After Britons made their choice to leave the European Union just a week ago, the world has been wondering what the consequences of this separation will be, both locally and globally. In a previous article, we presented an overview of ‘Brexit’, with both the causes that led to it as well as the immediate and long-term consequences.
Now it would interesting to consider more carefully the implications of ‘Brexit’ on the technology sector. For starters, it is important to note that Britain’s withdrawal from the E.U. will be a slow process, taking up to two years to complete.
That means a significantly long period of time during which tech companies will be unable to know for sure how regulations will evolve (or devolve) in the U.K. and the European Union. Uncertainty affects business.
More than that, Fortune reports that U.S. multinationals and tech firms are running out of ways to legally process the data of E.U. citizens. For years, this trajectory of EU-U.S. data transfers has been tumultuous. This happens because the E.U. has so far been unable to finalize an “adequacy” decision meant to declare the U.S. safe as a destination for Europeans’ personal data.
When the U.K. will have left the E.U. for good, it will be in the same boat. This ultimately means the Britain must reform its privacy laws in line with the new E.U. rules, even though it is leaving.
Tech leaders warned that ‘Brexit’ would hurt U.K. startups and they came out against it in the vote. “London is a talent magnet right now,” says Brent Hoberman, the co-founder of online travel booking site Lastminute.com. “Let’s not spoil it. It will hurt confidence. Startups and entrepreneurs from other parts of the world outside of Europe often pitch their tents in London because they see it as the gateway to the EU,” he added. Brexit “will hurt confidence.”
Damian Kimmelman, founder of corporate intelligence site DueDil, points out that Brexit’s biggest impact would be on hiring. “Without access to Europe the pool of applicants shrinks dramatically,” he says.
“We are a venture-backed business, and a venture-backed business means we are invested in to create super growth. But you can’t create super growth if it’s so difficult to hire the people that can create that super growth. People in tech are the number one commodity,” Kimmelman added. Microsoft also warned that ‘Brexit’ would make it less likely to invest in the U.K.
As for tech users, Brits may no longer have ways to get cheap mobile calls and data when they visit the EU. Nor will U.K. as a country have to follow decisions taken on the mainland (“upgrading” to 5G for super-fast mobile broadband, for instance), though it would probably be wise for them to follow E.U.’s lead on this one.