Information technology was supposed to usher in a new borderless utopia, but instead new walls are reappearing.
PARIS —The world was supposed to become a village.
That was 10 years ago, an eternity in Internet time. New York Times journalist Thomas Friedman was writing his book The World Is Flat, destined to become an international bestseller. Men, merchandise, capital and information were going to move freely around the planet. The walls erected by communist countries had collapsed, as had shipping costs, thanks to the development of container transport.
The Internet and burgeoning information technologies played a central role in this great opening.
Among the 10 “flatteners” Friedman listed, five came directly from the world of the Internet (web browsing, downloading, search engines, etc.), and four were largely amplified by information technologies (outsourcing, elongation of value chains, etc.). The problem was that this vision of a flat world was wrong.
First, we rebuilt walls, and not just in poor regions — in the U.S., Israel and Italy too. Then, the deepest financial crisis in almost a century demanded national resources to save entire segments of industry. The American government saved General Motors by nationalizing it, while the French government rushed to the rescue of Renault and Peugeot by supporting their credit subsidiaries.
Freedom of trade was also breached. But most importantly, the Internet was transformed deeply. It was supposed to shape the framework for the global village. Instead, it is becoming the matrix of a new world, with its continents and empires. Last December, a Slovakian graphic arts student named Martin Vargic published a superb map illustrating this idea, and it was a huge success on social media.
History repeating itself
It is not the first transformation of the electronic network. In the 1960s, the Internet was a military project aimed to build a decentralized telecommunication system in the form of a web able to resist a nuclear attack. The tool was quickly taken over by university researchers so their works could move around the world. This is what led to the utopian dream of an open and free world, far from financial stringencies.
But with the tools that were developed in the early 1990s — hyperlinks, for example — the network became accessible to a much larger number of people. Various companies saw the potential, as did investors. Nothing gets them more excited than a new world.
In the 18th century, investors speculated on the future of America by fighting each other in the rue Quincampoix, in Paris, to buy shares of the Mississippi Company. At the end of the 20th century, they were fighting to buy the ships that would allow them to sail on the Internet — Netscape, Yahoo!, and eventually Google.
The dot-com bubble burst in 2000, and that represented the symbolic end of this era. That’s when the Google moment started. The search engine established itself as the essential gateway, and the company soared on the stock exchange. The specter of a mega-monopoly was in sight. But in reality, cracks were appearing. Companies built their own ecosystems that included everything that could be done — browsing, buying, communicating. And it became complicated to go to the competitor.
Yves Tirode, head of the French railway website voyages-sncf.com and former director of the Orange research center, talks about going from the Internet to a “Multinet.” Apple is currently the most advanced in creating its continent, but others are emerging. There is a Google world, an Android world. The Windows 8 world for Microsoft, with its Surface tablets. A Chinese world, including its search engine Baidu, the online video game and messaging service Tencent, and the marketplace Alibaba. Maybe an Amazon world tomorrow, with its Kindle tablets.
Each continent is building itself with the three classic layers of information technologies. Hardware first, in which IBM established itself more than half a century ago. Then software, in which Microsoft became the leader of operating systems 30 years ago, and where it still achieves unbelievable margins with a word and number-processing program. It is Android, IOS or Windows. Finally, there is the marketplace, because the IT giants are no longer settling for earning money in their sector only. They intend to earn some in the others, and if possible, across the whole economy. For that, each continent is protecting itself in order to keep its customers. People who stocked their music, photos and agenda in the Apple world have the most difficulties migrating elsewhere.
In other words, borders are reappearing!
With this burst of the Internet, all the companies offering their services online have to meet new requirements: invest on every continent, as one invested not long ago to be implanted in Africa or in Asia. For instance, Les Echos must have an offer that is adapted to computers, to the iPhone, to Samsung’s Galaxy that runs with Android.
The burst also reveals the absence of Europe. No Internet continent has any European layer. Startups from the Old Continent are likely to be snatched away so they can blossom in other places. Beyond this, the burst is leading to a world that is disconnected from physical and political geography. It is a radical innovation.
With all due respect to those who would despise a stateless form of capitalism, classic companies all have local roots — even in finance, which is often opposed to the “real” world. The first French bank has “Paris” in its name twice. The first German bank is called the “Deutsche Bank.” As for the Internet continents, they are shaping new worlds. And not just to avoid paying taxes.