Chapter 01 The role of policy in delivering a technology revolution for all

Executive summary

Humanity has come a long way in a short time. In just a few centuries, we have moved from an agrarian civilization, dispersed in small villages, to an integrated global society capable of exploring the universe and providing a high quality of life to billions of people. At the heart of this progress has been our ability to harness and distribute the productive benefits of new technology. As we move through the 21st century, this ability will prove ever more necessary if we are to address the economic, societal and health challenges that humanity faces. How do we feed a population that will reach 10 billion by 2050, and do it on less land and using less water? How do we boost productivity to accommodate shifting demographic trends that may otherwise cut economic growth in half?[1] How do we find cures for longstanding diseases and tackle a projected 70 percent rise in cancer rates over the next two decades?[2]

A new wave of technologies, built around cloud computing, offers us huge potential in our ongoing quest to build richer, cleaner, healthier societies. The foremost among these, AI, is capable of transforming the output of people and organizations across every sector. Representing an entirely new class of equipment that learns and improves over time rather than degrading, AI will augment innate human traits like creativity and sensitivity in ways that will allow us to solve previously intractable problems, boosting the productivity of our economies by up to 40 percent.[3]

We must, however, not be naïve to the challenges posed by this latest technology revolution. As with previous eras of technological change, there will be significant disruption. Businesses will be impacted as technology gives birth to new ways of working; jobs will be lost. Those who are unable to access new technology will fall behind, while those with the resources needed to build and deploy it will enjoy ever greater success. Inequality, already at record levels, could skyrocket.

In addition to these familiar challenges of technological disruption, the 12 months since launching this campaign have shined a light on the damage that results from this new technology being willfully misused. Governments have launched debilitating cyberattacks on other nation-states, disrupting critical infrastructure and interfering in the democratic process. Organized criminals continue to reap ever-increasing benefits from cybercrime, with the cost of ransomware attacks for the year up 1,500 percent from 2015 at over $5 billion.[4] As governments and companies collect ever more of our personal data, we face questions over how to ensure this data remains both secure and private.

The challenges are as real as the opportunities...
we must accompany the development of new technologies with the development and updating of new laws.

The challenges are as real as the opportunities. To address both, we must accompany the development of new technologies with the development and updating of new laws. Given the increasing pace of technological development and deployment, the urgency of our need to act grows. As with previous periods of technological change, governments must create a framework capable of delivering technology in a way that benefits and protects all. But they cannot do it alone. What follows is a suggested policy road map, designed to help governments navigate the Fourth Industrial Revolution and create an environment in which technology can be delivered in a way that is trusted, responsible and inclusive.

A Fourth Industrial Revolution that works for all

We stand on the cusp of a new era of technology, what many are referring to as a Fourth Industrial Revolution. At the heart of this revolution will be technologies enabled and underpinned by cloud computing, better known as simply “the cloud” — vast networks of distributed hyperscale datacenters, providing for the collection, storage and analysis of data at unprecedented scale and speed. It is this ability to store and process huge amounts of information that is at the heart of the data-driven technologies like AI and data analytics that will come to define our era.

It is estimated that AI alone could increase labor productivity by as much as 40 percent, driving global GDP growth by an additional 25 percent by 2035 and, in the process, generating significant material wealth for many mature and emerging societies.[5] Indeed, many now talk about AI as a completely new input or “factor of production” alongside equipment and labor. This is because although conventional equipment and buildings deteriorate over time, AI’s ability to continually learn from the data it processes will enable it to become increasingly valuable. The combination of AI and other cloud-enabled technologies like data analytics is poised to drive a wider technology boom, powering advances in robotics, genomics, materials sciences and 3-D printing.

As with previous technological breakthroughs, the full potential of these new tools will only become clear over time, often in ways their creators never imagined. Look at what we have been able to achieve in combining previous inventions. Imagine, for example, explaining to Nikola Tesla, Guglielmo Marconi or Alexander Graham Bell that you’d just used inflight Wi-Fi to make a Skype call at 35,000 feet with the help of your smartphone’s AI assistant.

