Welcome to the KuppingerCole Analyst Chat. I'm your host. My name is Matthias Reinwarth. I'm an Analyst and Advisor with KuppingerCole Analysts. For this episode, I want to welcome Alejandro Leal. He is a Research Analyst with KuppingerCole. Hi, Alejandro.
Hi, Matthias. Happy to be back.
Great to have you and for the topic of today I try to look at things a bit differently at least from the beginning. IT people tend to be sci-fi aficionados and so am I. And we are talking today about cyber warfare and this is a term which immediately reminded me of a book that I've read really decades ago by the sci-fi author William Gibson who actually coined the term cyberspace. And he described the cyberspace in Neuromancer as a hostile world, as a world controlled by powerful corporations, where data is currency and where digital spaces are battlegrounds. And fast forward to today, I think he was not that wrong. His vision is strikingly real. Nations, corporations and cyber criminals, they engage in digital warfare and that has profound economic consequences. We have cyber attacks against everything that's dear to us from financial systems to infrastructure and it costs billions and it reshapes global power dynamics. And this is what we want to talk about today. You did some research in that area, Alejandro. So let's kick off the discussion with an open question and I think how does the current geopolitical landscape, and it is weird, we know, how does this really challenge the once anticipated vision of a peaceful, unified cyberspace and what has actually contributed to this shift? Why are we where we are right now?
Sure. Well, as you probably know, Neuromancer by William Gibson is one of the first Cyberpunk books, or at least it's the most famous. And there's this quote that I like about Cyberpunk that says, "Cyberpunk is not about saving the world. It's about saving yourself from the world". So that can be also understood as in the early 1990s when the internet first became available to the public, it was a time when the Cold War resided into history and we saw a dominant United States leading a sort of unipolar international system. And some political theorists, most famously a political scientist named Francis Fukuyama, said that we just reached the end of history, that universal history reached its zenith and from now on, other countries will be adopting economic liberalism and Western values. And sort of that was like the end of history. But of course, we know that that was not accurate. But if you see the 1990s, many countries started to open their, let's say, borders for foreign direct investment. For example, where I'm from, Mexico started a process of privatization in the early 1990s. And then in the year 2000, we had the first democratic election, also in other countries in Eastern Europe. So there was this notion that if countries start to embrace these Western economic principles, that would lead to economic liberalism and then to political liberalism. And that was sort of the idea of China. But as we know, in the next decades that followed, we saw the rising power of China, as well as other powers asserting their regional influence. So this shift from unipolarism to multipolarism can also be seen in cyberspace. We see nations that are prioritizing national security interests over global norms. Many nations that do not align with Western values, they see cyberspace as a platform where they can assert their influence and where the state can sort of mark their own sovereignty. Especially in year 2011 when we saw the Arab Spring, many countries and analysts were talking about the powerful effect of Facebook and WhatsApp on arranging protests and how that's a huge advancement for democracy. But that didn't really lead to what people were talking then. It led to more surveillance. It led to more, let's say, protectionism. And now we are in a place where Western nations are having a different understanding of cyberspace than nations that don't share the western values that we do.
Right, and that is exactly also the point where cyber warfare has turned into a modern economic and geopolitical factor. as you've mentioned, there are different aspects of values, but this is more or less a political statement. Where does cybersecurity and where does cyber warfare come in at that place? Is it just destructive? Is it espionage? What is really behind that? Where does it come in?
Yeah, I think that's an interesting question because we can find some similarities with the discovery of the New World. So there was this Dutch jurist and philosopher named Hugo Grotius. He wrote an international law book in 1609 where he talked about how the seas, the ocean should be a free space for any individual to go to trade and to explore. And that was a response to the Portuguese. Back then, the Portuguese had a of like a claim of monopoly on the East Indian trade. So it's interesting that we see those parallels. The New World was also known to be a place of opportunity, of freedom and lawlessness. So it is not coincidence that we saw religious groups that were persecuted in Europe going to the New World. They found refuge in these new spaces. But also we saw the emergence of piracy and new criminal activities. But the discovery of the world also changed the perception of what sovereignty means, what legitimacy means, and it sort of transformed European conflicts from continental warfare, let's say, to economic warfare or colonization. So in a way, also, if we see the emergence of outer space in the 1950s. There was also that sort of power competition between the US and the Soviet Union. And then that space was transformed also in 1990s when we saw the rise of private actors going into space. I guess cyberspace in a similar way is this new sort of spatial horizon that brings questions of sovereignty. And I think that has become more prevalent these days.
