Digital Economy Dispatch #06826th December 2021

Why the Future Depends on a Digital Infrastructure

It is surprising how little most of us know about the infrastructure that runs our world. Try it for yourself. Turn on the tap and see if you can say something meaningful for more than 20 seconds about how clean water is provided to your home on demand at the turn of a handle. Or ask someone plugging in their electric toaster to describe how the current flowing through the walls got there. You will most likely receive puzzled looks and a few vague mumbles about power stations and cables under the ground.

Much the same can be said about access to digital services such as mobile connectivity, wifi, and cloud-based services. I tried this myself recently with my own teenage kids. One lazy Sunday morning my son was texting his brother upstairs to tell him to come down for breakfast. So, I asked him what I assumed was a simple question: “How did that text message get almost instantly from your phone to your brother’s device upstairs?”.

After a little prompting, the best he could offer was: “Well, I suppose it just went through the air from here to there”. That was it. The sum of what he believed or cared about on the topic.

Why Does this Matter?

As our lives becomes more dependent on digital technology, its core infrastructure sinks deeper and deeper into the fabric of our world. Without realizing it, we become oblivious to how many of our activities are guided and shaped by the technological pathways that surround us. Yet, it is essential that we step back and consider why this works, how it operates, and most importantly, who governs its actions.

We are increasingly aware that a large number of the tasks we carry out now rely on the availability of digitally powered services. It is becoming impossible to function effectively today without using computers and the internet, whether it is for shopping, entertainment, health, or education. Their automation capabilities help us carry out activities repeatedly and reliably. The data they manage is essential to reduce errors, save time, and personalize actions to our needs and preferences.

However, alongside the opportunities and challenges brought by rising automation and digital storing of personal data, there are many concerns expressed today about the role digital technologies play in reshaping daily behaviour. From increasing cybercrime and cyber bullying to the rise of online scams and fake news, our actions are shaped and manipulated by the way digitally transmitted information affects our lives. Even more fundamentally, the future of our societies and political systems may also be deeply entangled with the struggle for control of the digital infrastructures that surround us.

What Lies Beneath

With the advent of cloud-based services over the two decades, companies such as Apple, Amazon, Google, and Facebook have created vast, interconnected computer utilities across the globe. These are rapidly becoming the information hubs of the digital age. Such centres are fed by exabytes of data generated by billions of consumers who have benefited from ubiquitous access to services and interaction via a plethora of mobile devices including tablets, smart phones, and wearables. It is hard to imagine what life was like only a few years ago without access to YouTube, Facebook, Instagram, or WhatsApp from every Internet-connected device. Commentators such as Nicholas Carr view these leading digital economy companies as “rewiring the world” in a comparable manner to Edison at the turn of the 20th century.

It is not surprising, then, to see most discussions about digital transformation starting in the world of bits, bytes, and data lakes to gain an understanding of its physical characteristics. In Andrew Blum’s “Tubes” he provides a fascinating account of how the internet works from the ground up. Literally. Starting with cables and routers that traverse the globe, like Alice in the Looking Glass he follows the white rabbit down the rabbit hole to work out how the text you type on your laptop sitting on the sofa can appear only a few seconds later on an ipad upstairs or halfway around the world.

Into the Deep Blue Sea

Of course, lots of very clever technology make the internet work. It is well worth taking the time to read more about this physical infrastructure. However, understanding the internet by tracking its cables is rather like describing education in terms of how books are printed. While fascinating, it misses the key point about its deeper impact. This is the theme at the heart of a recent book by Dame Wendy Hall and Keiron O’Hara. From a very similar starting point to Andrew Blum, they take us on a very different journey.

In this new telling for the story, the constant streams of data swirling in the air and flowing through the cables beneath our feet are the basis for an important on-going struggle that is reshaping commerce, economics, and the political future of our digital world. They describe this as four alternative visions of a digital society embodied in the values, structures, and operating models we see in four distinct versions of the Internet that have emerged.