In a similar vein, the cloud-enabled technologies that are underpinning our next technological leap will combine to help us lead richer, fuller lives in ways we can’t yet fathom. According to a World Economic Forum survey of technology sector executives, 75 percent or more believe that within 10 years we’ll have robotic pharmacists, automobiles manufactured using 3-D printing, and transplants of 3-D printed livers.3 If we can ensure widespread access to such technologies, it’s possible to imagine a not-too-distant future in which poverty is drastically reduced, crippling diseases are eradicated, a solution for climate change is found, and new forms of communication and collaboration unleash creativity and innovation on an unprecedented scale.

But as impressive as these leaps in innovation may be, it is also possible to look at the same technological revolution and wonder if we may be headed toward a darker future. In the past 12 months we’ve seen companies announce plans to replace large sections of their workforce with robots.[6] The percentage of people who fear their jobs are at risk from automation is growing.[7] Moreover, concern grows that the opportunities provided by a new, digital economy are “skills-biased,” or skewed toward those who have benefited from advanced education and training.

Strikingly, over the past 25 years, U.S. economic growth has produced 35 million new jobs. However, the number of jobs held by Americans with only a high school education or less has fallen by 7.3 million.[8] Similar trends are at play in advanced economies across the globe. The concentration of economic opportunities at the upper end of the income scale is likely playing a role in the increase in economic disparity, as the share of global GDP going to workers continues to decline and wealth inequalities increase.[9]

In addition to the challenge of ensuring the benefits of technological development are evenly spread, the past 12 months have also highlighted the way in which powerful new technologies can create new challenges through their willful misuse. We’ve seen nation-states begin to weaponize cyberspace, targeting civilian infrastructure and democratic institutions. Levels of cybercrime are rising rapidly. The number of cybersecurity breaches reported by companies increased by over 25 percent between 2016 and 2017, with the cost of ransomware attacks alone reaching $5 billion, up 1,500 percent from 2015. Governments continue to struggle to find the right balance between the need to protect public safety and preserving the right to privacy. As governments and companies collect ever more personal data, questions are raised about how to ensure this data is kept both secure and private.

The past 12 months have also highlighted the way in which powerful new technologies can create new challenges through their willful misuse.

Understandably, these challenges are raising concerns. The 2017 Edelman Trust Barometer identified a number of new inventions that are, as yet, “untrusted” by people, including driverless cars and blockchain-based currencies like Bitcoin. Nearly half of all respondents said technological innovation in general was happening too quickly and producing changes that were described as “not good.”[10] Unless we find a way to ensure that everyone is able to participate in the benefits of this new technology, while also being protected from its misuse, the potential of the Fourth Industrial Revolution will be left unrealized.

Charting our way forward, by reflecting on our past

So, how should we respond? To find our path forward, it’s worth reflecting on how society responded to previous periods of technological change.

The development of the cloud and the dawn of the Fourth Industrial Revolution is not the first time that a breakthrough technology has been the catalyst for profound change. By common consensus, humanity has been through three previous industrial revolutions. The First Industrial Revolution began in the U.K. in the late 18th century, when steam power led to the development of factories and machines that radically changed manufacturing and transportation.

The development of the cloud and the dawn of the Fourth Industrial Revolution is not the first time that a breakthrough technology has been the catalyst for profound change.

This was followed by a Second Industrial Revolution, beginning in the United States and built on technologies such as electricity and the internal combustion engine. Together these industrial revolutions powered the growth of modern cities, gave rise to assembly lines that changed manufacturing, and transformed transportation through the invention of airplanes, trains and automobiles. More recently, we experienced a Third Industrial Revolution that was driven by digital information processing and communications built around the core technology of the microprocessor. This ushered in the modern digital economy with the development of the personal computer, the internet and the smartphone.

Each of these revolutions delivered a huge leap forward in humanity’s productive capacity. But, along the way, each was accompanied by significant disruptions for people and communities. What lessons can we learn from how society responded to previous periods of technological development?

One notable observation is that during each industrial revolution, those countries that prospered were those that created an enabling framework of laws. These laws laid the foundation for realizing the potential of new technologies while lessening their negative impacts.

