Brexit has officially happened, and the implications of the vote to leave the European Union has raised many questions for the global technology industry.
In Britain, a majority of tech firms were against leaving the E.U. A technology industry group survey found that 87 percent of British technology firms wanted to stay in the European Union, and that 70 percent of them worried a vote to leave would damage London’s reputation as a technology hub. Global companies with offices in Britain, such as Microsoft, also campaigned against the move.
Now that the votes have been cast, here are some major issues facing the tech industry in Britain and abroad, in light of the decision.
Data flow and data privacy: The U.S. and the E.U. are in the process of making the final adjustments to their latest data privacy agreement, which governs the flow of data between U.S. and Europe. With a major player in the E.U. now backing out of the coalition, there are obviously some questions about what happens to data flowing in and out of Britain from the U.S. and elsewhere.
Despite the referendum results, however, things in this area will remain with the status quo — for now.
“The Data Protection Act remains the law of the land irrespective of the referendum result,” confirmed the U.K.’s Information Commissioner’s Office, but added that the Brexit does mean that the U.K. will not be subject to upcoming reforms the E.U. is planning to make around data protection.
However, Britain is unlikely to deviate from the policies of the E.U. in this particular area, simply because E.U. standards have become basically standard around the world. Should Britain shy away from those regulations, experts said, it would face dire consequences.
“It will be left out of the group of progressive and forward looking countries with suitable safeguards for personal data,” wrote privacy law expert Eduardo Ustaran ahead of the vote.
That doesn’t mean, however, that the Brexit will have no effect on the world’s data economy. There is also a sense, now that Britain has voted to leave the E.U., that the counterweight it provided against privacy-heavy countries such as Germany and France will also disappear. Germany and France have been leading the charge against major American tech firms -- notably Google, with the “right to be forgotten” ruling.
“This will help strengthen calls from the E.U. member states more concerned about protecting privacy rights,” said privacy advocate Jeff Chester, director of the Center for Digital Democracy.
Some are optimistic that, with fewer E.U. regulations, British companies would thrive. But the uncertainty in the immediate aftermath of the vote makes some uneasy.
“Europe is such an important economy, it would be a shame if this and some existing policy proposals by some in the E.U. came into effect in a way that dampened the ability to use technology and grow their economies,” said Ed Black, president of the Computer and Communications Industry Association.
Funding: One of the key reasons that many British technology firms said they were against a British exit from the E.U. was that it would be more difficult for them to secure funding for start-ups. London’s technology industry has been on the rise for the past several years.
Britain benefits in large part from funds such as the European Investment Fund, which backs an estimated 41 percent of venture capital investments in Europe. Its majority investor is the European Investment Bank.
But if Britain is no longer a part of Europe, that dries up a source of funding just as questions about how a U.K. shorn of its E.U. ties will regulate health tech, financial tech and other technology industries.
For its part, the EIF has said that it will continue business as usual for the time being. But the vote has injected a note of uncertainty into the start-up market, as Britain will now have to make its own negotiations with the fund.
“The European Investment Fund takes note, with regret, of the vote of the British people to leave the European Union,” the group said in a statement. “EIF will actively engage with the EIB and relevant European institutions to define the EIF’s activity in the UK as part of the broader discussions to determine the future relationship of the UK with Europe and European bodies."
Others also have financial concerns. For example, the video game industry in particular has said that it's worried that the new tax environment won't be as favorable to it as the E.U.'s has been.
Immigration: British tech firms — and technology firms from around the globe with offices there — have also raised concerns that the Brexit will fundamentally harm the tech industry’s ability to fill positions for highly skilled workers. Without the E.U.’s allowances to let workers move freely between countries, British companies are now worried about a shortage of qualified workers. That might be something that gets ironed out in a later agreement. But right now, there are plenty of expat workers in and outside of Britain that are raising questions about how Brexit affects their lives.
The concerns echo the talking points of the tech industry’s calls for immigration reform in the U.S. right now. The tech industry has repeatedly said that it needs to be able to recruit highly skilled foreign-born workers from across the globe in order to meet its labor demands.
Todd Schulte, president of the U.S. immigration group FWD.us, said that while the situations between the U.S. and Britain are obviously different, the need for support for a foreign-born workforce is not.
“In a globalized economy, when you’re trying to sell to the world, a diverse workforce is an asset,” he said.
There are also worries that companies that looked to London as an ideal place to start a company will now look elsewhere. Some start-ups have already begun to evaluate whether London is still the right place for their offices.
"To us, it was obvious to have London as a headquarters for all of Europe," said Allan Martinson, chief operating officer of the delivery startup Starship Technologies. "Today we may need to look for another location if we're working with continental Europeans."
Brian Fung contributed to this report.