Digitalisation Switzerland: High concentration of firms is dangerous

Prof. Lothar Thiele is delegate for digital transformation at ETH Zurich. We spoke to him about the opportunities and risks to industry posed by progressing digitalisation in Switzerland.

Lothar Thiele is professor of information technology at the Department of Electrical Technology at ETH Zurich. In his research he deals with cyberphysical systems, the internet of things, embedded systems and evolutionary algorithms. In early November 2017 the governors of ETH appointed him new delegate for digital transformation.

SMM: Mr. Thiele, where do you see opportunities in digitalisation for Switzerland?

Lothar Thiele: Indeed, digitalisation is a great opportunity for Switzerland. It will bring us increased productivity, better working and living conditions and better resource efficiency. In a nutshell: Digital technology allows new value added chains and business models.

What are the prerequisites for this?

L. Thiele: If we are to exploit the opportunities, there has to be an attractive environment for specialists not just from Switzerland but also from abroad. Switzerland is an attractive workplace for specialists. We should exploit this advantage in view of the oncoming wave of digitalisation, or else we will no longer have much advantage as an industrial location.

And where do you see the risks?

L. Thiele: One of the most important social tasks, which is a prime risk, is to safeguard education and training at such a time of change. Pupils must be introduced to information technology as early as possible, otherwise we are in danger of developing into a multi-class society – this time not divided into rich and poor, but into learned and ignorant. It is important for us to be able to determine our future ourselves and not become a digital colony of drifters. There is an urgent need for action here.

In your function as delegate at ETH Zürich, you also serve as consultant to commercial and political bodies. What does digitalisation mean for the economy, and how different are things now compared to 15 years ago?

L. Thiele: We have entered a new phase of digitalisation. Today we can collect, store, process and transfer data to an extent never known before. But at the same time we understand more and more how to obtain information, knowledge and know-how from data. A new aspect of digitalisation is machine learning. Learnable algorithms do not simply fulfil orders, but improve themselves continuously and independently. The machines themselves learn on the basis of success and mistakes. The new wave of digitalisation and automation is based on these new possibilities.

Is Switzerland in a good starting position as far as digitalisation is concerned?

L. Thiele: Switzerland is in a very good position thanks to its education system. The country is also open to innovation and new technologies. On the other hand, foreign countries are investing very heavily in digitalisation; the Asian countries are particularly well ahead. Therefore, to be able to exploit the opportunities even better, Switzerland should invest more in education, research and new industrial locations.

Many Swiss ideas end up abroad or are bought by foreign firms. Has that anything to do with the small home market?

L. Thiele: Unfortunately, as soon as an exciting idea is due to be implemented on a large industrial scale, start-ups often move abroad because of the small market and frame conditions. This way, Switzerland is losing opportunities and know-how. However: If just a few large economic players buy all the innovative ideas, that is a huge risk from a global angle.

You need to explain that in greater detail.

L. Thiele: The danger is a concentration in just a few firms. Digitalisation is based on a lot of data and their interconnection. This causes a bias towards big firms, resulting in a concentration of power. This not only increases the security risk of IT systems, but also creates the danger of market domination, biased information and a reduction of diversity.

But until now, humans have been in the forefront of data collection.

But the transformation of industry is becoming increasingly important. And here, information processing, for example through data analysis based on machine learning, is the «gold» of the future. What enterprises develop such algorithms and software infrastructures? Who in future will have the required data and know-how to adapt procedures to the areas of application and specialise? Will it not be the same companies that now collect and process data and can be counted on the fingers of one hand?

We can only hope that this value added will not be limited to just a few big firms, which is how we see it in central spheres of information technology. You only need to think of the firms with the biggest market capitalisation: Apple, Alphabet – Google, Microsoft, Amazon and Facebook. Unfortunately, the signs of this exist.

This is an abridged version of the interview. You will find the full version in german here.

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