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The End of Nation States? Part 4: What Post-Westphalian World in the Age of Platforms?

BLOG - 4 March 2019

In the three previous articles (parts 1, 2 and 3), we investigated the increasingly important role platforms are playing today. Indeed, the latter already perform services that would have been considered as part of the states’ sovereign activities a few years ago. In this article, we will discuss different scenarios for the evolution of our institutions, in light of these platforms’ new power. Because it is difficult to imagine a future where platforms and nation states merely coexist. In reality, the roles of both will necessarily have to be redefined and, while it seems premature to assume that a balance is currently being found, we must still make some assumptions in order to best understand the issues ahead.

First, it is worth noting that states will likely neither be able to pre-empt the digital revolution and become platforms themselves, nor maintain their sovereignty over meta-platforms. Estonia, with its X-road initiative, is such a unique case that we must consider it as an exception for the time being. China, whose platform model seems to be at the other end of the spectrum in terms of citizen engagement, has chosen to delegate these platform attributes to its most powerful digital companies. The Chinese social credit system, which rates the behavior of Chinese citizens, is thus run by huge players such as Alibaba, Tencent, Didi, etc. For the time being, the Chinese state is mainly only in charge of project management and technological coordination work between these actors. 

What will state institutions have left? Although many public services should indeed be more easily operated by private digital actors, it remains difficult to conceive that legitimate violence be transferred to them (although in the United States, there are currently discussions around the legalization of hackback, a kind of private technological violence). As for the rest, as emphasized in previous articles, it is expected that platforms will at least pervade sectors such as education, health, transport, banking, etc. As also previously discussed, sovereign functions such as the provision of identity could also be devolved to platforms. 

The regulator and meta-platforms

However, would it be appropriate to dismantle platforms in the same way that the Standard Oil Company, or later AT&T, were dismantled?

The platforms increasingly play the role of aggregators: they structure data that can be used by other companies very efficiently, since it is consistent over very large volumes.

Given the picture sketched by our last articles, the question may almost seem incongruous. However, the answer is not necessarily self-evident, because platforms can only really be effective when they are fully able to implement their logic of increasing returns. Be it in terms of search engines, chatbots, or navigation services, size, not to say domination, is an important condition for efficiency. Moreover, these platforms increasingly play the role of aggregators: they structure data that can be used by other companies very efficiently, since it is consistent over very large volumes.

Hence, one regulatory approach, which is becoming more and more popular, would be to ensure that the data collected by these platforms be used freely and without charge by public good stakeholders, or even be accessible by competitors in order to deconcentrate the market (the French Digital Council has launched a reflection along these lines in France). But of course, other topics also need to be discussed: are platforms obstacles to innovation? This question has been obstructing regulators' work for decades now, with no conclusive answer at this stage, as a data-based antitrust doctrine seems particularly difficult to create. Similarly, one may wonder whether these platforms’ social functions are not qualifying them as enemies of democracy, since the equity of voices necessary for public debate seems easily altered through their services.
 
It is true that it is not easy for governments and regulators to decide on the best stance to adopt towards platforms. While it is difficult to imagine states taking ownership of platforms' attributes, deciding on the model on which to base the coexistence of these two different types of players is particularly challenging, given that platforms are now so embedded in our daily lives. There are four possible scenarios we could nonetheless consider.

Four potential stances to adopt towards meta-platforms

The End of Nation States? Part 4
  • The scenario of inaction 

According to this scenario, states will try to pursue their missions as they have done in the past. This scenario would certainly involve a massive shift of sovereign services (healthcare, education, transport, etc.) towards platforms. The latter’s action would consist in an "over-treatment" both of traditional actors (doctors, hospitals, schools, teachers, etc.) and of innovation actors (third-party startups using data from and synchronized by platforms). The algorithm provided by one of these meta-platforms would, for instance, be in charge of recommending a particular pedagogical model for a particular student, whose risk of dropping out of school would otherwise be significant. The software of one of these meta-platforms would also diagnose early an emerging cancer, in order to recommend a prescription and to ensure compliance. In this scenario, not only would the transfer of value be important, but it would obviously also involve an equally significant transfer of sovereignty. As we have seen, there seems to be no reason why, in the long run, essential functions such as identity control would not be transferred to platforms either.
 
