The global trend of digital fragmentation seems unstoppable. Barring intervention by the Supreme Court, a law banning TikTok in the U.S. will go into effect later this month, despite the company investing billions in implementing U.S. data-localization requirements. China’s own AI regulations prevented the first generation of large language model chatbots from reaching the country. And while the European Union’s Digital Markets Act, Digital Services Acts and AI Act have created regulatory clarity, they may also limit foreign firms’ capacity to do digital business in the EU.
While tech powers like the U.S. and China push for ever more digital fragmentation, the rest of the world often bears the costs, with regulatory, economic, technological and security implications. With digital fragmentation showing no signs of slowing down, various countries are now adopting a range of ad hoc approaches to navigate the challenges and risks it presents. Yet, the most effective strategy is likely to be one of pragmatic resilience, characterized by adopting non-antagonistic narratives, emphasizing short-term results and pursuing long-term regulatory ambitions.
What Is Digital Fragmentation?
Digital fragmentation is often discussed from the perspective of who is doing the fragmenting. One view focuses on corporate actors who, by creating closed digital ecosystems, make it prohibitively expensive for consumers to migrate across digital ecosystems. This monopolizing strategy reinforces and expands companies’ market advantages but often leads to higher prices and less choice for consumers. It also decreases the interoperability of systems and applications.