Crafting an Indian exceptionalism in technology policy

The centrepiece of the Indian approach should be to foster a competitive environment that enhances consumers’ rights, rather than rely on regulatory solutions to do the same

In March this year, just over two months into his term, United States (US) president Joe Biden made two appointments that confirm the change in America’s position on Silicon Valley’s technology behemoths. He announced that he intended to appoint legal scholar Lina Khan and Tim Wu, a professor at Columbia University, to the Federal Trade Commission (FTC) and the National Economic Council respectively.

Representational Image. (Shutterstock)

That same month, Wu was appointed adviser to the White House on competition policy. Three months later, on June 15, Biden fulfilled his promise by appointing the 32-year-old Khan as chair of FTC.

Both these former academics have been vocal critics of the unbridled power of technology giants such as Amazon, Facebook, Google, and Apple. Wu’s 2010 book, The Master Switch: The Rise and Fall of Information Empires, chronicled how the internet centralised power in the hands of corporates and Khan’s 2017 paper Amazon’s Antitrust Paradox triggered a rethink on conventional notions of what antitrust is.

The appointments of Khan and Wu carry forward a trend that began at the end of the Donald Trump administration’s tenure, namely a shift in American technology policy from a light-touch approach to a more interventionist one. The former sought to support innovation by following a non-interventionist line that relied on free-market principles to maintain equilibrium in the technology sector. The latter is more disruptive and seeks to use antitrust to the check the concentration in digital markets as a means to encourage competition and foster innovation.

A recent suit filed by FTC and some US states against Facebook for the alleged abuse of its dominant position to thwart competition highlights America’s new interventionist streak. If FTC successfully proves that Facebook violated antitrust laws, the judge presiding over the case can break up the internet behemoth.

America’s decision to follow a more interventionist line against big tech might seem like it is following Europe’s lead on technology governance. However, beneath the veneer of similarity lie crucial differences.

The European Union (EU)’s General Data Protection Regulation (GDPR), among the world’s toughest data protection laws, is an ex-ante regulation. One study found that the strict standards of the GDPR prompts firms to “abandon products or product ideas” that are inherently irreconcilable with the regulation. It further found that it discourages entrepreneurial activity. Moreover, the single greatest gripe of start-up founders with the GDPR is the enhanced power of data protection regulatory authority to intervene in their affairs and levy fines. This is in contrast to the US which doesn’t have a similar law.

For its part, India might read the US’s new approach as a move to break big tech. The reality, however, is that America’s actions are guided by its own strategic self-interest, for two reasons.

First, it is nudging these Silicon Valley giants to invest their ever-burgeoning cash reserves to enhance the country’s technology supremacy. Evidence of this lies in the Biden administration’s recent proposal to tax only the top 100 global companies with revenues of at least $20 billion rather than explicitly opposing any taxation on big tech companies.

Second, it would much rather initiate the break up of big tech on its own soil, on terms tacitly pre-negotiated with Silicon Valley, to promote its hard power in digital markets. After all, why should it hand over a key lever of global influence to another government?

In such a scenario, India should craft its own exceptionalism that serves its economic interests. The centrepiece of the Indian approach should be to foster a competitive environment that enhances consumers’ rights, rather than rely on regulatory solutions to do the same.

Less regulation for greater consumer welfare seems counterintuitive. However, recent trends indicate that the entry of new players that offer users services which are more rights-centric than dominant platforms, tends to place an effective check on any potential abuse of market position. For instance, according to a report by Fast Company, Facebook’s announcement regarding a change in WhatsApp’s privacy policy in 2021 prompted millions to use Signal, a privacy-centric messaging app that does not store user data on any servers. The shift was particularly significant in India where Signal had only 1.6 million installs prior to the announcement. That figure ballooned to 23 million soon after Facebook notified users about the potential change on WhatsApp.

The upcoming digital rights frameworks in India appear heavy-handed, and may not foster a competition-led rights protection regime. They are also riddled with overlapping regulatory ambits and costly compliance standards. India should therefore, consider calibrating these to lay the foundation of a unique digital governance framework. Its building blocks could include incentives to encourage the growth of homegrown, consumer-friendly challengers to big tech, as well as revisiting proposals envisaged to create room for regulation-led innovation. If it takes these initial steps successfully, India will do what others have tried to but failed – craft a governance framework in which competition and users’ rights walk hand-in-hand, rather than on opposing sides.

Vivan Sharan is a Partner and Aayush Soni is the Communications Lead at Koan Advisory Group, New Delhi

The views expressed are personal