Concentration of technological power

Concentration of technological power (digital assets, knowledge, strategic technologies): Concentration of critical technological assets, capabilities or knowledge in a small number of individuals, firms or states that can control access to key technologies. Due to, but not limited to: failure of antitrust regulation; insufficient investment in the innovation ecosystem; or state control over key technologies. “Technological acceleration” is a structural force that refers to technological developments made possible by exponential growth in computing power and analysis. It has the potential to blur the boundaries between technology and humanity and rapidly create new and unpredictable global risks. The question in this article is what risks this concentration of technological power poses. To that end, I look at this phenomenon from the STEEPLD viewpoints. (Social, Technical, Economic, Environment, Political, Legal, Demographic)

In this contribution, I express my own opinion, not that of any organization.   The 2024 Global Risk Report – WEF provides these definitions

Things the WEF says about “concentration of technological power”

“Entrenched market concentration”: (free from the document 2024 Global Risk Report – WEF)

It highlights cyber insecurity and technological power concentration as the only risk factors for adverse outcomes of AI as a highly concentrated technology. Supply chain issues are foreseeable. As there are mineral costs, access to semiconductors, dependence on a single cloud provider….

National security objectives may remain the primary objective of innovation and industrial policy in several economies in response to market concentration due to the importance of AI. States will seek to secure their supply chains, onshoring and friend-shoring whenever possible.

What does STEEPLD “say” about “concentration of technological power”?

Social – Societal

Innovation

Some think of less innovative performance by the big companies themselves over time because there are not enough opportunities for real competition, which should drive innovation. Innovation is created by exponential organizations, which look at things from a completely different angle. This encourages creative disruption. Does this mean loss of careers by canceling projects that were in the pipeline? One example is managing traffic using data from smartphones: “Throughout the developed world, road agencies acquire the data used to manage traffic on their roads from roadside sensors such as induction loops, radar or cameras – a monitoring infrastructure that is costly and requires ongoing maintenance.” In this way, creative disruption seems at once progress for many, but job loss for some others. Another example is the rise of automobiles and Henry ford’s assembly line : “Examples of creative destruction in history include Henry Ford’s assembly line and how it revolutionized the automobile manufacturing industry. However, it also displaced older markets and forced many workers out of work.”

By concentrating innovations to a limited number of companies, another problem also occurs: too high prices for the available technical products. People from migrant backgrounds often have fewer opportunities to develop digital skills. This can lead to a “digital divide.”

In addition, the limited variation of supply also occurs. This need not always be the case. A counter-example is the invention of the CD and the CD player by Phillips, as a new standard for audio installations. This prevented prices from becoming sky-high, but also prevented producers from taking customers’ needs into account. The vinyl record market changed profoundly. The same happened later with video cassettes as a result of the advent of the DVD.

Misuse of user data

A very big danger are companies that collect a lot of user data, such as some social Web sites. They use psychometrics to map the behavior and preferences of their users. Then they use this data to send targeted ads. By doing so, they can entice people to make useless purchases within their sphere of interest. Moreover, they can influence vulnerable people in their voting behavior by providing them with pre-chewed misinformation about political candidates. As a result, social media change election results, at the simple request of (and payment by) interested third parties. (Brexit?) A particularly dangerous situation is when this user data is hacked. In addition, the potential for “tailored censorship” where certain ideas can be suppressed is a significant danger to free speech.

The main additional danger of using such data, as well as expensive prices, is that companies with such capabilities, make the rich richer, but not the poor. This creates a greater social disparity in wealth, wealth and power.

Problems of youth

An important social phenomenon of social media use is the phenomenon among youth of anxiety and alienation from social media use. Jonathan Haidt wrote about this in his book “the anxious generation”.

Technical

There are technical risks of concentration of technological power for Europe and the world. These risks include:

Innovation

Small, innovative companies can have a hard time competing with giants due to not having necessary budgets. This results in a stifling of innovation because original ideas cannot be developed except in those large companies. This can result in a lack of new products and services for consumers, tailored to their exact needs. Therefore, there is always the need for large companies to keep detecting the needs of the end customers. Therefore, instead of innovating themselves, large technology companies may choose to buy up innovative start ups. This can then once again lead to a concentration of innovative capabilities in the hands of just one or a few companies.

To the extent that Europe depends on other countries for technology, such as development of computer systems and related hardware and software, it may lose control of its own digital future. This can lead to great uncertainty for further technical innovations, through military, political and economic vulnerability because of these third countries. It is not unrealistic to think that third countries do not provide certain capabilities of these systems to other countries. As a result, Europe may fall behind other regions and lose its innovation potential. This could lead to a loss of jobs and economic, financial, social and scientific growth.

Cybercrime

Increased vulnerability of countries to targeted cyberattacks, with infrastructure disruptions and other technological threats. This is possible because cybercriminals can focus on a small number of companies, with the consequences being felt by their customers. The evolution of healthcare e.g. can also suffer. In 2017, for example, WannaCry targeted hospitals in Britain. It creates dependence on a limited number of technology suppliers. This leads to “vendor lock-in,” making switching to alternative solutions extremely difficult.