This scenario is currently unfolding in many countries, including in France. It’s not that our nation is not trying to implement an ambitious digital transformation. It’s more that the underlying drivers of change are so deteriorated (poor quality of the education system, sparse governance, resistance of the administrative and productive body) that it is difficult to have a fast and effective impact on the course of events. The tax model linked to the notion of a stable establishment, the absence of truly binding regulation by data, public services’ inability to create quality user or citizen experiences, massively facilitate the transfer of skills, and therefore of value, to meta-platforms.
 

  • The democratic techno-sovereign scenario   

In this second model, both the functions of the central state (i.e. the rather popular idea of a platform state) and of social and economic regulation could be reviewed. The doctrine of competition would no longer be based on market shares, but more generally on the sharing of data, which meta-platforms would place at the service of the common good. Data could also be used to regulate actors of worrying importance. All this, it is true, remains very theoretical, as there is almost no general framework within which to operate. In this scenario, the size of meta-platforms would probably not be so much of a matter of concern, but their ability to influence the experience of the consumer-citizen and, ultimately, of society as a whole, would.
 
Estonia is the central state that comes closest to this model: not only does it have a long-term technological planning capacity allowing it to provide a wide range of digital public services, but it is also particularly precautious regarding its own potential drifts, so as to avoid transforming into an Orwellian State. A special court of justice for issues related to the use of citizens' data has been set up. To fight the digital divide, squads of public officials assist people in situations of "illectronism". Even issues of resilience (in the event of an attack on their Russian neighbour) seem to have been addressed by a technological approach that goes so far as developing a digital identity for autonomous citizens on blockchain.
 
For the time being, this scenario seems out of reach for the French state. First of all, civil servants, starting with senior civil servants, are neither trained nor even aware of the potential dimensions of a platform state. Moreover, human capital is lacking and the project has not been the subject of any pedagogical work or democratic debate, given the lack of skills among public servants. These prerequisites are essential for the implementation of such an initiative. Indeed, there is a significant risk that these technologies could, in the event of the advent of autocratic power, negatively impact and subject the most disadvantaged  populations. This hypothesis is regularly highlighted in France by many organizations to oppose anything that allows citizens to be "monitored". The risk inherent in this second scenario is that it will slip into the third, presented below.
 

  • The totalitarian techno-sovereignty scenario 

The Chinese model, whose social credit ratings revealed in 2016 outshine Orwell’s dystopia, obviously comes to mind (on this topic, I recommend reading the vertiginous article published in June 2018 in Wired, "The complicated truth about China's social credit system"). The Social Rating that is implemented there is ultimately nothing less than a form of omnipresent and ongoing justice, evaluating through bonus-malus the value of an individual's contribution to the common good. The latter is obviously expected to suffer from little criticism. It is worth noting, however, that this scenario is very well suited to private actors who exchange all the information they gather with the police system, in order for the latter to better control the country. Anonymity is prohibited on social networks, as well as on e-commerce sites and on online media. The truth obviously does not emerge from collectively constructed analyses, but from official propaganda. In this scenario, the size of the platforms is virtuous, because it extends the power of the totalitarian state beyond its borders. Vitally important companies, such as those in the telecom infrastructure sector, are now generally considered more strategic from a military and economic point of view than is an elite battalion. This explains the extreme sensitivity the Chinese and the American governments express when their infrastructure champions (Huawei, ZTE, Cisco, Qualcomm...) are challenged in their expansion strategies.
 

  • The libertarian scenario

This scenario is obviously the one promoted by the Silicon Valley culture. It is that of a globalized, post-state world, where physical boundaries have become obsolete. Many arguments stand in favour of this model. First of all, that of efficiency: California's digital players can undoubtedly report breathtaking successes in this domain. And as emphasized by the American authors of the CypherPunk movement John Gilmour or Phil Karn, and more recently by Peter Thiel, there is no reason why these technologies should not eventually generate an entirely new civilization, where public institutions would be reduced to a small share, thus putting an end to five centuries of nation states holding plenipotentiary powers. In this scenario, therefore, the State would only be in charge of the most basic functions (mainly security) and the rest would happily be privatized.
 
