In the modern era, nation-states have emerged as a standard notion for communities and their existence and have dominated the global political system since World War 2. ‘Nation’ is a cultural term, referring to a body of people who are naturally bonded together by certain affinities that give them a sense of purpose and unity. It is held together by a shared heritage, including common language, culture and ethnic ancestry and a democratic set-up in which every member has equal rights. Its legitimacy comes from the “will of the people.”
Before the nation-states emerged, the global political systems were dominated by ‘empires’, which comprised many countries (possibly non-sovereign states) and nations under a single monarch or a ruling state government. ‘State’, meanwhile, is a political term, referring to a body of people who live within a defined territory and were unified under a set of institutional forms of governance, which possess a monopoly of power and demands obedience from its people. A combination of the two terms—nation and state—implies that culture and politics support each other; a state derives its legitimacy to rule from its endorsement of a specific cultural group, and in turn, a culture survives and thrives with the aid of political power.
A modern nation-state has to satisfy four fundamental features:
The relevance of nation-states has come under scrutiny in today’s highly globalised world, in which everyone and everything is connected through global information networks driven by the internet. These networks are a community of people who interact with each other, cutting across the boundaries of nation-states. They are moving fast, have more significant impact and an ambition to dominate the world of post-capitalism, where knowledge and insights are based on data, rather than capital, land or labour. Data is the new basis of wealth.<1>
National boundaries are now irrelevant as information can travel from one person to another without the traditional restrictions placed by nations. Today’s world is also deeply interconnected economically and politically through communications and movement of people. This interconnectedness requires cooperation of the nation-states, but the geographical range extends well beyond national borders.
The past hundred years or more witnessed the rise of multinational corporate entities like Exxon, General Electric and Monsanto that become global powerhouses of influence and authority. The 21st century is witnessing a change where data-driven technology giants such as Facebook, Google, Amazon and Alibaba have come to wield even more influence and authority. These new global giants have grown much faster, are more connected to their users and know more about the users because they have access to the new oil - the user’s data.<2>
This is precisely why the millennials are less wedded to the idea of a nation-state than their predecessors. With platforms like Instagram and Snapchat, they have a higher percentage of friends from across the borders and more significant interactions with them that are political, social and also transactional in nature. Since information is shared more effortlessly and seamlessly, hyperlocal networks have developed creating strong links with people from different cultures, lifestyles and languages. These internet-enabled communities are seeking out alternative identities based on faith, ethnicity, language, class or sexuality. This is creating new fault lines in identity politics and posing new challenges for the nation states and traditional political parties.
A new class of digital communities have emerged which are tightly knit, have a concept of membership that mirrors the idea of ‘citizenship’ that acts as a means of authentication, governed by a body of moderators and algorithms.
They have no physical territorial presence but they do have a very significant digital territory presence and go to a great length to preserve that territorial integrity.<3> Facebook, Google and Amazon are prime examples of such communities, also known as ‘Net-States’. The world is entering an era where the most powerful law is not that of sovereignty, but that of supply and demand.<4> Firms are setting the pace vis-à-vis government regulators in a perennial game of cat-and-mouse.
Net-states are techno-political entities with a mix of social and economic flavours and are similar to nation-states in the way that they exercise global influence, both from macro and micro perspectives. Like nation-states, they are diverse. Some are big, like Facebook and Twitter. Then there is GhostSec, an invite-only cyber army created to target the ISIS. There are the ‘hacktivist’ collectives like Anonymous and Wikileaks. While nation-states are based on the idea of tribes, languages and culture, net-states stake their legitimacy on like-mindedness and people coming together for a common purpose, be it social, economic or political.
Regardless of their differences in size and reasons, the net-states share the following qualities:<5>
Online connectivity is developing new and more stable loyalties. In a world that is more geodesic than geographic, the "where" becomes much less important than the "what". Facebook's two billion members, therefore, don't compete with nations, they transcend them. Facebook is not a country but a channel for generating movements driven by ideas and agendas. Net-states like Facebook are the most massive democratically-operating structures on the earth. These states have global members and also advocate for firm boundaries of their own but they live in silos.
Net-States are also substituting for the fundamental functions of sovereign governments. For example, they are taking infrastructure to the future. Companies such as Uber are building the future of transportation in the world. They're creating the kind of infrastructure that mimics governments.
Globally, the internet has been a significant factor for dynamically altering cross-cultural habits, popular entertainment, education, economy and politics. It is encouraging greater cross-border exchange of ideas, flow of information, goods and services. It allows consumers and businesses to bypass national borders. Therefore, it is truly democratic in nature.<6> The internet's decentralising nature has brought this effect.<7>
Many proponents of these new technologies argued that hierarchies per se (including large corporations as well as governments) were outdated and might get replaced by self-organising networks. (A network is defined as peer-to-peer relationships held together by an acquaintance, friendship or other forms of informal obligation.) These networks have given people a voice. What we are seeing for the first time is a clash between the concept of the nation-state and these international, beyond-the-borders corporations. Indeed, a few big tech companies now surpass the size and power of many governments.
