Turbulence in the Relationships Between Governments and High Tech Firms

Abstract

"The turbulent times governments all over the world are facing include the transition towards the Fourth Industrial Revolution (4IR) in which the confluence of new technological developments result in major challenges for national as well as local governments. The confluence of the newly developed technologies is only possible if huge amounts of data can be stored and transmitted at high speed in, among others, hyperscale data centers (HDCs). This paper focuses on the complex relation that arises between local governments - on whose soil the HDCs are built - and the high tech companies planning and building the HDCs. This relationship is characterized by an unequal playing field with local governments being no match for the high tech industry. The latter sometimes have annual turnovers 1000 times higher than those of local governments and impose rather different demands on decision making processes than governments do. They impose restrictions on the decision-making process that result in processes running counter to principles of good governance and, if exposed, result in a deterioration of institutional trust among the population. This is illustrated through a case study in which a small municipality in the Netherlands was faced with an offer from Meta to make a huge investment in a hyperscale data center, provided the whole process towards the permits and the approval of the building would remain secretive. Shown is an imposed secrecy by the high tech firm and information revealed about the process afterward through the Freedom of Information Act disclosing many irregularities. This changed the existing trust in the municipality into complete distrust at the end of the process and eventually forced the High Tech company to withdraw. The relevance of this paper for this special issue is that the case study shows that the new developments towards the 4IR require capacitated, knowledgeable and decisive local governments, which momentarily are not even present in a developed country like the Netherlands."