State aid, data adequacy and Britain’s tech ambitions
IN SEPTEMBER Dominic Cummings, chief adviser to Boris Johnson, wrote to government employees laying out the government’s ambition for post-Brexit Britain to become a hothouse in which to grow technology companies with trillion-dollar valuations. Freedom from the EU’s rules about what financial support states may and may not provide to the private sector would help, he said, as the government would be able to pump public money into technology companies, stimulating a new generation of British giants.
There’s a problem with this vision. In order to get a trade deal with the EU, the government may have to give up the freedom to pump money into companies. And if it does not get a deal, another impediment may prevent its unborn tech giants from seeing the light. If the EU does not judge its data protection rules to be adequate after January 1st, and British entities may process Europeans’ data only after jumping through regulatory hoops, any potential technology giant will be hamstrung.
That is because Britain’s 66m people cannot alone sustain a trillion-dollar tech firm. Alibaba, Google and the like serve user-bases ten times that large. The pool of users of similar size most immediately available to Britain’s future tech giants, in which they would not be competing with Chinese or American ones, is the 446m folk of the EU...