Second, advocates of this scenario believe that, in a world where innovation now consists mainly of risky attempts - the famous serendipity -, it is important to leave significant room to these forms of innovation. This argument is not incidental: American success in the digital world is, whatever one may say, largely the result of its mistrust towards Washington and lawmakers who aim to corset risk-takers. American regulators have often relied on Adam Smith and Schumpeter to preserve a laissez-faire approach, and to favour the implementation of a posteriori regulations, i.e. as a last resort.
 
But even beyond regulators, the libertarian scenario could well be driven by the very nature of information technology. For the architecture of information systems and networks seems to be inexorably decentralized, while the very autonomy of these systems seems to be increasing, to the point of making them neither seizable nor controllable by states themselves. Here, we are obviously thinking about the well-known Bitcoins, and beyond that, about the probable architectures of future data networks - Fog, Edge computing, etc. - which give pride of place to calculations distributed in the network. However, the nature of these architectures is deeply decentralized, which greatly complexifies control operations.
 
This model’s disadvantage lies in the feudal e-republic project it carries. Indeed, many techno-libertarian players speak of eugenics and technological selection as inevitable, if not necessary, forces. Moreover, this scenario induces major social risks, insofar as the main beneficiaries of such a model would be the upper economic classes.

The 21st century state

The forces in place are thus significant, while many developed countries remain sort of stunned and largely inactive in the face of the emergence of these protean digital empires. Indeed, most of these countries lack a clear strategy. Within the European Union, obvious disagreements between states too often obstruct the development of the virtuous dynamics that would allow them to regain leadership. The latter is nevertheless accessible given the quality of our continent’s human capital.
 
A modern state should agree to facilitate the emergence of new public service offers by third parties, while focusing on its truly sovereign functions. Hence the need for sanctioning powers, which are absolutely necessary to ensure that the coexistence with platforms takes place within a fair legislative and regulatory framework. This argument alone justifies the necessity of European integration. We’ve witnessed France not being listened to when it tried to impose controls on key digital players, whereas control at the European level is much more coercive, and therefore effective. However, this division of tasks requires that the state develop a digital culture and focus on some of its functionalities in order to delegate others to third parties.

While companies necessarily have a role to play in this framework, citizen initiatives such as Bayes Impact seem decisive in combining the common good with radical technological and service innovation. Resorting to open source, to open standards and to citizen communities of coders, which are inherently more attentive to the beneficiaries of public action, is still too often discarded as an unsustainable option. However, these approaches have a lot of potential, provided they are well understood and supported. Through them, the state could pursue an adequate form of data governance between actors that are generally situated outside of the state’s realm. It would also encourage respect for necessarily open standardization, privacy, data portability, system integrity, citizen debates around digital topics, fair tax collection, and the strengthening of human capital. Such would be the main tasks assigned to a state of the 21st century.

The forces in place are thus significant, while many developed countries remain sort of stunned and largely inactive in the face of the emergence of these protean digital empires.

Some delicate issues, such as identity, will still need to be tackled. For some, entrusting its provision to states involves great risks of abuse. This is a complex debate, as the notion of pseudonymization (non-nominal identification) emerging within artificial intelligence could impact the founding elements of our law. But beyond that, the immense challenge facing liberal nations is that of preserving the possibility of trust within disparate social groups. To do this, they must, if still possible, find models to combat fake news (several platforms, including Facebook, are seeking to develop information verification systems such as "CrossCheck", but based on instant artificial intelligence), maintain and strengthen the construction of the public sphere, and avoid political destabilization by non-democratic states. These risks are largely underestimated, and the Yellow Vests episode could, for lack of an adequate response, be mere foreshadowing.
 
Given the powers involved (companies with almost unlimited capital, states whose imperious behaviour and lack of concern for fundamental rights is no longer to be demonstrated, the collapse of liberal states), the choice of a strategy favoring technological emergence seems to be a difficult one between bad solutions. Yet the technological reading of the world allows us to consider a strong alternative. The latter is accessible, and it is probably because it does not yet exist that it represents the most viable choice for those who are attracted neither by imperious nations nor by a world dominated by meta-platforms and private interests.
 
 
 
THE END.

 

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