Geopolitical perspectives on digitalisation

The great value-creating potential of the digital transformation, the changing geopolitical situation and an increasingly rapid technological development have made digital technologies increasingly strategic. The development of 5G is a clear example, where the race for technology and standards in combination with geopolitically motivated barriers to trade and investments has come to the fore.

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Access to data and digital technical solutions is of fundamental importance for countries' competitiveness, innovative capacity and resilience in order to maintain and develop important societal functions. Sustainable digital development is about optimizing the conditions for digital technologies to contribute to competitiveness, solutions that enable system changes for sustainable societal development, while at the same time an open society based on civil liberties and rights is safeguarded in digitalisation.

Sweden is a high-tech nation at the forefront of digitalisation with openness and sustainability as guiding stars. But in order to continue in that direction, Swedish actors must gather nationally and work strategically internationally, especially through the EU. Key areas for national power gathering include communication technology, data sharing, microelectronics, AI and quantum technology - developments that include not only technology but also the industrial and societal systems that these technologies are part of.

The geopolitical dimensions of the digital revolution

Sedan Francis Fukuyama at the end of the Cold War declared "the end of history" and the final victory for an open liberal world order, the geopolitical context has undergone a dramatic change. China's emergence as a dominant authoritarian global player, Russia's return to real-political zero-sum games and the political uncertainty that characterizes the United States underline the importance of control over digital technologies.

The openness that the Internet revolution entailed has largely been replaced by a digital arms race, where data and digital technical solutions are becoming increasingly crucial for countries' competitiveness, innovative capacity, security and capacity for sustainable societal development. China's rapidly growing research and innovation capacity as well as the market dominance of a handful of large American technology companies are contributing to the digital arms race. The same applies to the increased distrust of unregulated use of individual data and algorithmic decision-making.

The fact that digital technologies have become increasingly central to the geopolitical considerations of different countries is clearly reflected in national research and innovation strategies, with the United States, China, South Korea and Japan as clear examples. These are primarily artificial intelligence, cloud-based data processing, advanced communication technology (5G and 6G), quantum technology and microelectronics - technology areas that are on the EU's agenda for strategic investments, but where Sweden must also gather strength.

Competition for technological dominance

There is a clear line of conflict between the United States and China in terms of technological dominance. The US National Strategy for Critical and Emerging Technologies emphasizes the importance of maintaining dominance by limiting China's access to US technology and knowledge production. There is much to suggest a significantly more active research and innovation policy in the United States in the next few years, with increased investments in strategic technologies. It also wants to put pressure on other countries to limit China's access to important technology.

National autonomy in technology is an overarching objective even for the Chinese regime. The extensive interventions that the regime has implemented since the autumn of 2020 against leading Chinese technology companies have aimed to limit the position of power that these companies have acquired, not least due to the massive base of user data that the companies have built up. Instead of developing services for the consumer market, the Chinese regime has a clear ambition to gather Chinese expertise to develop advanced digital capabilities in the national interest, primarily linked to artificial intelligence. From a global perspective, governance and control of the Internet is one of the cornerstones of the Chinese regime's strategy to transform global institutions and norms to reflect the values and priorities of the Communist Party. The expansion of Chinese-controlled global fiber networks is an important part of this strategy.

The current world order is often described as a struggle between the United States and an emerging China. But while most EU member states have become increasingly dependent on China (which from 2021 is the country from which Europe imports the most), EU-US bilateral trade and investment cooperation remains the most integrated economic cooperation. in the world. China's increasingly powerful conduct has accentuated the importance of the transatlantic link in maintaining an open and liberal world order. At the same time, the uncertainty caused by the US's polarized domestic political situation means that the EU is increasingly striving for its own path towards open strategic autonomy.

Open strategic autonomy as a goal

The EU strives for open strategic autonomy in the geopolitical game of developing and using digital technologies. "Autonomy" refers to control over the supply of skills and components as well as influence over the design of the technologies and the conditions for their use; "Open" indicates that it is neither seen as possible nor desirable to close exchanges with the outside world.

Technology supply and dependence on overseas countries is a prominent theme in EU technology policy discussions. This is happening, among other things, against the background of the increased tensions between the USA and China. The member states of the Union have their own interests in China that need to be asserted without too much alignment with the interests of the United States. The EU and the US also have different interests and approaches in terms of the need to regulate AI and data use and in terms of managing the dominance of large US companies.

