Linklaters Technology Legal Outlook for 2021
After the seismic events of 2020, the new year offers new hope for tackling the COVID-19 pandemic, for economic recovery and for “building back better”. Technology and data will continue to have a critical role in all aspects of the global economy, and this will present opportunities and challenges for tech companies. Businesses will be the subject of increased scrutiny and will need to navigate a climate of heightening risk and increasing regulation of the digital economy.
We highlight the key global trends in the technology sector that we believe will shape the legal outlook for businesses in 2021 and beyond:
01 — The shifting global dynamic
Covid-19 dramatically shaped 2020 and the pandemic will continue to influence geopolitics and the global outlook for 2021. Following a number of major breakthroughs in vaccine development, there are expectations of recovery in 2021. In the meantime, it is clear that continuing to live with Covid-19 will involve more living and working online, sustaining higher demand for digital services. This digital dependency will continue to fuel the growth of tech investment and we expect investors to focus on the key verticals that have attracted significant investment in 2020: fintech, digital health and digital infrastructure.
While there is an expectation that in 2021 President Biden will bring a more predictable and multi-lateral approach to U.S. foreign relations, the U.S. and China will remain rivals, vying for tech supremacy and related economic power and geo-political influence. These two superpowers, along with many other nations, are likely to continue to take steps to protect their economic and security interests, such as controlling foreign investment in certain tech and restricting the international transfer of personal data. Tech companies, especially those with relationships with the U.S. and/or China, will need to reconsider and adapt their global operations in light of these developments.
02 — Viewing the future through an ESG lens
Tech is considered critical to recovery from Covid-19: businesses are accelerating their digital transformation; investors see greater returns in tech investment and governments see tech investment as critical to economic recovery. As governments across the globe seek to “build back better” and to promote a green recovery, there is an increased focus on Environmental Social and Governance (ESG) issues and tech will have an important role to play in enabling these objectives.
In the wake of the pandemic, extreme weather events such as the Californian wildfires, and recognition of inequalities highlighted by the Black Lives Matter movement, we have seen ESG considerations feature prominently in: investor scrutiny; demands from stakeholders; business decisions; new regulatory initiatives; and conditions in the award of public funding.
In 2021 ESG and, in particular, the social aspect, should be a priority for tech companies under pressure to address online harms and to improve their diversity, and more generally for organisations which need to address the legal and ethical issues arising from commercialising data and deploying advanced technologies.
03 — Regulation and redress in the digital economy
In a world where we have become dependent on digital services in almost all aspects of our lives, and businesses and governments are reliant on technology for future prosperity, there are fears that major technology companies have become too powerful, and the digital economy cannot be allowed to develop unchecked.
In 2021 we are likely to see continued scrutiny of Big Tech, increased regulation of the digital economy, greater enforcement by regulators and heightened litigation risk as individuals pursue collective actions for alleged failures. We expect a new wave of competition law regulation and enforcement led by Europe, the U.S. and China.
To read more from Linklaters Technology Legal Outlook 2021, click here.
Author: Julian Cunningham-Day, Global Tech Sector Co-Leader, TMT Partner, Linklaters