Possible reasons of increased vulnerability further include a lack of redundancy with other technical solutions, the attractiveness of the data collected by the companies, poor or non-existent own control of own IT systems, the possibilities of bribery to maliciously use technology for social, economic, environmental or other purposes. This can lead to huge financial losses, reputational damage and disruptions to essential services of businesses and governments. Like the cyber attack on Antwerp in December 2022. Mutatis mutandis, it is not difficult to imagine that cyberattacks on critical infrastructure could jeopardize national security.

Compatibility

The technology of the dominant companies may not be compatible with each other. For example, using different standards or a different unit system in a different team in a different country. This makes it difficult for organizations to collaborate and exchange data. This can lead to waste. An example of this is the failed NASA project with the Mars Climate Orbiter.

Nature of technology as a factor

The impact can vary widely by technology and context. The most important factor here is the nature of the technology:

• Technologies essential to daily life or national security
• Technologies that can be used for both civilian and military purposes.
• The impact of new technologies, is difficult to predict.

Environment

Environmental risks from concentration of technological power in Europe and the world are diverse. Some key risks are:

Competition

A lack of competition can lead to fewer new technologies that can reduce environmental pressures. Examples of (a lack of) innovation include mealworms and bacteria that digest plastic, and petroleum companies researching seaweed-based biofuel options.

Energy Transition

Limiting sustainable development by delaying energy transition and limiting access to clean technologies when these developments would be financially unfavorable. This could make developing countries more vulnerable to the effects of climate change and other environmental threats.

Policy

In addition to these specific risks, concentration of (technological) power can also weaken environmental policies and regulations. One example of this can be found in the policies of developing countries that allow the unhealthy mining of ores and minerals in mines. Here, a lack of competition from off-take can thwart the development of sound mining techniques. Such innovations require significant investment upfront, with longer payback periods.

Transparency and other obstacles

Development of harmful technologies by technological power in the hands of a small number of actors can result in waste that is harmful to the environment. For example, chromium VI had been released during work by PG&E.

Reduced transparency and control over the development and use of technologies can have negative environmental consequences. One example that has escaped attention for some time is PFAS.

Intellectual property rights, resource control, trade barriers, incompetent technical support, but perhaps most importantly due to a culture and language gap can create problems by creating limited access to clean technologies.

There is a continual magnification of environmental impacts through economies of scale. The last day in the year after which the Earth can recover from the consumption of Earth’s resources is shifting more and more forward in the year.  This is due to an increase in absolute consumption of resources, increase in waste, lack of flexibility of companies to changing environmental demands and influence by global supply chains. It leads to environmental impacts such as climate change, pollution and biodiversity loss, human and ecosystem health problems, and economic damage.

Artificial Intelligence

There are specific environmental risks associated with certain areas of technology: artificial intelligence (AI) produces increased energy consumption and e-waste.

Fatalism

There is an overall reduction in environmental awareness and responsibility possible in that companies and individuals may be less inclined to be concerned about the environmental impacts of their actions if they feel that little can be done about it.

Economic and financial

There are economic-financial risks in the concentration of technological power:

Competition

A first is reduced competition. For example, higher prices may be demanded or firms start hindering competing products. This leads to slower economic growth and fewer jobs. In Microsoft’s story, a dynamic of competitiveness was maintained because there are competitive pressures.

Large companies with dominant market positions can use their power to advance their own interests at the expense of the public interest. This can lead to unfair competition, abuse of market power and a loss of control over key technologies.

A company may create unfair competition through a monopoly position. The government intervenes in such cases to break up such companies.

Dependency

Society is too dependent on technology companies, especially in connection with critical technologies. This entails the risk of geopolitical pressures and efficiency and effectiveness problems of supply chains (including technical ones), which has a negative impact on the global economy. An example is the computer chip industry that faced floods in 2011.

Misuse of user data

Criminal organizations can hack companies with lots of user data and misuse it to sell it to third parties on the dark web. There, they can purchase them to use for targeted advertisements, for example.

Also through algorithmic manipulation, social media platforms may present content to users more frequently to encourage purchase behavior. This too will exploit emotions. Actually, this is an application to loss of privacy and data protection. Because technology companies possess large amounts of data about their users, they can use it through psychometrics for targeted advertising or other purposes.

Politics

Political risks from the concentration of technological power include the following.

Competition and intransparency

Lack of competition in the technology sector leads to concentration of power in other sectors. This gives rise to economic inequality and a loss of democratic control due to non-transparency of technological applications such as algorithms used on the Internet, for example. Misuse of technology easily gives rise to violations of privacy, spread of disinformation and cybercrime.

Welfare

Such things lead to concentration of power, inequality and a loss of psychological and physical well-being of the individual. (See also the book “the anxious generation” by Jonathan Haidt mentioned earlier.) As a result, on a larger scale, this produces a loss of wealth for society.

Fatalism

By keeping their algorithms and data processes secret, it is difficult for governments and citizens to monitor these technologies. Holding companies responsible for their use is therefore quasi-impossible. Even in terms of legislation for them.