Several member states have made extraordinary investments in digital transformation as part of the adaptation to and recovery from the pandemic, but also to push for increased sustainability and resilience. Important investments are also being made to accelerate the digital transition, above all through the new framework program Horizon Europe, the cluster "Digital, Industry and Space" and "Digital Europe Programme”. The investments focus on the development of supercomputers, AI, cyber security and competence. They also include support for digital transformation in companies and the public sector through digital innovation hubs.

Preserve the role of an open high-tech nation

Sweden also needs to strive for open strategic autonomy. Partly to strengthen the role as a high-tech nation that is open to the outside world, partly to safeguard civil liberties and national security. At the same time, the geopolitical challenges must be met through the EU and in cooperation with the member states. Domestic policy initiatives are needed that make it possible to contribute to strengthening the EU's position and that strengthen the conditions for influencing EU geopolitical action.

Sweden's opportunities to contribute are greatest in areas where Swedish business and industry has a strong position internationally. The development of the next generation of technology for mobile communication, international standards and platforms for data sharing between companies are examples of areas where Sweden has both strong interests and much to contribute. At the same time, other strategically important areas need attention, including microelectronics, AI, cybersecurity and quantum technology.

Communication technology (5G and 6G) has in recent years ended up at the top of the geopolitical agenda. As data communication has become an integral part of most operations, issues concerning security and vulnerability are raised, at the same time as issues relating to lock-in effects, supplier situations and competition. Telecom operators and governments in the United States, Japan, Germany and the United Kingdom consider that competition in the mobile infrastructure market is insufficient and therefore actively support the development of technology for so-called Open Radio Access Networks. In ten years' time, this may radically change the conditions of competition in the market for mobile technology and Sweden needs to act proactively in relation to this. Sweden has a strong tradition through Ericsson which, together with a well-developed infrastructure, can provide significant funding for the EU's open strategic autonomy in the area.

The opportunities for data sharing play a crucial role in the digital transition in both business and society. The area is complex and contains important issues such as standardization of data structures, communication technology and cloud and edge-based data processing using AI. In addition, there are many non-technical issues related to business models, law and ethics. Several EU countries are pushing to build an infrastructure for secure data sharing and data processing services within the EU. Particular focus is on data sharing across corporate, organizational and national boundaries. Sweden needs to increase its involvement in this area. Implementation of concrete demonstration projects for international data sharing can strengthen Sweden's knowledge base and thus the opportunities to act in the geopolitical area.

Access to advanced microelectronics is crucial for Swedish industry. Att Sverige does not have domestic component manufacturing, making it particularly important to support the EU's efforts to ensure access to advanced microelectronics. The problem has been accentuated by US action to block China's access to technology for the most advanced microelectronics. The global component shortage in the wake of the covid pandemic has further accentuated the need to secure the supply routes. Important in this context are the European Commission's Important Projects of Common European Interest (IPCEI). So far, two project have been approved, one in microelectronics and one in the battery area. In addition to these, planning is underway for new IPCEIs for microprocessors and semiconductors, as well as for hydrogen, space rockets and low-emission aircraft. The projects are part of the policy of open strategic autonomy.

Both the European Commission and individual member states are making major investments in artificial intelligence (AI), partly as a result of the growing need for large-scale data processing. Sweden's opportunities to contribute to, influence and benefit from the development of AI depend on the degree to which practical use takes place in both business and the public sector. The EU wants to see a partially different and stricter regulation than is the case in, for example, the United States. The EU has the ambition to take a leading role globally in terms of principles for the development and use of AI. The principles put man at the center. This is well in line with Swedish interests and the tradition that exists in user-centered design.

Quantum technology is highlighted as strategically important by the EU, even though the technology is still in an early stage of development and the practical applications are a few years ahead. Through extensive and long-term funding from Knut and Alice Wallenbergs Stiftelse, Sweden has active and internationally anchored research in the area, where several Swedish companies collaborate in research environments. However, Sweden has so far acted passively when it comes to planning R&D initiatives at EU level.

PDF version of policy letter 2 - Geopolitical perspectives on digitalisation