9 Tech Sector Trends in 2021
Shifting global dynamics
Trends in tech investment and funding
As predicted in the 2020 outlook, 2020 proved to be another strong year for tech M&A. Global VC investment for the year to Q3 2020 is up 15% on the same period last year. We expect 2020 to be a record year in Europe for VC investments. Covid-19 has brought new momentum to digitalisation and there has been significant growth in investment in the tech verticals that support the new ways of living and working – a trend we expect to continue into 2021 and beyond.
Shifting global dynamics
Foreign investment and technology
The Covid-19 pandemic has accelerated the rise of foreign investment controls across the globe and this has been particularly pronounced in the tech sector. Fifteen OECD countries have introduced tighter foreign investment controls and a further seven are planning changes, with new rules aiming to protect the tech sector. While 2020 was about putting in place rules and powers, authorities are now thinking about ways of applying the rules to avoid killing off foreign investment. However, FI control is here to stay and across Europe there are more changes looming each month.
Shifting global dynamics
Deglobalisation demands a different approach from business
Events in 2020 have disrupted the flow of global commerce and brought new momentum to the recent trends towards protectionism and deglobalisation – trends set to continue into 2021. Governments keen to protect and maintain their technological and data sovereignty have introduced protectionist measures and even bans on inbound investments, as well as increasing the self-sufficiency of their home markets. The tech sector witnessed intensified rivalries between the US and China, and significant legal developments such as the EU’s Schrems II decision and the new Hong Kong national security law. These developments have prompted international organisations to consider recalibrating their global operations and cross-border data transfers.
Viewing the future through an ESG lens
Tech as a green enabler
Low carbon technologies and digital infrastructure will have a critical role in 2021 and beyond in enabling nations to “build back better” and in helping the economy transition to net zero by 2050. However, tech companies and their green credentials are under scrutiny from a broad range of stakeholders, who are particularly focused on the risk of greenwashing. Tech companies will need to ensure that they are considering the environmental and social impacts of their own corporate activities together with those market actors in their upstream and downstream value chain (and the technologies they provide). They will need to take steps – including due diligence – to ensure that they are meeting emerging standards and managing corresponding risks in their supply chains as well.
Viewing the future through an ESG lens
Prioritising ESG in digital strategies
The potential social impact of technology is greater than ever. The lockdowns of 2020 demonstrated the value of tech as a force for good in bringing people together, enabling the economy, facilitating scientific progress, and tackling a pandemic. However, incidences of the mis-use of data and the spread of misinformation have shown how technology can also be used to cause harm. At a time when ESG has come to the fore, organisations will need to address the legal and ethical issues that arise in relation to their use of data and technology.
Viewing the future through an ESG lens
Building diversity into the tech workforce
2020 has presented some fundamental challenges to the diversity agenda of many businesses. The tech sector has been one of the few sectors to continue to grow during the crisis, but the experiences of employees and consumers this year create a powerful argument to put Diversity & Inclusion at the forefront of business strategy as we move into the recovery phase, both to appeal to the widest talent pool and to reflect the expectations of consumers.
Regulation and redress in the Digital Economy
Data – enforcement, litigation and redress
Data protection became a board issue with the introduction of the EU’s General Data Protection Regulation in 2018, followed by equivalent regimes across the globe which provide rights of redress and sanctions of a much greater scale. The right for individuals to claim compensation for damages, the availability of collective procedures to enforce individual rights, and the availability of litigation funding to drive collective claims means that the exposure of the biggest companies for data protection failings could run to billions of pounds. Developments in collective redress will shape the risk outlook for 2021 and beyond.
Regulation and redress in the Digital Economy
A revolution in anti-trust regulation of digital platforms
Governments and competition agencies have different views on how to tackle Big Tech, but despite their differences in approach, the consensus is clear: overcoming concerns in digital markets remains a top priority for 2021 and beyond, and existing competition tools are not sufficient. These upcoming reforms could have wide-ranging consequences and will be closely watched by both online platforms and other businesses that are impacted by their conduct.
-
Shifting global dynamics
Shifting global dynamics
-
Shifting global dynamics
Shifting global dynamics
-
Shifting global dynamics
Shifting global dynamics
-
Viewing the future through an ESG lens
Viewing the future through an ESG lens
-
Viewing the future through an ESG lens
Viewing the future through an ESG lens
-
Viewing the future through an ESG lens
Viewing the future through an ESG lens
-
Regulation and redress in the Digital Economy
Regulation and redress in the Digital Economy
-
Regulation and redress in the Digital Economy
Regulation and redress in the Digital Economy
Fintech Global Year in Review 2020 and Year to Come 2021
Explore our complementary report
Key contacts
Explore our Year in Review 2020 and Year to Come 2021 series across 20+ jurisdictions and a number of topics.