoting innovation and flexibility in compliance.
Furthermore, the analysis acknowledges the interconnectedness of digital policy with other factors, including energy and climate issues. The development of the digital economy is linked to energy consumption, indirectly connecting it to climate change. The analysis recognizes that the challenges related to energy and technological development vary across regions.
The analysis discusses the potential positive and negative aspects of fragmentation in international law. It acknowledges the negative connotations of fragmentation but also views it as constructive disruption that can foster the development of new ideas and solutions. It argues that international law does not always require standardization or harmonization, as countries should have the flexibility to adapt global frameworks to their individual systems.
The emergence of different models from various regions is embraced as a disruptive and innovative phenomenon. Examples such as the Africa Continental Free Trade Agreement (AFCFTA) and regional effects like the Brussels effect and the California effect are highlighted. These examples suggest that laws or regulations established in dominant regions or corporations can be adopted by others.
Lastly, the analysis appreciates Estonia’s unique approach to data storage, known as the “digital embassy” model. Estonia stores its data in a neutral location, specifically Luxembourg, to ensure neutrality and safeguard against potential cyberattacks. This alternative solution challenges the traditional debate of local versus offshore data storage.
In conclusion, the analysis delves into diverse perspectives on digital policy implementation. It emphasizes the significance of data protection, inclusion, flexibility, and consultation. The interconnected nature of digital policy with other factors and the potential benefits and challenges of fragmentation in international law are explored. The emergence of different models and Estonia’s innovative approach to data storage are acknowledged. Overall, the comprehensive analysis provides valuable insights into the intricacies and dynamics of digital policy across regions.
Speakers
A
Audience
Speech speed
172 words per minute
Speech length
1278 words
Speech time
446 secs
AE
Andrin Eichin
Speech speed
179 words per minute
Speech length
2472 words
Speech time
829 secs
KK
Katrin Kuhlmann
Speech speed
207 words per minute
Speech length
7627 words
Speech time
2211 secs
M
Moderator
Speech speed
162 words per minute
Speech length
593 words
Speech time
220 secs
PF
Pilar Fajarnes Garces
Speech speed
162 words per minute
Speech length
3783 words
Speech time
1398 secs
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