Government Control in the Digital Age The Economic Impacts of Internet Shutdowns

Internet shutdowns are employed by governments seeking to control the flow of information to a population, often without justifiable reason.

There is nothing new about government suppression. Often considered a knee jerk reaction, suppression is wielded in various ways by governments intent on filtering a country’s reaction to oppressive policies, systems, and regimes. This sometimes includes restrictions placed on free speech, the prevention of large assemblies of people or banning government critique. In such systems, information about citizens’ reactions to government policies or crackdowns is often restricted and cherry picked in order to avoid casting the government in a bad light or sparking global outrage.

But the world is a global village, and governments are finding it more difficult to preclude themselves from critical news cycles or international outrage at assaults on the fundamental rights of citizens. Fearing citizen unrest, some governments have, often as a last resort, implemented an internet shutdown: a disruption of internet-based communication that renders the online space inaccessible or effectively unavailable. While outages can sometimes be caused by events such as natural disasters, cyberattacks or deep-sea cable disruptions, government-enforced shutdowns are deliberate. Internet shutdowns are employed by governments seeking to control the flow of information to a population, often without justifiable reason.  According to Access Now, a not-for-profit organization that champions digital civil rights, there were 196 recorded internet shutdowns in 2018, a rise from 106 in 2017. In 2019 this number rose to 213, spread across 33 countries. Governments often cite public safety and security concerns as reasons for shutting down the internet, but this power has been wielded as a pre-emptive defence against the threat of violence during election periods and, more absurdly, during national school examinations to curb malpractice.

Shutdowns are only made possible because, across the world, internet access is regulated by the government. In some cases, such as with Ethiopia’s Ethio Telecom, internet services are the government’s property to control. During an internet shutdown, a government typically pressures Internet Service Providers (ISPs) to restrict customer access to social media sites, or to lower network speeds thereby making it difficult to stream or upload videos. The primary aim stated by such authorities is the need to maintain law and order, an argument used by the Iranian government in November 2019 when it disconnected the country from the world for six days following mass unrest. Yet there is no direct evidence to show that these tactics work. Instead, limiting access to authentic information undermines trust in government systems and infrastructure, and risks damage to a country’s reputation.

Shutdowns sometimes occur in phases, with restrictions or blocks placed on access to specific or foreign websites. Total shutdowns are easier to implement in countries with centralized internet structures or with ageing infrastructure, as these factors leave access at the discretion of government authorities. In such cases, critical voices are reduced and occasionally wholly silenced amid human rights violations.

GREATER THAN KEEPING THE PEACE

An internet shutdown can have devastating effects beyond simple restrictions on connectivity, especially at times where accurate and timely information is vital. The 2019 Nigerian elections were conducted under the constant threat of an internet shutdown. While the federal government did its best to allay fears, justified concerns persisted as the election had been marred by the suspension and resignation of the chief justice of the supreme court. Equally significant were estimates that an internet shutdown would cost the nation an estimated $134 million per day. This figure was based on revenue potentially lost from the telecommunication industry as well as online services.

Shutdowns are especially harmful for growing economies buoyed by the prospect of better internet connectivity and better-priced data options. Even short-term shutdowns negatively impact a country. Zimbabwe’s six-day internet shutdown in January 2019 resulted in a loss of $5.7 million daily. Such disruptions do little to inspire the confidence of potential investors, who consider whether businesses can rely on internet connectivity, and whether a country has the ability to compete and deliver in an increasingly connected world. Shutdowns promote a volatile market unwittingly dependent on the lack of a transparent system.

WEIGHING THE COSTS

Despite these figures, it is often difficult to accurately measure the economic effects of an internet shutdown, as the metrics are not easy to conceive. Questions often arise about how to accurately determine the effects of a long- or short-term internet blackout on a nation’s GDP. The Organization for Economic Co-operation and Development (OECD) estimates that Egypt’s 2011 internet shutdown cost the country $90 million in profits. This in itself is a conservative figure as it does not account for the impact on e-commerce, tourism or other internet-dependent businesses.

