The United States and the Soviet Union used to hold summits to reduce the danger of a nuclear war. Today the US and China hold summits to reduce the dangers of confrontation and conflict in cyberspace. The stakes are extremely high nowadays and how the world responds to the threat of cyber attacks will determine the extent to which future generations will be able to benefit from the digital era. There is also a danger that governments will overreact and erect barriers to information that undermine the potential of the Internet and make things more difficult than they need to be.
In a sense, the world is already in a low-level continuous conflict in cyberspace. China is not the only country that is engaging in massive cyber operations against other countries’ political and economic structures. “We are in the midst of one of those historic shifts when offensive technologies are cheaper and more powerful than defensive ones.” There is a need for rules in the realm of cyberspace. With the US as the Internet technology leader and China with the largest numbers of users, the danger is not only regarding political confrontation between states. The fear of a loss of control within states drives new data-localization requirements and other new barriers that could ultimately fracture the Internet.
Equally worrying are policies in the European Union that, in the name of defending citizens’ privacy, are leading to the erection of barriers to the free flow of data. In some European countries for example, there seems to be a conviction that citizens’ data will only be safe if stored on European soil out of the reach of others. This simplistic philosophy seems to have underpinned the European Court of Justice’s recent decision invalidating the so-called Safe Harbor agreement, which facilitates the free flow of information across the Atlantic. As a result, the entire legal framework for these data transfers has been thrown into disarray. Ensuring the protection and integrity of data is indeed a vital issue but this has very little to do with where data is stored.
Attackers based in China recently broke into the US Office of Personnel Management and stole up to 22mn files with sensitive information on federal employees. Hackers routinely penetrate secure industrial and government networks in the US and Europe. And several countries are tapping underwater cables carrying the world’s communications. So what problem does data localization actually solve? The solution to privacy concerns like this lies not only in data localization, but in the development of secure systems and the proper use of encryption. Data storage actually means the continuous transfer of data between users, with no regard for borders. Security in the digital world is based on technology instead of geography.
With the rapid development of global value chains, economies are becoming increasingly dependent on the free flow of data across political borders. With the advent of new, global technologies the notion of data localization becomes even more misguided. The OECD issued a report highlighting how data-driven innovation will increasingly drive the economies of the future. Crucially, it stresses “the need to promote the ‘openness’ in the global data ecosystem and thus the free flow of data across nations, sectors, and organizations”.
A huge global agenda of digital governance – the new domain of diplomacy – lies before the nation States in this digital era. It includes the establishment of formal and informal norms for state behavior, better legal mechanisms for addressing cross-border cybercrime, transparent national legislation for law enforcement, and endorsement of the need for encryption to protect the integrity of data. In all of these areas, efforts to deal with cybercrime and terrorism must not undermine the principles on which the Internet is built.
Many countries will need to adapt and accept that each nation’s behavior must comply with globally-accepted norms regardless of their power relative to other nations. “The Internet has already become the world’s most important infrastructure. But this is only the beginning: soon it will be the infrastructure of all other infrastructures. Policies born of confusion, chaos and confrontation have no place in this new world of opportunities.”