Economic Growth

The pace of innovation is speeding up. Digital fragmentation threatens that

In a world of digital fragmentation, cybersecurity risks are heightened and regulation of AI is hindered. Cooperation can avert that.

In a world of digital fragmentation, cybersecurity risks are heightened and regulation of AI is hindered. Cooperation can avert that. Image: Getty Images/iStockphoto

Michael Miebach
CEO, Mastercard
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Economic Progress

This article is part of: World Economic Forum Annual Meeting
  • Digital integration is accelerating fast, with more and more data moved seamlessly and securely across geographies.
  • But digital fragmentation endangers that — posing an economic challenge as well as an obstacle to cybersecurity and AI standards.
  • Averting digital fragmentation would mean we can better regulate AI and protect ourselves from cyberthreats.

In the height of the COVID-19 pandemic, major parts of the global supply chain buckled, with disruptions and shortages cascading throughout the world economy. At the same time, digital trade — with cross-border data flows, e-commerce and video streaming — kept growing as if there was no health crisis at all.

This dynamic shows how, despite major challenges including the pandemic, wars, inflation and rising nationalism, we are all becoming more interconnected. One clear example: from 2010 to 2019, data flows among countries increased at a 45% annual rate, rising from about 45 to 1,500 terabits per second. By 2021, these flows had nearly reached 3,000 terabits per second.

This trend is ramping up, with 5G, hybrid cloud and Artificial Intelligence (AI) expected to spark even more cross-border data flows. This safe and free flow of data will unlock new innovations, spur economic growth and ensure billions of people and businesses can access the information and goods they need.


How is the Forum tackling global cybersecurity challenges?

Digital fragmentation risks progress

That bright future, however, could be restricted by digital fragmentation, with different countries and companies developing technology standards that aren’t compatible with each other.

We've seen fragmentation happen with different hardware and platforms for telecommunications networks, electric-vehicle charging, smart-home devices and much more. This fragmentation can create barriers between markets. It can slow trade, make it harder for people and small businesses to gain access to the digital economy and complicate cybersecurity efforts.

As we saw during the pandemic, a tightly connected digital economy strengthens the world’s resilience by connecting people and keeping trade moving. Critical to these efforts is establishing consistent standards in two key areas: AI and cybersecurity.

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AI regulation relies on cooperation

In November 2023, the British government hosted an AI summit that brought together computer scientists, government officials and leaders from major companies. More than two dozen countries signed onto the “Bletchley declaration,” pledging to work together on AI safety.

This summit, and more like it that are already planned, highlighted how important it is to keep up dialogue on fast-developing technologies like AI.

For now, many countries and companies are moving at different speeds to develop AI standards, and very few are coordinated. There’s little agreement on key definitions and requirements for AI rules, even including how AI should be defined.

We need to create AI standards and guardrails that balance creativity and innovation with protections against likely and material risks, like systemic bias and AI-powered scams. These standards must be rooted in a principles-based approach that focuses on privacy, accountability, fairness and transparency.

Positive efforts so far have included the European Union’s recent deal on the AI Act, which is expected to foster trustworthy AI across the EU, as well as a new safeguards from both Canada’s privacy authorities and a White House executive order in the US.

As we saw at the Bletchley summit, more collaboration across the public and private sectors will help us all make progress in these areas.

Cybersecurity risks in a fragmented world

The growing trend toward nationalism and protectionism is limiting the free flow of data across borders and around the world. It’s understandable that many governments have an interest in protecting their countries’ and citizens’ data. But when we shut out collaboration and place too many restrictions on data, it stifles global fraud monitoring tools, which work best when using data sets across multiple countries.

In many ways, digital fragmentation makes it easier for cybercriminals to operate, allowing them to work across borders and exploit the complexity created by separate tech and data standards and systems.

It’s an important reminder of the fact that cybercrime is global — and so our response must be global too. The best results come through collective defense: partnerships, shared best practices and, yes, shared standards. We’re most protected when we protect each other.

The digital economy proved invaluable during the pandemic. It will be even more important in the future as technology becomes an ever-bigger part of our lives.

That’s why it’s so critical to push against fragmentation. When we move forward together in partnership, tangible improvements happen and more people and small businesses are able to tap into the digital economy’s great potential.

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Related topics:
Economic GrowthGeo-Economics and PoliticsCybersecurityEmerging TechnologiesForum Institutional
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