Whoever has physical access to the servers that hoard our data could determine who controls the global economy of the future — and our lives.
At the G-20 summit last June, when Japanese Prime Minister Shinzo Abe introduced a resolution endorsing the free flow of data across borders, India, South Africa and Indonesia refused to sign it. India’s then foreign secretary Vijay Gokhale described data as a “new form of wealth” to explain the country’s reluctance to part with it.
It wasn’t an isolated standoff. President Donald Trump’s trade war with China and tariff battles with India and Europe dominated the global financial discourse in the months before the coronavirus crisis. But the next trade conflict after the pandemic eases is already brewing, and it won’t involve only tariffs on products. It’ll be focused on territorial control of data.
A growing number of emerging economies with giant populations, like China, India, Nigeria, Indonesia and South Africa, are leveraging the markets they offer to demand that foreign firms keep the data they gather from these countries within their borders, and not on servers in the West. That’s leading to rising tensions over “data localization,” especially with the U.S., which has an overall global trade deficit but enjoys a massive trade surplus in digital services — in good measure because of its control over global data, say experts.
Indian Prime Minister Narendra Modi dangled his country’s 1.3 billion-strong market during a visit to the U.S. last September, calling data the “new gold.” China has 13 data localization laws that span all sectors of life — all data on Chinese nationals and infrastructure must be stored within the country. Nigeria has a similar requirement. An Indian government panel has meanwhile recommended that New Delhi do the same.
U.S. senators and tech giants are fighting back, lobbying their governments and the administrations of nations that are tightening data control regulations. U.S. Trade Representative Robert Lighthizer and the European Union have publicly criticized India’s proposed data localization plans, for instance.
“With technological advancement, countries across the world have realized the power and value of data as the new oil and are making efforts to preserve its value to their own advantage,” says Munjal Kamdar, a partner with consulting firm Deloitte.
This battle over the global data market — and especially in fast-growing and populous markets — will only sharpen, say experts. India’s data generation is expected to grow at twice the global rate in 2020. Yet the emerging data wars remain “an underappreciated subject,” says Rohinton P. Medhora, president of Waterloo, Canada-based Centre for International Governance Innovation. Concerns over who controls data range from questions of personal security and privacy to national security and national sovereignty.
The battles are likely to be most intense in fields that are most sensitive — such as health or financial records. The U.S.
