Huge implications of technology-sector issues in coming year

Looking at 2016 from the perspective of this column, many intriguing technology-related issues emerged or morphed during the year. I have chosen a selection that feature on my own radar, all of which I believe will increase in importance and implication as 2017 unfolds.

First up, a huge and complicated one: the absolutely critical business issue of data transfers between the EU, the US and post-Brexit UK. A new agreement, Privacy Shield, was formally agreed in 2016 to replace the old inadequate Safe Harbour principles and enable the continuance of the billions in annual trade reliant on such transfers. However it is under legal challenge by privacy advocate Digital Rights Ireland, which argues it does not meet data-protection requirements outlined by the European Court of Justice (ECJ). That case, if accepted, will be heard in Europe in 2017.

Parallel to this is a second case involving the Irish Data Protection Commissioner, who wants a ruling on the validity of the special contractual clauses many companies have relied upon as an alternative to Safe Harbour or Privacy Shield. These contracts and agreements are dependent on the US – and soon, post-Brexit UK – showing that EU data is given adequate protection. Yet, the incoming Trump administration shows every sign of supporting increased secret surveillance. If so, the US will find it difficult to maintain that Privacy Shield is fit for purpose.

The UK has just passed the draconian Investigatory Powers (IP) Act, which in effect gives lawful permission for the secretive, wide-scale surveillance revealed by Edward Snowden – and the European Court of Justice just ruled unlawful the sweeping surveillance powers allowed in what has become the IP Act. The looming question for 2017: can the US and the UK believably provide mandatory EU data transfer protections? If not, what happens to trade reliant on digital data transfers?

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UK Investigatory Powers Act sparks major privacy fears

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Make no mistake, this is a tier one business issue of resounding – unthinkable – potential impact. Data transfers quite conceivably could be halted, a scenario mostly ignored by the business world (large to small), legal advisers and politicians, all alarmingly under-informed on privacy and data-protection policy and politics.

Next: the “gig economy” and its millions of not-really-employees, who work under the aegis of “disrupter” companies that have been gorging on VC funding, such as Uber and Airbnb. The companies argue that they fall outside of the regulation placed on the (oddly similar) industries they disrupt.

Now, though, life for the disrupters is being disrupted. Many are facing a rake of lawsuits from unhappy consumers, officialdom and “employees” (who argue they are actually employees). New regulations and requirements have been imposed in some locations. Some firms are losing money – Uber, valued at $69 billion, is said to be nursing an $800 million loss in the third quarter and could end 2016 a couple of billion in the red.

Will these disrupters simply be companies that exist in a short window when they take advantage of under-regulated industries before collapsing or turning into more traditional companies? Will they make or lose money for investors? The coming year will be interesting.

Third on my list: the adoration of the algorithms. Until 2016, many people admired, or at most ignored, those adept, money-making computer algorithms developed by companies like Google and Facebook, which shape our searches and determine what we see online. However, after Brexit and the US presidential election and the emergence – for some demographics, dominance – of fake or highly filtered news, algorithms are under fire.

Companies like Google shamefully missed the depth to which their algorithms were being gamed and exploited for a worryingly long time – even to where the predominant returns on searches on the Holocaust on Google were sites stating the Holocaust was a hoax.

Some, including politicians, are now arguing that these ultra-secret algorithms, with their little understood calculations that silently dominate public discourse and private life to the point where elections could possibly be influenced, must be more transparent.

And a final jumble of issues I think will keep growing in 2017: first, multinational taxes. The EU to the left of them, bombastic Trump threats to the right – what’s a big tech company to do? Under threat of losing those ingenious tax breaks, they’ll have to wait and see whether Trump actually does more than mouth off and whether the EU can force payments.

Second: what constitutes a media company in these internet-dominated days? This matters in terms of regulation, royalties, income and content production. Right now, Google and Facebook eat up most online revenue for news actually produced by "real" media organisations. Facebook chief executive Mark Zuckerberg has just conceded that Facebook is a sort of media company, if not a traditional one (see "gig economy", "algorithms" and "data transfer"). For a long time, we have been told (as with Google) that the companies merely provide a technology "platform". The implications of being a media company eventually could be significant.

I’ve got one more that emerged over Christmas – but I am saving that for a full column next week.