The fast-growing digital economy (UNCTAD) as inequality expands the digital divide

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The data-driven digital economy is booming, with global Internet Protocol (IP) traffic more than tripled between 2017 and 2022. However, according to the economy report UNCTAD Digital 2021 published on Wednesday, the digital divide is expanding.

According to the United Nations Conference on Trade and Development (UNCTAD), the Covid-19 pandemic has significantly increased Internet traffic as many activities had to adapt to this new reality and establish an online position.

According to the report, Internet bandwidth increased by 35% in 2020 from 26% in the previous year.

The increasing share of data flow is linked to mobile networks. According to the report, mobile broadband data traffic is expected to account for almost one-third of the total data volume in 2026 as the number of mobile devices and internet-connected devices increases.

However, UNCTAD points out that the data-driven digital economy “unfortunately is characterized by large imbalances and large disparities.”

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“As the digital economy grows, additional data divides are exacerbating the digital divide,” said Shamica N. Silimann, Director of Technology and Logistics at UNCTAD. It encourages the establishment of a new international system for regulating data flows in order to redistribute profits more equitably.

Developing countries have been relegated to a secondary role

The UNCTAD report states that in this new configuration, developing countries “must be merely suppliers of raw data to global digital platforms, while at the same time paying for access to digital intelligence gained from their own data.” Is warned.

Only 20% of people in least developed countries (LDCs) use the Internet, and when using the Internet, download speeds are usually relatively slow and correspondingly expensive, the report said.

In addition, the average speed of mobile broadband is about three times faster in developed countries than in least developed countries.

Also, in many developed countries, 1 in 10 Internet users shop online, while in many LDCs, less than 1 in 10 shop online.

International bandwidth usage is geographically concentrated along two major axes: North America-Europe and North America-China.

Digital giants strengthen their dominance

According to the report, the largest digital platforms, Apple, Microsoft, Amazon, Alphabet (Google), Facebook, Tencent and Alibaba, are investing more and more throughout the global data value chain.

They are investing in data collection via user service platforms, data transmission via submarine cables and satellites, data storage (data centers), and data analysis, processing, and use via artificial intelligence (AI) and more. increase.

With the acceleration of digitalization, the size, margin of profit, market value, and advantage of these platforms were further strengthened during the pandemic.

Through privileged access to data, network effects, economies of scale, and economies of scope, these platforms have become global digital enterprises with global reach. Huge financial, commercial and technical power; someone who manages an infinite amount of data about users.

UNCTAD reports that Amazon has invested about $ 10 billion in satellite broadband.

Amazon, Apple, Facebook, Google and Microsoft were the top winners of AI startups between 2016 and 2020.

In the last quarter of 2020, the four major platforms (Alibaba, Amazon, Google and Microsoft) alone accounted for 67% of global cloud infrastructure services revenue.

By 2022, the global online advertising spending share of the five largest digital platforms (Alibaba, Amazon, Facebook, Google and Tencent) is expected to exceed 73% from just 50% in 2015.

An innovative approach to global data governance is paramount

As cross-border data flows become more and more important in the digital economy, UNCTAD seeks an innovative approach to equitably regulate them at the international level.

A new international system for regulating data flows is essential so that the resulting benefits can be redistributed more equitably.

Currently, an entity that can extract or collect data is in a privileged position to properly use most of its value.

“A new international system for regulating data flows is essential to enable a more equitable redistribution of the resulting benefits,” said Shamika Silimanne.

According to her, the international community should pay more attention to the current bills that characterize the world’s digital economy, which can be seen not only between countries, but also between nations and businesses.

“The lack of adequate skills within government is likely to lead to a lack of technical and analytical expertise in the legislative framework-building process and regulation,” said Torbjörn Fredriksson, head of UNCTAD’s e-commerce and digital economy division. To do. »»

He adds that this situation can hinder both the opportunities offered by digital technology and the risks and dangers that they can arise, as well as the government’s ability to identify the means to address them. increase.

The report also highlights the fact that developing countries are suffering from brain drain for the benefit of developed countries, so they are not well represented in discussions on developing public policy at the global level. , World inequality.

While all countries need to allocate more resources to develop the ability to create and capture data value at the national level, many developing countries need international support to do so. There is a possibility. And technical resources are underlined in the report.