The U.K., for example, which pioneered the use of coal and steam in the First Industrial Revolution, was also the first to adopt a modern system of property rights. It created the world’s first patent regime in the middle of the 18th century. This was shortly before James Watt invested 12 years of his life improving Thomas Newcomen’s steam engine, laying the foundation for the productivity boom of the late 18th and early 19th centuries. And with the 1833 Factory Act, which made it unlawful to force small children to work long hours in factories, and the 1863 Alkali Act, which limited the impact of coal burning on the environment, the U.K. also led the way in building out legal frameworks to begin to address the social challenges produced by the new technology. In creating these laws, the U.K. government helped build trust in these new technologies, helping ensure they were developed and delivered in a responsible way.

This dynamic was repeated during the Second Industrial Revolution, where the United States led the way in driving forward new technologies built around electricity and the internal combustion engine at the same time as making wide-sweeping interventions in education and training. 1852 saw Massachusetts create the first contemporary universal public education, quickly followed by other American states and developed countries such as the U.K., France and Japan over the course of the next 30 years. Similarly, via the 1862 Morrill Act, the U.S. was also the first to provide federal involvement in vocational colleges training people in agriculture and the “mechanical arts.” These interventions both provided the updated skill base needed to power the new economy and helped ensure that a wide number of people were able to enjoy the spoils of the growing economy, by allowing them to work in those increasingly competitive industries that were deploying new technology. Reflecting on our own challenges, we must look to learn the lessons of such education programs if we are to drive more inclusive growth by delivering them over a more compressed timescale.

A history of trusted, responsible and inclusive policy

These themes of trust, responsibility and inclusion have been visible in the way that successful economies have promoted innovation during each previous period of intense technological change. Governments have time and again created laws to ensure the companies developing and deploying new technologies were accountable for their impact, driving a responsible approach to the use of new technology. The labor laws, environmental regulation and emissions standards created during the first and second industrial revolutions created better working conditions and laid the groundwork for the eventual improvements in energy efficiency and reduced emissions that companies continue to pursue today.

Similarly, educational interventions, such as the creation of universal educational systems, helped ensure that the benefits of technology are delivered in an inclusive way. In each case, successful governments are those that have been at the forefront of regulatory change.

Today, as the technology that powers our economy continues to evolve, governments must again look to update the rules, infrastructure and incentives around technology, ensuring it can be deployed in a way that benefits and protects everyone.

Indeed, given the increasing pace of technological change, there is more of an urgency to the need to review relevant legislation. It took 100 years for the steam engine to make it onto rails in the form of the locomotive, and 70 years from the invention of the telephone to its use by over 80 percent of households in the developed world. By comparison, the core technologies of our time, the personal computer and the internet, reached a similar level of penetration in less than 30 years. Indeed, the cell phone took just 15 years. The adoption of cloud services has been even swifter, with Fortune 500 companies moving from almost 0 to over 90 percent adoption in under 10 years.

We understand that governments cannot do this alone.

Given the speed at which technology is reshaping our lives and the pace at which the challenges around the deployment of new technologies continue to emerge, we must review our existing frameworks with some urgency. What follows is intended to serve as a suggested policy road map to enable governments to craft rules to help ensure that cloud-based technologies are trusted, responsible and inclusive.

We understand that governments cannot do this alone. As a company that is helping to drive technology innovation in this new era, we recognize our responsibility to work in partnership with governments and communities to help advance social and economic progress.

At Microsoft, we have made a concerted effort over the past year to play our part. To increase trust in technology, we have proposed the creation of a Digital Geneva Convention[11] to protect citizens around the world from cyberattacks. As part of our commitment to responsible technology development, we launched AI for Earth[12] to explore how our most powerful technologies can help solve some of our world’s biggest challenges. And to foster inclusive access to technology, we launched the Microsoft Airband[13] Initiative to provide internet connectivity to millions of people in the United States who lack reliable and affordable broadband connections.

But we know this is just the start and that the decisions and actions we take today will affect the role that technology plays in people’s lives for many years to come. We look forward to playing our role as initiator, convener, and promotor of ideas and initiatives that will help advance a cloud for global good.