THE CONTEXT: With the Internet playing a central role in determining how humans live and work, a few big technology companies have gathered remarkable clout. The clout is a result of the fact that users depend heavily on a few companies for most of their needs. Efforts by competition regulators in the European Union, the United States, and India have not conclusively settled issues that have emerged as a direct result of the dominance of big tech players. This article discusses why accountability is needed.
PERSPECTIVE FOR INDIAN MARKET
India’s digital age has brought with it tremendous opportunities. Indian SMEs now have access to a global market, leveling the playing field for these businesses.
- With a population of over a billion, there are about 500 million active web users and India’s online market is second only to China.
- According to the World Investment Report by UNCTAD, the FDI inflow into India rose 13 percent on year in FY20 to a record $49.97 billion compared to $44.36 billion in 2018-19, mostly in the digital sector.
- Credit Suisse recently revealed that the digital transactions in India are expected to rise fourfold, to $1 trillion, by 2023.
- Google generates $1 billion in ad revenues in India and Facebook is accessed by 217 million people every month.
- Currently only half of India’s population is online, which leaves these companies a fairly chunky market segment to expand into. And just so we don’t lose sight of scale here – that’s a market size of 650 million.
- The global pandemic has supercharged digital adoption in India, noting that the digitization of MSMEs is a particularly exciting trend to keep track of.
With a handful of internet companies projected to control 30% of the world’s gross economic output by 2030, the essential question before many regulators across the world is, how to fix accountability?
NEED TO HOLD ACCOUNTABLE
Access and availability aren’t the only things that have changed. Big tech firms are now some of the most powerful groups in the world because they, in many ways, shape and control the content that social media users see and consume online.
Content moderation: The common people deserve to know how their information is being used, censored, and potentially exploited online. These companies have an obligation to explain it. As social media platforms continue to evolve, so too must the laws that govern them.
Antitrust: Google’s rise now has implications not only for business but also politics and society — which makes the antitrust conversation relevant for all countries, including India. This conversation also needs to extend to other digital companies, such as Facebook, the other gatekeeper of information online.
Anti-competitive behavior: New-age internet companies often exhibit anticompetitive behavior not by cartelizing and hiking prices, but by keeping consumer prices low, or even free, and using it to achieve dominance across multiple businesses verticals.
Privacy concerns: Lack of transparency in the way tech companies process user data; this has raised serious and pressing privacy concerns.
Acting as a referee: They’ve developed high-powered, opaque algorithms that learn online behavior and deliver customized results based on what we search, see, and share online. Some platforms have gone a step further – beyond delivering customized results and content – and have appeared to act as the arbiters of truth by moderating and censoring user-generated political content – political speech, essentially. How they do it is largely unknown, which is one of the reasons why they need to testify and hold accountable. Whether or not these companies believe they’re acting as a referee, suppression of people’s political speech is occurring.
Other issues: Other issues that need consideration include intellectual property rights and licensing, international taxation, and a user-centric data security regime.
The gap between the tech giants and their closest competitors is wide and has naturally given rise to a slew of complaints of abuse of dominance, illegal mergers, and acquisitions, and anti-competitive business practices such as bundling, predatory pricing, and deep discounting, exclusive arrangements, and cartelization and others.
MEASURES TAKEN AT THE NATIONAL AND INTERNATIONAL LEVEL
Governments across the world have introduced stringent laws to ensure users’ right to privacy by requiring tech companies (and any other entity that utilizes user data) to adhere to certain basic and essential data security and privacy measures.
- The E.U. introduced the General Data Protection Regulation (GDPR) to function as a consolidated set of data protection laws for Europe and Europeans, with a focus on certain basic principles of privacy which all entities handling user data must adhere to.
- In India, social media companies are able to absolve themselves of any liability by citing the Information Technology (IT) Act’s provisions protecting intermediaries from any legal action for user-generated content.
- India is also working on a Personal data protection bill.
- The U.S. has now set its sights on big tech. After the announcement of anti-trust litigation against Google, a major overhaul of how these companies operate in nearly every possible arena is likely.
