As part of the DLA Piper IPT Predictions for 2021, we analyze in this article our predictions on the main legal challenges in the Technology sector.
The fundamental goal in managing dynamic and unpredictable challenges is resilience: the COVID-19 pandemic has forced a large-scale adoption of technology to master various critical aspects of the crisis, such as ensuring business continuity. This massive shift to digital services has had an enormous impact on the technology sector, which saw companies forced to manage unprecedented demand. Our survey results show that the technology sector has proven to be one of the most resilient and – unsurprisingly – compared to the overall results, tech companies have reacted better than others to the crisis, achieving more extensive revenue growth and smaller losses. However, the vast demand increase represents a critical challenge for tech companies. The attack surface in cybersecurity continues to expand as we enter a new phase of digital transformation.
The pandemic accelerated existing digital transformation efforts and pushed an overall increase in IT investments. Interestingly, our survey shows that most tech companies (76%) believe that digital transformation will positively affect customer interaction. As a result, technology companies are investing more than others in technological solutions aimed at managing the remote relationship with customers (58.82% compared to an average of 47%) while allocating less financial resources in remote working products, mainly because such companies had already largely adopted a remote working business model. In this context, the mastering of remote identification and contracting solutions will be pivotal both for B2B businesses with high adoption of electronic signature and electronic document management products and for B2C firms as we expect a further uptick of the eCommerce market for an exponentially large array of solutions, which according to more than 35% of respondents needs to be supported by legislative intervention aimed at easing the use of technologies. A significant trend towards legal tech products is likely to occur to reduce costs and handle automation needs as clients will be moving at a greater speed.
According to 70% of the tech companies that took part in our survey, artificial intelligence and cybersecurity will be the significant trend in the technology sector in 2021, with figures substantially higher than the average (43%). This different point of view may be influenced by the cybersecurity paradox tech companies have faced during 2020. Due to the massive shift to digital services, the swift changes imposed in the information technology landscape risk weakening existing cybersecurity measures, turning their speedy adaptation into a challenge. At the same time, cybersecurity is the primary enabler of trust in emerging use-cases for digital services. Thus, it represents a crucial component to facilitate digital transformation where AI technologies are increasingly used, even though users are often unaware of it.
All this is playing out when EU data protection supervisory authorities are starting to exercise their enforcement powers, forcing technology companies and their customers to substantially increase the strength and resilience of technical and organizational security measures to limit the risk of data breaches. But AI can be both a risk generator and mitigator. Indeed, with an increasing number of malware and web-based attacks, in 2021, artificial intelligence and machine learning within cybersecurity practice will drive efficiency, enabling a reduction of the manual steps in the monitoring of the attack surface instead of chasing malicious activity.
Finally, even though, according to the World Economic Forum, cloud IT infrastructure investments increased by 35% in the second quarter of 2020, almost 65% of the survey respondents identified the upcoming changes in their customers’ business models as a significant threat to their business. And these changes might be driven by regulatory interventions such as the recent CJEU decision in the Schrems II case, which considerably affected data transfers outside the EEA and might lead companies operating in the EU to switch to different technology providers.
While the outcome of the geopolitical discord is uncertain, it is easy that the predictions for the future of technology companies in 2021 will depend on their ability to earn trust from their customers, governments, and users, and this will require business leaders and regulators to be able to refresh their mindset. We believe Peter Drucker’s famous quote reflects the current situation; “The greatest danger in turbulence is not turbulence; it is to act with yesterday’s logic.”
You can read the DLA Piper IPT Predictions 2021 on the technology sector and the other areas where we operate HERE, and on a similar topic you can find interesting the article “Coronavirus makes eCommerce and electronic signature crucial for your business“.