A major state actor could now legalise internet piracy and hacking
Today gas prices in Europe rose to 800p per therm — an eighteen-fold increase in just one year. Meanwhile, fertiliser prices are set to rise and with them food prices, with wheat prices basically doubling since last year. Financial markets are now openly fretting about stagflation (the combination of soaring inflation and stagnation in the economy). We have not seen it since the 1970s and it is unclear how our now overly financialised economy will respond to it, but my bet is that economies today are far more prone to stagflationary chaos than they were in the 70s.
Although it may be impolitic to say, there is mounting evidence that we are not thinking through the consequences of the sanctions policies we are imposing on Russia. Even ignoring the pressures our policies are putting on prices at home, what about other long-term consequences? In a previous piece I highlighted that banning Russia from SWIFT would only encourage them to use Chinese alternatives, thereby undermining the importance of SWIFT on the global stage. Over the weekend it was announced that Russian banks are moving to China’s UnionPay as Visa and Mastercard cut ties with the country. How exactly does this benefit the West?
Then there is the risk that the sanctions force Russia to normalise ‘dark web’ activity. Newspapers here are already pointing out the fact that Russia is likely to take advantage of emerging Bitcoin technologies to circumvent sanctions. In effect, what this would do is put a major state actor behind an alternative financial system. Who knows where that goes? It could create a global shadow financial system that would harm, amongst other things, the capacity for our governments to levy taxes.
In response to Microsoft stepping in to ban subscriptions to their products, there is good reason to believe that Russia will start to legalise software piracy. These days software is easy to hack and clone. The only thing that protects major Western software companies from losing their capacity to profit from their products are tight laws against software piracy. With a major state actor deploying piracy as a policy, expect most of the developing world to take the vastly cheaper cloned/pirated software than the expensive Western alternative.
This extends to media products too. Many Western media companies, including Netflix, have stated that they are retracting their products from the Russian market. In response to this, one Russian lawmaker has suggested that the government legalise a website called RUTracker — a site used by people who want to download pirated media content and software. North Korea already does a lot of this sort of piracy, but they have nowhere near the technological capacity or the worldwide economic reach of Russia.
It hardly needs be said, but the internet is a decentralised system. If a state like Russia throws its weights behind media piracy, software hacking and cloning, this will vastly impact the Western internet. The new cheaper/free products will flood the online market and, at least to some extent, drive out licensed and legal alternatives. The media and software companies may find themselves launching yet another war on piracy. But this time, rather than their adversary being a few anarcho-libertarians based in Sweden, they will be facing off against a large state actor.