• The Silicon Valley Open Internet is the original concept designed by engineers and scientists as a digital world that was free for all, supporting sharing of knowledge, providing open access, and committed to net neutrality.

• The Brussels Bourgeois Internet is the libertarian view of a managed society that is governed by regulations to ensure fair play and to make sure everyone follows the rules to eliminate bias.

• The DC Commercial Internet is the market-driven infrastructure that views property rights and commercial interests to be fundamental to encourage competition for driving rapid technology development and innovation.

• The Beijing Paternal Internet is a controlled environment where the broader interests of the state determine what is accessible and available to citizens to contain unacceptable behaviour.

What we witness today is a geopolitical struggle for our digital future as these four visions jostle for dominance. As Hall and O’Hara describe it, the importance of this digital infrastructure transcends concerns about technology and physical devices. What is at play here is the role of the Internet in determining core aspects of freedom, innovation, security, and human rights. Understanding key elements of this digital infrastructure is essential to appreciate why the battle for control of the Internet is at the heart of today’s political discussions. How this is resolved in the coming years will have implications for all of us.

Who Pays the Ferryman?

One key impact of this struggle is being played out in the dominant role of a small number of Big Tech companies. Companies such as Amazon, Google, Microsoft, Alibaba, Tencent, and Facebook have built huge businesses by delivering pervasive internet-powered platforms that deliver a vast range of digital services through their own expanding portfolio of offerings, and as the anchor for partner capabilities.

Sometimes viewed as approaching monopoly status, they have used their position to collect data on all aspects of their business operations and customers to optimize the delivery infrastructures they control. While this was beginning to be questioned in some quarters as “data hoarding“, and by others as the epitome of an emerging “surveillance capitalism“, it is now becoming clear that they are at the centre of a pervasive critical infrastructure powering business resilience and continuity. They are key elements of the four Internet visions described by Hall and O’Hara.

Even more importantly, to many people today, the digital world is synonymous with the services they consume from the Big Tech giants. The value in thinking about digital infrastructure as a utility is that it reminds us that digital transformation is something much more than a technology concern for a few companies to worry about. Gaining an appreciation for what sits beneath the surface is important for all of us. But rather than getting lost in technical detail, it is critical to remember that for all its overwhelming complexity the Internet is fundamentally a pervasive infrastructure for connecting people, organizations, things, and places. And that simple fact is what makes it the key to our future.

Digital Economy Tidbits

Why its Too Early to Get Excited by Web3. Link.

This is a very important commentary from Tim O’Reilly on Web3 and its implications. Definitely worth a quick read and a long think.

Let’s focus on the parts of the Web3 vision that aren’t about easy riches, on solving hard problems in trust, identity, and decentralized finance. And above all, let’s focus on the interface between crypto and the real world that people live in, where, as Matthew Yglesias put it when talking about housing inequality, “a society becomes wealthy over time by accumulating a stock of long-lasting capital goods.” If, as Sal Delle Palme argues, Web3 heralds the birth of a new economic system, let’s make it one that increases true wealth—not just paper wealth for those lucky enough to get in early but actual life-changing goods and services that make life better for everyone.

The Future of the Car. Link.

This is fascinating view of the impact of digital transformation. Take a look if you want to see how the software that is embedded in a vehicle is completely revolutionizing the concept of mobility.

During a live digital event, Stellantis mapped out its software strategy to deploy next-generation tech platforms, building on existing connected vehicle capabilities to transform how customers interact with their vehicles, and to generate approximately €20 billion in incremental annual revenues by 2030.

This transformation will move Stellantis’ vehicles from today’s dedicated electronic architectures to an open software-defined platform that seamlessly integrates with customers’ digital lives. It greatly expands the options customers have to add innovative features and services via regular over-the-air (OTA) updates keeping vehicles fresh, exciting and updated years after they have been built.