Now that Britain has voted to leave the European Union, the global economy is preparing for the worst in upcoming days. Brexit won’t only impact the UK and European tech industries, but it will send shock waves across the Silicon Valley. The impact of Brexit on Silicon Valley giants will be huge as trade and investment of over trillion dollars with the United States is threatened.
Global policymakers have ramped up their warnings of Brexit impact on Silicon Valley. The exit from the European Union has threatened an effort to ease the rules for Silicon Valley giants like Facebook, Twitter, and Apple among others. In one way the deal could be the best for aforementioned companies as the European Union has been the biggest trouble maker for them when it comes to trade. But, even the exit won’t arrive as any help and the impact of Brexit on Silicon Valley giants will be a nightmare. This is because the UK will perhaps impose its own rules for American Internet giants. The United Kingdom is a significant overseas market for these companies.
Recently in an interview Eric Schmidt, Chairman, Alphabet Inc., was asked what keeps him up at night. He gave a provoking yet short answer that the balkanization of Internet. Previously, we could’ve assumed that such answer was in regards to China or maybe India, which keeping its restraints high on American Internet giants. Well, China, as we all know keeps more regulations and tabs than India. After all, we’re all aware of the ban of Google and Facebook in China. Aren’t we? But now we know that the answer was a quick indication to Brexit as well.
Impact of Brexit on Silicon Valley Giants
Now arriving back to the point of impact of Brexit on Silicon Valley giants, the gloomy forecast is probably driven by an anticipated sharp decline in value of the pound along with severe disruptions in the overseas trade. Brexit will force the nation to renegotiate the deals with countries overseas and there are higher chances that negotiations will be on worse terms.
Europe hoped to establish a digital single market where services and goods could be transported across the continent without any hassles under the same set of rules. Under this set of regulations, the nation sought to create rules in order to safeguard intellectual property, end country wise restrictions on digital contents like TV shows and movies and eliminate roaming charges on mobile phones. Instead of negotiation various rights with every other country in the European nation, Silicon Valley could’ve done it following a single set of rule, but Brexit will change this.
Now Facebook and Google along with other leading Silicon Valley mammoths will have to slog for following different regulations based on different country. The elimination of barriers to Internet giants in a market of approximately 500M individuals could’ve added $470 billion in a collective economy. The opportunity is lost and Brexit impact on America will be a loss of opportunity to garner billions of dollars in the personal economy.
Despite this raging tension, Joe Kaeser, the CEO of Siemens, thinks otherwise. In fact, he is quite positive that Brexit impact on Silicon Valley won’t be negative.
“The Internet does not care about legislation. The Internet is without borders. There should be a global approach, not a U.S. or European one.”