- There is also a bipartisan effort to investigate censorship policies on Facebook and Twitter and also, relatedly, into the issues of ethical journalism and fake news.
WHAT SHOULD BE DONE?
Big Tech Companies shape how you live, think, consume, vote, read, work and holiday. Forcing them to be accountable is essential.
- Sites would also be required to provide an easily digestible disclosure of their content moderation practices for users. And, importantly, they would be required to explain their decisions to remove material to consumers. They would need to create an appeals process for users, too.
- There’s a growing bipartisan consensus that it’s time to shed greater light on these secretive processes. People deserve to know how their information is being treated by big tech.
- India needs to draw on the work that led to the American lawsuit, and take into account conversations in the European Union, where courts and policymakers have dealt some of the strongest blows to big tech’s propensity to cartelize.
- If these proposals (for Potential Avenue for invasion of privacy, choices one key new yardstick, antitrust investigation) turn into law, they could offer a whole new set of tools to regulators and alter the face of the digital landscape for a generation.
- Anti-competitive behavior should be punished with record-setting fines and ordering changes in business models and structuring.
Whether this is sufficient in terms of regulation remains to be seen.
WAY FORWARD:
Digital tech giants such as Google, Facebook, Microsoft, Amazon, and Walmart are all eagerly participating in writing the next chapter to the great Indian tech odyssey. This is just the beginning. So how can India use tech to supercharge its economy?
- If the role played by digital tech to counter the disruption caused by the Covid-19 pandemic is anything to go by, then digital is definitely the way forward.
- India has two possible paths ahead: adopt progressive new antitrust approaches which may emerge from the ongoing global churn that could help create more innovation-friendly markets or adopt a narrow nationalistic plank and characterize the problem as merely a “foreign” monopoly concern.
- The changing landscape of the tech sector and markets in general and the fact that these entities have unimaginable wealth and power has meant that traditional methods will be insufficient to arrive at any long-term, concrete solutions.
CONCLUSION:
Given the size and impact of the Indian market, all regulatory action in India is bound to be closely monitored and can have a far-reaching impact elsewhere in the world. There is a good chance that the close scrutiny of major tech players by Indian regulators will lead to reform in the other regions and provide some heft to the growing concerns around their dominance. Given the importance of the Indian market, companies themselves will be inclined to ensure that the local regulators are satisfied.
JUST TO ADD IN YOUR KNOWLEDGE
PERSONAL DATA PROTECTION BILL: The Bill seeks to provide for the protection of the personal data of individuals. The Bill governs the processing of personal data by:
- Government
- Companies incorporated in India
- Foreign companies dealing with the personal data of individuals in India
Obligations of data fiduciary: Personal data can be processed only for a specific, clear, and lawful purpose. Additionally, all data fiduciaries must undertake certain transparency and accountability measures such as:
- Implementing security safeguards (such as data encryption and preventing misuse of data), and
- Instituting Grievance Redressal Mechanisms to address complaints of individuals. They must also institute mechanisms for age verification and parental consent when processing sensitive personal data of children.
Rights of the individual:
- Seek correction of inaccurate, incomplete, or out-of-date personal data.
- Have personal data transferred to any other data fiduciary in certain circumstances.
- Restrict continuing disclosure of their personal data by a fiduciary, if it is no longer necessary or consent is withdrawn.
Grounds for processing personal data: The Bill allows the processing of data by fiduciaries only if consent is provided by the individual. However, in certain circumstances, personal data can be processed without consent. These include:
- If required by the State for providing benefits to the individual,
- Legal proceedings,
- To respond to a medical emergency.
Exemptions- The central government can exempt any of its agencies from the provisions of the Act:
- In the interest of the security of the state, public order, sovereignty and integrity of India and friendly relations with foreign states, and
- For preventing incitement to the commission of any cognizable offense (i.e. arrest without warrant).
Offenses:
- Processing or transferring personal data in violation of the Bill is punishable with a fine of Rs 15 crore or 4% of the annual turnover of the fiduciary, whichever is higher, and
- Failure to conduct a data audit is punishable with a fine of five crore rupees or 2% of the annual turnover of the fiduciary, whichever is higher.