While the citizens of nation-states have identities restricted to a single nation, it is possible to have multiple ones in the world of net-states. However, the data these netizens create and share on such platforms remains tightly controlled by the net-states and is usually never exported. The benefits of multiple identities is immense – netizens can avail different services across multiple platforms, cutting across personal (conversations) and professional (business) aspects.
Disruption is the new norm, changing the social and governance structures and existing standards. For instance, the online content on a vast variety of subjects has completely changed the educational scenario. However, what is more significant in the long run is that Facebook, Twitter and other Silicon Valley companies seem to have taken ‘social media’ to the next level, determining the ways in which communities are interacting with each other.
Data in itself is meaningless; what matters are the insights based on analytics of such data. One might get monthly reports filled with vanity metrics and graphs but how would that drive business? How will the numbers bring customers? The information that the fuel tank of a car is empty is meaningless if the car does not need to be filled up.
In today's times, an individual generates vast amounts of data about his or her activities throughout the day – financial, social and others – called ‘user-data’. These data sets act as a user's identity in the internet space. Global platforms like Facebook and Google capture and use these data in a variety of ways. Insights and analytics that are now being generated by such collection and processing of data through informed user consent, are being used to develop new products in the consumer market. Clearly, the power of data goes beyond internet or social media, it is now defining how businesses adapt and shape the future of global markets. The current thinking is that whosoever controls and processes this user-data can shape the global political and financial landscape.
One of the critical characteristics of the net-states is their global nature of operations that allows them to transcend regulations of various nations. Their functionality depends on both interconnectivity and hyper-local actors that participate actively in the communities. They have their unique style of governance determined by their internal policies, functionalities, market needs and the algorithms that run these platforms. The web is increasingly encouraging more cross-border exchanges of goods and services, allowing the users and firms to bypass national borders. Although net-states transcend global laws, ironically, they advocate strong digital boundaries of their own. In the future, nation’s sovereignty will be increasingly difficult to maintain as there will be a conflict between loyalties of virtual and real citizens.
Net-states drive communities that have significant traction in real life. They mobilise communities and generate passion among them the way the nation-states were intended to do. The presence of multiple identities across different spectrums of political and social thought processes makes it easy to mobilise communities. Members of such communities feel extremely passionate about their opinions and are often keen to leverage their community identity in other contexts. For example, the #MeToo movement was completely played out on social media and subsequently triggered to the real world. Origins of movements are changing. Earlier, revolutions started off on the streets. Now, narratives first emerge on social media and from there onwards trickle down to the masses and the real world.
Passion and sentiments are often used by ‘influencers’ to drive home opinions. And it could be about anything – women empowerment, gay rights, privacy etc. The democratic nature of internet allows anyone to become an influencers, provided they receive the support of their peers, of the masses and channelise their sentiments into movements that change the way people think.
Net-states are generating new values as a growing number of people see themselves as ‘global citizens’. They have made it easy for people to accept and adopt different cultures.
Internet has played a crucial role in driving popular culture. Emojis have become the norm for expressing oneself on the internet because of platforms such as Skype, IM, texts, Twitter and WhatsApp. In this fast-changing technological world, abbreviations and acronyms have become key to communication. At the same time, ‘memes’<8> have emerged as a popular choice for expressing humour on the internet. The democratisation of ideas into practices allows people with a free choice to innovate on the internet. Similarly, social media challenges, such as the ice-bucket challenge<9>, infuse a sense of motivation and passion in the minds of netizens.
Culture on internet develops faster, creating unexpected phenomena. Its hyperlocal, yet global. Creation of a meme depends on the number of times Internet users share it and spread it around. Although anyone can upload a picture and caption it, but only when it reaches a certain popularity scale does it become a meme. Once again, this demonstrates the democratic nature of the internet.<10>
Facebook owns Instagram – one of the most popular social networks in the world. It also owns WhatsApp, which is the most popular messaging app other than a couple that is in China. Moreover, they have more than two billion reaches a month because of the ecosystems they have created.
Google, apart from being a search engine, has a whole suite of mapping technologies that include Google Maps and Waze (ride-hailing app). It owns YouTube, the world’s most popular video channel. Google wakes you up in the morning and later recommends a lunch place. While you are on your way to lunch, it is partly responsible for your travels, since Google is an Uber investor.
You start your morning and check-in on Facebook while on the go. You repeat that during lunch with your colleagues. All this while, the data sets of Facebook and Google (and the insights that these data sets provide) know what you are doing at any given moment. In the evening, you return home and switch on Netflix. All this while, Amazon still knows what you're doing, since it owns the web cloud services its rival use (it does not matter if you're watching Amazon Prime or not!). Amazon can replenish your coffee with the touch of a button and will automatically recognise when you have run out of detergent. In addition to the Amazon Store, it owns many different kinds of media and publishing properties, including Audible which has audio books. Amazon also owns Zappos, the shoe company. It holds this suite of different e-commerce sites. It has no other option than advertising on Facebook or Google – who now own about 88 percent of the global internet marketing – to attract new customers.
