Qtr 2, 2026 | Competing for the future: Geopolitics and the global technology race

Rapid digital advances and their strategic importance to security and the global economy are occurring amid heightened geopolitical vulnerability while creating major investment opportunities for technology and defence firms. Richard Gardiner assesses how this is reshaping national security policy and what it means for the private sector.

Data centres, drones and digital platforms – once seen as peripheral to national security – have become core infrastructure in a technological shift that is reshaping defence, economic and security policy worldwide. Recent Iranian strikes on Gulf data centres and the central role of drones and artificial intelligence (AI) in the Russia‑Ukraine war illustrate how deeply digital systems are now embedded in both modern economies and contemporary battlefields. As this digitalisation process unfolds amid a more volatile and fractured geopolitical landscape, governments are placing technology at the heart of their strategies to ensure resilience and future growth, while private‑sector actors are having to move just as quickly to mitigate emerging risks and seize the opportunities this new environment presents.

Risk and reward

While AI and related technologies are transforming how we work and live, they are also reshaping modern warfare, exposing new vulnerabilities and generating new kinds of military advantage on the battlefield. Ukraine has placed technology and data at the centre of its strategy to offset Russia’s advantages in firepower and manpower, with advances in drone systems and artificial intelligence fundamentally changing how the war is fought. Ukraine has gradually gained an edge in this domain, in part due to the highly iterative nature of its drone development and manufacturing ecosystem. Furthermore, thousands of hours of combat footage are collected and stored on domestic and overseas servers and cloud‑based systems, enabling engineers across the public and private sectors to analyse battlefield performance and rapidly integrate lessons learned into successive generations of drones. This continuous feedback loop has allowed Ukraine to innovate at a pace that has often outstripped its adversary.

While AI and related technologies are transforming how we work and live, they are also reshaping modern warfare, exposing new vulnerabilities and generating new kinds of military advantage on the battlefield."

These technological and operational gains in modern warfare depend on a wider digital ecosystem comprising data centres, fibre‑optic cables, mobile networks and cloud infrastructure that underpins both modern militaries and national economies. As a result, such assets are increasingly treated as critical infrastructure on a par with power stations, water treatment facilities and transportation networks – and are becoming attractive targets in their own right. This was underscored during Iran’s strike campaign against Gulf states in March 2026, when data centres in the UAE and Bahrain came under attack, disrupting internet and cloud‑based services, and by US and Israeli strikes on an Iranian data facility used to process salary payments for the Islamic Revolutionary Guard Corps (IRGC). Because much of this infrastructure is developed and operated by private‑sector companies, these firms are themselves being drawn into the conflict landscape, a shift highlighted by Iran’s identification of several major US technology companies operating across the Middle East as prospective candidates for long‑range strikes.

Technology in modern warfare

The strategy

Despite these concerns, the direction of travel is clear, and governments cannot afford to be caught flat-footed as technological advances continue at a rapid pace. Yet many are attempting to do so in a highly constrained environment, balancing already‑contested defence budgets with the need to fund innovation and respond to growing political scrutiny of spending decisions. As policy makers navigate these challenges, they are increasingly focusing on three broad areas:

• Securing the digital backbone: Governments are adapting legislation, increasing spending, and strengthening public-private partnerships to prioritise the defence of the digital infrastructure on which modern systems depend. Global cybersecurity spending across the public and private sectors has risen steadily in recent years, reaching USD 212 billion in 2025 and is projected to climb to around USD 377 billion by 2028. However, securing the physical components of digital infrastructure presents substantial financial and logistical challenges, with data-centre complexes spanning thousands of square metres and undersea cables running across ocean floors in international waters. In response, countries are increasingly integrating the protection of digital infrastructure into military and defence planning. For instance, in May 2026, the UK, Australia, and the US under the AUKUS defence pact outlined plans to develop undersea vehicles capable of conducting surveillance of subsea cables amid growing concerns about sabotage by their adversaries.
• Weaponising innovation: Defence departments in major powers at the forefront of technological advancement are also seeking to adapt civilian-designed platforms and software for military advantage. To facilitate this, governments are attempting to reduce regulatory barriers and accelerate procurement processes to attract more technology firms into defence programmes. For instance, Project Maven, brings major US companies into the Pentagon’s flagship effort to integrate AI into intelligence, surveillance, and targeting systems. Elsewhere, countries facing escalating drone threats in high‑risk regions of Europe, the Middle East, Africa and Asia are turning to battle hardened countries such as Ukraine, as well as established US, European and Israeli suppliers, for combat‑proven expertise and systems. Most notably, in March 2026, Kyiv signed agreements with partners such as Saudi Arabia and the United Arab Emirates to provide direct supplies of low-cost interceptor drones, and longer-term agreements on joint manufacturing lines and research and development.
• Controlling the tech frontier: Amid this intensifying global technology race, states are also seeking to shape who controls critical technologies and the rules governing their development and use. This competition spans entire supply chains, from US efforts to secure critical minerals for AI chip production in regions such as Sub‑Saharan Africa, to concerns in Washington over China’s growing dominance in battery manufacturing, a sector with wide‑ranging civilian and military applications. At the same time, rapid advances in AI have heightened fears of misuse, ranging from large‑scale cyberattacks to the development of biological weapons by malicious actors. In response, initiatives such as the Hague Process on autonomous weapons and emerging AI safety dialogues aim to establish basic safeguards and governance frameworks. Additionally, in June 2026, President Donald Trump signed an executive order requiring AI companies to notify the federal government and share certain new models up to 30 days before broader release, while directing national security agencies to develop a framework for assessing AI‑related risks. Furthermore, Washington has also begun enforcing export controls on cutting-edge frontier models, underscoring how access to top-tier AI capabilities is becoming a strategic lever in global competition.

Managing risk in a digitalised world 

With the private sector in prime position to benefit from global digitalisation, companies – like governments – must ensure they are resilient to the severe risks that today’s geopolitical climate poses to their products and services. This applies especially to defence and technology firms that own or operate critical sites such as data centres, which are increasingly plausible targets for sabotage or attack. For these actors, investing in robust physical security and carefully segmenting key assets as the threat landscape evolves is essential. Furthermore, companies that rely on digital platforms to run their businesses cannot assume they are insulated from conflict‑driven disruption simply because the fighting is elsewhere. Taking steps to build redundancy into architectures is becoming increasingly important through using multi‑cloud setups or diversifying data‑centre locations – so that an outage or attack on critical infrastructure in one country does not cascade into a major operational crisis in another. 

Into the cloud and beyond

With AI already reshaping economies and warfare, and amid escalating geopolitical volatility, the coming years will likely see the global technology race move to the forefront of international competition. States are likely to compete not only for territory and natural resources, but also to determine who owns and operates the platforms, data, and compute infrastructure that underpin both prosperity and national security. As this competitive environment intensifies, the ability to maintain sovereignty over critical technologies, chip supply, and compute capacity will increasingly determine which countries can keep pace and which risk falling behind.

With the private sector driving much of this innovation, powerful dual use technologies are set to become even more attractive to governments seeking strategic advantage, prompting deeper state involvement in technology markets. In parallel, companies operating critical digital infrastructure will need to manage heightened political and security risks. Ultimately, success in this new era will belong to the states and businesses that can innovate, secure, and adapt more quickly than their rivals in an increasingly contested landscape.