More comprehensive attempts to quantify the economic impact of internet shutdowns, such as those carried out by the Collaboration on International ICT Policy in East and Southern Africa (CIPESA), take into account losses caused by shutdowns not only in the visible digital economy but also in the offline sector. This includes the effects on productivity, supply chains, and significantly, foreign direct investment.

The economic costs of a crackdown on digital access and free speech are often not considered by authoritarian powers. Governments that restrict digital access are often limited in their view of the internet, seeing it merely as a tool for communication rather than as a source of significant economic income for the country. When justifying the Ethiopian government’s frequent shutdowns of web services in 2019, Prime Minister Abiy Ahmed suggested that it was not a basic need. However, a 2017 study by Ericsson and Imperial College Business School found that a ten per cent increase in broadband usage corresponded with 0.6 to 2.8 per cent increase in GDP. With more and more people choosing to go online, small businesses now rely on services such as WhatsApp for Business and Instagram ad placements to market their products and target a wider audience. There is little doubt that a free internet creates a more predictable and profitable marketplace. Foreign companies that observe deep uncertainties in repressed environments find it difficult to commit to investing in such an economy.

According to top10vpn, a virtual private network site, the global cost of internet shutdowns in 2019 was around $8 billion. The bulk of these losses were the result of restrictions in three regions: the Middle East and North Africa, sub-Saharan Africa and India. These regions share certain characteristics. Each includes developing countries governed by authoritarian systems and has areas with significantly young populations where unemployment rates are high. As the internet becomes easier to access, the search for employment has moved from the physical world to a virtual space with many embracing the benefits of remote work.

Businesses encounter difficulties fulfilling existing contracts with customers or engaging with new ones. That was the story for Furqan Qureshi in Kashmir, India, whose food delivery company Kart Food relied on an app developed to manage orders. Averaging around 50 orders a day, his business was severely affected by the internet ban and he was forced to lay off all 15 of his workers. Across small businesses especially, such layoffs are often permanent, as businesses are unable to recoup losses or return to full capacity due to unfulfilled obligations and unpaid debts.

INTERNATIONAL LESSONS

Authoritarian governments seem to draw justification for internet shutdowns from more developed countries’ increasing adoption of this tactic. Although authoritarian systems tend to use nations such as China as a model, it is important to note that China is an outlier. The country is known for its government’s hard stance against dissenting or critical speech yet is still able to moderate the flow of information while sustaining economic growth. China’s GDP grew by 6.1 per cent in 2019 despite government restrictions on internet usage and accessible content. However, this is only possible because China can afford to fuel growth through the economic activity of local domestic companies. Much of China’s internet activity is conducted through Baidu, a search engine similar to Google. Competition from Google was sufficiently quelled when the company pulled out of China in 2010, leaving Baidu to service a region representing 18 per cent of the world’s population.

During regional protests in 2018, the Russian government ordered that mobile services be cut for the first time in the country’s history. By May 2020, Russia had announced successful trial runs of RuNet, a national internet network that could function exclusively of the global net. While justified by officials as a cybersecurity measure, such isolationist tactics raise concerns about how far a country could go to isolate itself, and its economy, from the rest of the world.

There seems to be little chance that the trend of internet shutdowns will abate.  By August 2020, there were 53 recorded cases in the world. More and more governments are using these powers to attempt to control dissident populations, often failing to acknowledge the disruption to connectivity. Governments have also grown eager to create regulations that will grant them more control over the internet.

In order to maintain international reputation, a country’s leaders may give assurances of their commitment to internet freedom in trade agreements and invitations to investors. Governments might allow international bodies to observe crucial events where restriction on citizens’ digital rights could have been implemented. Perceived transparency, however, becomes insignificant when a government is unable to see past the potential threat of civil unrest. Governments that ignore the far-reaching effects of internet shutdowns on businesses that rely on the endless possibilities of a digital economy risk damaging their countries’ economic future

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