Self-interest

Such companies can impose censorship if necessary for their own self-interest. Freedom of speech, privacy and the right to free competition are thus compromised. Large technology companies can thus control the dissemination of information, influence political opinions and possibly manipulate elections. The latter is currently a major fear as new elections are approaching.

Authoritarian regimes already use technologies to socially control citizens or suppress dissidents.

Limited access and lack of cooperation

When Europe’s access to new technologies is limited and intellectual capital flees to better-paying countries, access to new, innovative technologies is more difficult. For example, as versions come onto the market for countries other than the country of production. This gives rise to a loss of political, economic and scientific competitiveness. This protectionism stems from the competitive drive for technological supremacy, can give rise to economic and military espionage and even (cyber) conflict. Drive for technological dominance can give rise to trade conflicts, embargoes and splitting the world into “techno-political blocs”. An example of this has long been the development of atomic weapons.

So there are always political and ethical challenges to international cooperation. This makes it more difficult to reach consensus on common standards and rules.

Legal

Legal risks of concentration of technological power can be divided as follows.

Limiting competition

Companies with dominant market positions can restrict competition and stifle innovation. This can lead to antitrust investigations and fines by the regulator.

Governments can favor domestic companies by keeping technical knowledge within their own country. Technical books on e.g. cryptography where some editions are only for within the USA, and others for the rest of the world.

Restriction of competition may involve monopolistic practices which can lead to price discrimination and reduction of consumer choice

Abuse of dominance may involve tying, exclusive agreements or predation pricing

Consequences can include fines and penalties, such as forced breakup of the company or forfeiture of assets; reputational damage with loss of customers and investor confidence. Further, lawsuits with damages may come from it.

Misuse of intellectual property rights

In the context of the concentration of technological power, misuse of intellectual property (IP) rights can have significant economic impacts on competition and the creative sector. Forms of IP infringement in this regard include counterfeit products, pirated software, patent infringement, copyright infringement, trademark infringement and trade name infringement. Consequences of such infringements are financial losses, reputational damage and unfair competition.

Violation of data protection

Privacy and data protection violations can happen through hacking, data breaches and unauthorized use of data. Possible consequences for individuals include identity theft, financial losses, reputational and emotional damage.

Data protection violations are failure to comply with laws and regulations regarding personal data. This can be through inadequate security measures, careless use of data and lack of transparency. Possible consequences include fines, lawsuits, reputational damage and loss of customer trust.

Legal inequality

Reinforcement of legal inequality is a final important factor. Consequences of unequal access to technology include unfair litigation because access to legal software gives a disproportionate advantage in court cases. In addition, discrimination by algorithms used in the legal system that discriminates against certain groups of people, particularly those less well represented in the datasets on which the algorithms are based. An example of this was SyRI.

Such cases can erode trust in the legal system and reinforces social inequality.

Demographic

Demographic problems of concentration of technological power are primarily an economic inequality. From that, other problems may arise.

Economic inequality and consequences

By widening the gap between rich and poor, a small elite benefits at the expense of the rest of the population. In extremis, such a gap can lead to social unrest and instability in some countries.

Amplification of the gap between rich and poor through concentration of technological power, in addition to elements already mentioned above, can increase through job losses, including through automation and inability to work with digital solutions.

This is especially true for people with low education or those working in industries that are routine and repetitive. There may be an increase in temporary jobs, part-time jobs and odd jobs. These offer less security and benefits give rise to poverty and inequality.

Also, in many countries, it gives workers reduced bargaining power.

Poor families and developing countries also have less access to education and development. This creates disadvantages in the labor market in an increasingly technological world. As a result, these households also have less access to capital to start a business.

Demographic problems often coincide with geographic location. Poor households often live in areas with fewer opportunities, poor schools and few employment opportunities. This can lead to social unrest. An example of this is Gaza.

Other consequential problems

Such demographic problems create other problems, such as negative effects on people’s mental and emotional health. This can include a reaction to feeling that they have no control over their own lives. This can include feeling that the system is unfair, that businesses and governments are not fulfilling their responsibilities or are not doing enough.

Furthermore, the concentration of technological power can lead to the destabilization of regions. This then typically occurs when seeking advantages somewhere, such as resources, access to water or territorial claims.

Such issues make it more difficult to establish international cooperation and address global problems.

Conclusion

The solutions are to be found globally.

The WEF states, specifically for AI as the main concentrated technological power, the following: (free from the document 2024 Global Risk Report – WEF)

“Acting Today:

Several AI governance frameworks have already emerged at the global level to provide high-level guidance for AI development, including the most recent Hiroshima G7 process on generative artificial intelligence, as well as the Bletchley Declaration. In addition, there have already been calls for an “AI version” of the IPCC.

This entity, in collaboration with the private sector, could enable global scientific consensus on the risks and opportunities of frontier AI. Similarly, it could communicate findings to decision makers, based on the best available projections of global AI hardware and software, albeit necessarily with faster assessment cycles. Monitoring could also extend to a reporting database and a registry of critical AI systems. The most existential of these risks, however, requires extensive cooperation among powers to achieve mutual restraint around the proliferation of high-impact technologies, as well as the unintended escalation of military AI.