You mentioned that we have moved from a unipolar or from the traditional Cold War scenario that we had earlier in the 90s or before. Now we're moving to a multipolar world. You have already elaborated on that. But also the way how we translate our political systems into cyberspace is really something that is a bit influencing the way how we look at the cybersecurity. So the US EU model of the open internet being a platform being something where freedom also should be granted to each individual and to businesses and to countries and to governments. On the other hand, there's a model like the Chinese digital sovereignty model that also shapes global relationships. But on the other hand, also the way how countries how regions look at the internet as a whole, does this influence this cyber warfare aspect as well?
Yeah, absolutely. And I think it's interesting that in the early 1990s, there was a person, he was a lyricist of the band The Grateful Dead. His name was John Perry Barlow. And he wrote a famous paper, I think it was in 1996, called the Declaration of the Independence of Cyberspace. And there was a famous quote where he said, governments are not welcome here. You have no sovereignty in this place where we gather. So in the early days, we saw these sort of... there were different understandings of what cyber space is. And again, it's similar to how the seas and the ocean were perceived in the 16 and 17th centuries. But also we saw in the internet, the rise of criminal activities. I believe that the first e-commerce transaction was performed in the early 1970s between students from Stanford and MIT. They were selling to each other, I believe, drugs. So we can see that even in its infancy, the internet has been used for unconventional purposes. But to answer your question, the different visions for cyberspace reflects the different visions of how nation states see sovereignty. So that's why we see now the creation of alliances. As you said, the US and the EU often share similar values. So they tend to cooperate together on aspects relating to cyberspace. And then we see other nations that are, let's say, geopolitical rivals to the US and to the EU. They're challenging this idea of a unified cyberspace and an open ecosystem and a free internet. So we see clear ideological divides over what cyberspace should be, and it's often reflected in the way nations perceive themselves.
And if we go more into detail, and I fully agree with what you just said, if we go into more detail or if we look at what is really at stake, there are some key elements within the internet, within the global networks that are at stake, that are endangered. And one of those, and we read that in the news all the time, are, for example, the undersea fiber optic cables that are so critical in connecting actual regions, areas of the world with each other. So why are they so critical in the global competition and what security risks do they pose? Are they really that bottleneck that could be easily cut off?
Yeah, so submarine cables are very important. They provide more than 95 % of intercontinental internet connection. And we see that there's sort of competition between the United States and China when it comes to planning or expanding submarine fiber optic cables, particularly in the Indian Ocean, the Pacific Ocean, and the South China Sea. And some of these areas are disputed territories, which makes it even more complicated. But in the past few years, we've seen that China has invested in this area. The US has been able to influence the decisions of countries. For example, in 2017, Australia had a plan with the Solomon Islands to have a 4,500 kilometer fiber optic submarine cable connecting Australia with the Solomon Islands. But the then Prime Minister of the Solomon Islands gave this project to Huawei Marine, which this company has now rebranded, and now they're known as HMN Tech. And that created a scandal in Australia. The United States was also, let's say, not happy with that decision because there were some fears that there could be some surveillance or cyber attacks affecting the data that went on in these submarine cables. But China has been, let's say, working in other regions as well. There's this South Atlantic Interlink sale, which was completed in 2016, 2018, I don't remember, but it's a cable that connects Brazil with Cameroon. And this was made by HMN Tech. And more recently, we saw that last year, there was a plan to expand the SEA-ME-WE. It's an optical fiber submarine communication cable that connects Southeast Asia with the Middle East, leading all the way to France, so to Western Europe. And this project was allocated to HMN Tech, but then the US got involved in that decision, and there were some changes in the plans, and then the project was handed over to SubCom, which is an American company. So these fiber optic cables, for people that maybe are not familiar with them, they look like garden hose. So they're very thin and there are various layers, layers composed of polycarbonate, polythylene, steel wires, aluminum, and they're made to protect these very important cables from different things. So from water, from environmental factors, from fishing nets, for example. So these things are very, very delicate. And we've seen that in recent years, the Chinese have been focusing on the maintenance part of these cables. The US has been able to expand and plan the expansion of these submarine cables. But the Chinese in the past few years, they've been focusing on just the maintenance part. And according to my research, there are less than 100 ships that are capable of maintaining these cables. And the Chinese have specialized in this area, which leads to some governments, even Western governments, when they really need to fix or repair something, they're not going to be waiting for some American company to help them. But they could rely on a Chinese company to do the maintenance. And that leads to questions of security. Particularly many governments are worried about physical tapping, so the interception of data. So yeah, lots of examples here, but as you can see, there are many things going on in this area that sometimes doesn't really appear on the news.
