The analysis company, which specialises in looking at country and industry risks, says that recent events involving Huawei and TikTok show that greater regionalisation is taking place.
Technology “has become geopolitical, but that does not mean that a full splinternet is inevitable”, says Fitch. “Similar events should be expected in the future, with an escalation always possible.”
Fitch notes that TikTok has been banned in India and might potentially be banned in the UK. TikTok, Google, Facebook and Twitter are suspending their operations in Hong Kong, it adds.
Meanwhile, says the company, Huawei is “about to be banned in the UK, reversing a previous decision, but not in France, though with restrictions”.
These are important events, says Fitch “but in our view they do not necessarily mean a full splinternet, where different systems are completely separate and not interoperable, will automatically happen”.
Fitch says it still believes “this is unlikely, even if it has become more possible. Regionalisation has been present for several years, but the idea of sovereignty when it comes to tech has become more prevalent.”
This has already happened because the European Union (EU) has implemented higher standards for data protection. “And certain European countries have ensured that what is illegal in the analogue sphere is also illegal in the digital one,” says Fitch.
“China has also been implementing its firewall for many years, and we see what is happening in Hong Kong as a continuation of that process following the passing of the new security law. The US companies which have suspended their operations are not operating in China, whereas others like Apple or Microsoft, which are present in China, are expected to continue offering their services in Hong Kong under a similar framework as they currently do in the mainland.”
The analysis company says that it expects TikTok “to offer services under its Douyin brand [in Hong Kong], as in the mainland”.
Fitch Solutions warns: “Tech is increasingly becoming geopolitical, and will continue to be used as an extension of broader conflicts. This is not only because of the great power confrontation between the US and China, but also because many countries realise the importance of technology in terms of power, influence, and future economic growth.”
The company notes that “TikTok is turning into a poster child of Chinese tech influence like Huawei: TikTok is easier to ban, because it is an app, and will therefore become a more attractive target to countries wanting to lessen Chinese influence, but at a limited cost.”
It adds: “It remains to be seen whether China will defend TikTok with the same vigour it has done with Huawei, and whether the US will want its allies to ban both companies.”
