The Digital Domain and the New Social Contract

In the last two years, humans generated more data than in the past twenty thousand. Today there are over 8 Billion connected devices but that figure will jump to 40 Billion by 2025 with the coming of age of the Internet of Things. This systemic shift in how we operate, communicate, register and process data will change our economy, politics and social interactions. The implications of digital transformation are manifold and range from a changing landscape of economic power, to the redefinition of privacy, to the geopolitical implications of the emergence of data.

This process, however, also brings with it numerous challenges linked to the generation and distribution of income. The Social Contract—that in the US was centered around social mobility and in Europe around economic security—looks increasingly broken and the gap between the highly skilled and everyone else is growing. These technological and economic transformations have reshaped the relationships between education, work, opportunities and welfare, rendering our previous social contract outdated, and making it necessary to establish a new one that benefits everyone.

The understanding and governance of systemic shifts of this nature requires a new set of policies and regulations to foster innovation around data and its governance while improving social inclusion. This research program tries to support this process by analysing the transformation of the digital domain and the fracture of our social contract from a multidisciplinary perspective, and advancing new and realistic solutions for future agreements.

The New Digital Domain

How the Pandemic Reshaped Geopolitics, the Social Contract and Technological Sovereignty

As a spearhead effort for the research programme, this report analyses the impact of the pandemic on the key trends of the digital economy, power and social cohesion. It proposes a series of recommendations for global and economic governance and identifies opportunities to improve the Social Contract in the digital era.

The COVID-19 pandemic, besides triggering the most severe economic crisis since the Great Depression, is accelerating technological trends that were well in the making before its outbreak. When the Great Lockdown froze the global economy for several weeks, only the companies that had already invested in digital operating models could guarantee continuity to their business operations. While in the pre-crisis years most firms of a sufficient size had moved towards a digital core based on software, data, and digital networks, only some had reached sufficient digital capacity to transition to a new business model almost overnight.

The pandemic has not only exposed the wide technological divide between those who were ready for hybrid business models and those who were not, but it has also sharply accelerated the pre-existing move towards digitalization.

Today’s biggest winners are the big tech companies, who represent the lion’s share of the most valuable companies that run on data, algorithms and apps rather than physical labor, but have also managed to utilize the under-governed nature of the digital domain to avoid paying tax and social security. The societal flipside of the growing digital gaps between winners and losers has been skyrocketing inequality and the hollowing-out of the middle class—something that in the short term the pandemic is likely to exacerbate.

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For too long, and on too many issues, the governance of technology has been left solely to those who design it. Instead, we need to think critically about how the deployment of digital technology in our society bumps up against our existing democratic laws, norms and regulations. Data governance needs to be embedded in a much broader policy agenda that includes international politics, competition policy, content moderation policies, and a host of data rights issues.

Managing the adverse effects of the dynamics of the digital domain will require holistic approaches to platform and data governance.

The recommendations and topics of exploration included in the report (global governance, economic governance and social contract) are intended to serve as a basis for further research.

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RESEARCH TEAM

Oscar Jonsson

IE University

Taylor Owen

Centre for International Governance Innovation

Edoardo Campanella

IE University