New apps, such as Uber, Netflix or Airbnb and smaller companies have to go through the likes of Facebook, Amazon and Google to reach their prospective customers. So, while other companies achieve success, the likes of Facebook, Amazon and Google too benefit from that success. The fact is – tech is an intrinsic part of our lives and people are more dependent on it than possibly anything else, including the government. And this just demonstrates the influence and impact they have on our lives.
It's a little hard to define the nature of these technology platforms. They are a social networker, a calendar, job seeker, business platform, publisher, entertainment portals, communities, carriers of movements, a hot- spot of political ideas and a lot more. Their multifarious functions give them great control and power over most of the social and economic activities than what is ordinarily understood.
Ironically, regulating these entities to improve their functioning may actually end up making them even more powerful. Take the case of Facebook. Its news feed is one of the most popular sources of news in the world. Probably more people rely on it than on all the news papers and news channels put together. Now to ask or allow Facebook to regulate its news content would make it an arbiter of morality across the globe.
Today, we have more than two billion monthly active users on Facebook. It is the single largest group of people on the planet, after the Christians, and is growing at a rapid rate (17 percent per annum). Outside China, where it is banned since 2009, Facebook accounts for 20 percent of the total time spent on the internet. In a majority of the Africa countries where the internet was introduced recently, Facebook represents the internet for all practical purposes. The outcome? Nation-states are looking to adapt to the changing global scenarios.<11>
Uber is a fascinating example of how net-states can drive a paradigm shift in vital economic sectors. Globally, Uber has achieved that no ministry of transport could ever did – making transport cheaper, efficient and convenient. In this way it has made a more significant impact than the critical arm of the nation-state. It revolutionised the transport system by bypassing the policy and regulatory processes.
In doing so, Uber has gathered detailed data sets – about the movement of individuals, their meeting or vacation destinations, the kind of vehicles they use for different purposes and many others. These data-sets can provide insights into their income, social circles, daily routines and to an extent their societal status.
The Uber drivers and riders are the members of this community and, in the nation-state's terms, the online infrastructure is the land. Uber may not have any sovereign powers, but it certainly can rub shoulders with governments from the impact it has on the transport sector. Moreover, now it is bringing a new revolution – flying taxis. So, in a way, it is again substituting the function of a sovereign nation.
Uber’s impacts are economic, social, technological and infrastructure in nature. It has brought more jobs, newer forms of transport and mitigating climate change by way of popularising electric vehicles.
It has changed social life. With easy access to ride-hailing options round the clock, owning a car is not necessary any more. One can stay longer at parties and not worry about driving home at odd hours. The safety aspects have been taken care of by 24 by 7 monitoring of drivers. An active rating system for both the drivers and riders has brought discipline and trust to its services.
With their growing power, the net-states are exercising greater control and influence over people’s lives. Net-States are now creating foreign mission to different countries. Facebook is preparing a foreign service that will do what is generally done by ambassadors. Google experimented with this idea in 2006.
Their functioning, however, raises a few important questions about their presence, their global strategy and their operations cutting across boundaries, cultures, and regulations. At the same time however, one questions the governments, as to the survival of the nation-state model. Tech giants have been successful at diluting the influence of governments they have had on their own people, as well as with matters of regulations and policy.
With the emergence of future tech such as Artificial Intelligence and 4th Industrial Revolution, a deeper interconnected world, and more people online than ever, net-states are likely to grow in size, influence and power. They are going to play a major role in shaping the global socio-economic and political systems. While at one hand it bodes for interesting times ahead and possibly a new world order, we need to tread carefully with effective privacy and cyber-security regulations to protect digital rights of the new global citizen.
As net-states evolve, technical issues around data collection, processing, storage and purpose will be key for governments across the globe to implement effectively. Similarly, political issues around regulation and the extent of it will require greater thinking and attention from world leaders in the years to come.<12>
<1> Peter Hinssen, “How Power Is Shifting from Nations to Networks,” Forbes, 6 June 2017.
<2> Hinssen, Supra note 1.
<3> Gaurav Koley, “The internet is creating net-states,” Koley, 8 December 2017.
<4> Parag Khanna, “These 25 Companies Are More Powerful Than Many Countries,” ForeignPolicy.com, March–April 2016.
<5> Alexis Wichowski, “Net states rule the world: We need to recognise their power,” Wired, 11 April 2017.
<6> Julia Franz, “Confronting the new geopolitics of ‘net-states’,” PRI, 23 November 2017.
<7> Dylan Hewitt, “Technology and the nation-state: governing social complexity,” 29 May 2013.
<8> A meme is an idea, behaviour or style that spreads from person to person within a culture, often with the aim of conveying a particular phenomenon, theme or meaning.
<9> The Ice Bucket Challenge is an activity involving the dumping of a bucket of ice and water over a person's head, either by another person or self-administered, to promote awareness of the disease amyotrophic lateral sclerosis (ALS) and encourage donations to research.
<10> Younès Rharbaoui, “Culture of the Internet Nation,” Salon, 10 April 2017.
<11> Robbie Gramer, “Denmark Creates the world’s first ever Digital Ambassador,” Foreign Policy, 27 January 2017.
<12> “SOLVED: What is a Net State and is Facebook the first?, Up and Running Technologies Incorporated,” Urtech, 21 November 2017.
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