Right, all of this is also part of the cyber warfare, although it's actually just creating infrastructure, providing infrastructure to a global internet community, call it community, maybe it is not, but really providing that infrastructure actually is part of how countries, how regions, how political influence spheres influence also infrastructure. And maybe one other aspect to look at as well is where cybersecurity also really comes into play. It's on the one hand based on it and on the other hand, it's influencing it. I'm talking about semiconductor manufacturing, which is a key technology right now. And we are in desperate need of more semiconductor technology. And as we all know, Taiwan is a very important player in that. There are lots of these factories that plants around there and that of course raises tension as well. So maybe you could elaborate on that a bit?
Yeah, sure. As you mentioned, Taiwan is probably the largest and most important center of semiconductor manufacturing. And we've seen some, let's say, trade wars between the US and China in this area, because for historical and political reasons, there are fears that the Chinese could make a move on Taiwan. And this place is very crucial in terms of technology. Since the Trump administration, there have been these sort of fights with the Chinese on economic and technological tariffs. And what's going on now is that the US to some extent has struggled to, let's say, convince the European partners to also initiate this trade war with the Chinese. So it's a very, very delicate place, this South China Sea and where Taiwan is located. There are different cybersecurity infrastructure that are at stake.
Right, and if we take one step back, something that I could not imagine when I was that very young reader of science fiction books, I thought a worldwide internet, a worldwide computer infrastructure that connects the whole world, I did not consider that we should or could waste so much time, effort, money, and all of this at different levels, at national level, at organizational level, at regional, at influential sphere level, are wasting so much money, effort and time on that. And we could use that time, effort and money for other things like, for example, fighting the climate change, improving AI governance. And there's so much more to do beyond technology. So how does that influence that? And is there a way out of this?
Yeah, well, so if we understand based on this conversation that cyberspace governance is in a way fragmented, it also reflects a fragmented international system. We see more conflicts going on and less cooperation between nations. And as you say, there are some challenges out there that we need to address, for example, AI governance, climate change, nuclear proliferation. I think that ironically, cyberspace is also this platform that can connect us all as a globe, as one species. But unfortunately, there are many challenges there because of different interpretations of what cyberspace is supposed to be. But I think that cooperation is essential. And I really hope that this fragmented international system can maybe lead to a more unified system and perhaps a more unified cyberspace. And I would like to conclude me with this Chinese proverb that I found and I wrote down on my blog that says, a single tree does not make a forest. So cooperation will be crucial moving forward.
Absolutely. You've mentioned your blog already and that was really a great summary already. I will put it into the show notes of this episode as well. It's a really good read and it really elaborates more on what we just discussed in this very casual way, but there is so much more to it to cover and to look at. So this is a really interesting topic. Alejandro, thank you very much for being my guest today. As usual, questions, comments, put them down in the comments section below that video. And if you have any questions, just reach out to Alejandro or me. If you have suggestions for that podcast, let me know. Really looking forward to your feedback. That was a kind of different episode, starting with William Gibson and ending with climate change. So it's a bit different. Again, thank you very much Alejandro.
Thank you, Matthias.
Great to see you again soon and bye bye!
