How can the Indian Government stay ahead of Technology led Disruptions?
How can the Indian Government stay ahead of Technology led Disruptions?
P Rajagopal Tampi
Introduction
Many of the biggest challenges before nations today are emanating from a single cause: the meteoric growth of technology innovations and scientific research. In most countries, the rapidity of technological innovations has left the institution of many desirable concomitant regulatory safeguards lagging, in some cases due to complexity and lack of understanding of the issues involved and in others due to the lack of data, overlapping jurisdictions and many such hurdles. In all cases, the common refrain is the novelty and the rapidity of these changes.
How should India go about staying ahead of the curve and managing technology changes in a way that we encourage innovation and progress without compromising on our economic growth, security, independence and self-sufficiency?
How will nations benefit by regulating technology companies?
Regulating technology companies will ensure that nations receive their fair share of tax and other revenues from every transnational company that is operating domestically irrespective of its country of origin. Clandestine espionage by some technology companies for their home nations and owners can be prevented thereby ensuring that intellectual property, national security data, personal data, confidential data, and other such valuable assets of a nation are not compromised. Having strong policies for regulating data, can ensure that national markets and stock markets are kept free, open and fair, monopolisation and unfair practises can be nipped in the bud thus unshackling the nation’s economy to permit its maximum growth.
Armed with fine tuned legislation, knowledge of detailed data usage and ways of making profits through commercial operations, Nations will be able to safeguard themselves against exploitation, policy related arm-twisting and interference in their internal affairs including manipulation of elections and politics. It will strengthen capability for equitable discussions during trade negotiations at the WTO and other organisations. The prevention and safeguarding the nations resources against cyber attacks is another key benefit.
In the world of technology, innovations and changes are so rapid, that nations need to keep themselves well ahead of the curve with the regulatory and verification tools necessary to effectively neutralise the harmful effects of emerging technologies. There is a need for self sufficiency in this space by in-house development of simulators, testing facilities, targeted policy, pure scientific research, laboratories, certification and licensing agencies. The setting up of such an infrastructure and enacting necessary legislation will require large investments in the nation’s budget and the coming together of the brightest minds in the country, working alongside legislators from the Parliament. The successful execution of the laws effectively across the nation will provide powerful leverage for India to achieve its economic and strategic growth goals.
Institution of fine tuned legislation, knowledge of detailed data usage and ways of making profits through commercial operations by technology companies , nations will be able to safeguard their citizens against exploitation, policy related arm-twisting and interference in their internal affairs including manipulation of elections and politics. It will strengthen capability for equitable discussions during trade negotiations at the WTO and other organisations. The prevention and safeguarding of national resources against cyber attacks is another key benefit.
The main technology challenges faced by Nations today
The unbridled growth of Technology companies
E-commerce has existed for more than two decades. Yet Governments are not yet unanimous on how to tax cross border e-commerce sales. In actuality, the issue tackled by India only in 2016 when it introduced “Equalization Levy” or “Google Tax” as it is popularly known, on online advertisements and later extended it to cover sales of goods and services through online platforms. “A global tax reform agreed by 140 nations covering both digital economy taxation and a plan for minimum Corporate tax rate at 15% looks set to take longer as consultations continue around the finer aspects of digital economy taxation….” 1.
Google was levied a penalty of Rs 1337.67 crores for abusing its dominant position in multiple markets in the Android mobile device eco-system apart from issuing a cease-and-desist order2. A second penalty of 936.44 crores3 was levied by Competition Commission of India in relation to Google Playstore policy mandating the use of Google billing and payment system by all android app developers with no options to use other billing systems.
The loss of revenue for traditional news and media companies due to the rise of big technology companies which operate as online aggregators is another instance of monopolistic behaviour. The battle between the press and Google started in Australia three years ago with Google threatening to pull out their search engine from the country. Australia pitched Microsoft with its Bing search engine against Google silencing the latter into agreeing to share revenues with the press and content creators. Australia treated the issue as one of competition and not copyright. Competition legislation ensures that the content creator also owns revenues in spite of the use of technological devices by big technology companies.
The security and economic growth of nations are being threatened by the covert abilities of technology firms to spy on sensitive and valuable data of other nations. The arrest of Huawei CFO Ms Meng in Dec 2015 in Canada at the behest of the USA is a case in point. In a follow on move, the USA has disallowed certain Chinese telecom companies from bidding for projects in the USA. Recently, India followed a similar path when Chinese companies we are not allowed to participate in the 5G Telecom upgrade project trials.
The many cases of cyber security breaches in Indian institutions like a AIIMS and Indian Railway travellers data point to the inevitability of regulatory changes in the technology sector. Recently, The US has ramped up sanctions against China by outlawing the sale of advanced chip design, lithographic and manufacturing technologies to China. India has banned the Chinese company Tik-Tok and the US has also done the same recently.
These steps demonstrate the role that technology companies play in covert espionage and cyber security breaches which in turn are today affecting geopolitical strategies of nations. Warfare between nations takes place in the technology and trade fields in addition to limited physical wars, a quantum change from the twentieth century.
The active role of disruption played by technology companies within their home nations and across other nations has been increasing in the past decade. Cyber security and e-commerce challenges are faced by other nations in which transnational technology companies operate, while in their home countries, the technology companies face challenges arising out of rapid technology growth, growth of new business models, disruption in the industry and various other such causes.
Approaches for regulating technology companies:
1. Ownership based models:
Build ownership and control as a shareholder and Director on the board of the company by issuing “golden shares” to the State with veto powers. China has taken “golden shares” in two of their largest companies Alibaba and Tencent in a bid to spread and formalize its ability to control the governance of these companies. After imposing large fines and sanctions on China’s tech firms wiping billions of $ in valuations, stopping the world’s largest scheduled IPO of the Ant Group, for criticism of Government policies by Jack Ma the Founder of Alibaba, the Chinese Government has decided to change tack to a less destructive method. The “golden shares” come with special rights over business decisions. Within China the stakes are known as “special management shares” and have been used since 2015 by the state to exert influence4. This advantage of this approach is that the State is privy to all information in companies, which is not in the interest of entrepreneurial growth. The proof of this pudding is in the fact that Jack Ma has handed over control of his companies and gone underground. Such a structure would be radical change from existing structures in a free democracy like India. This type of hard control structure is suited for and is easily implementable for authoritarian regimes like the Communist regime in China.
2. Non-ownership based models:
a. The US government tends to rely on the nation's own big technology companies like for ensuring the execution of its safety and security laws and regulations for its citizens. They have put in place rules that require companies like Google, Facebook, and Amazon to disclose how they use data, how they make money and also to restrict them from making huge profits. The State exercises control on exports of technology and Intellectual Property.
b. Government of India have not taken ownership of, nor made close ties with Indian big technology companies though it is connected strongly with Industry bodies in various segments and owns many Public Sector Enterprises. Indian Government today regulates directly through legislation or by the use of government agencies like CCI, TRAI, NCLT, NCLAT and others to control monopolistic businesses and unfair commercial practices through refusal of permissions and imposing of penalties.
c. The European Union, despite its many constituent states has been doing commendable work in the area of GDPR and surveillance of big technology companies for encroaching into the rights and freedom of its citizens as enshrined in its Charter of Fundamental Rights.
What can India Do?
There is an unquestionable need for the Indian government to build deep consultative expertise in technology, software, AI, Data frameworks, Cybercrime etc to enable them to regulate big technology companies. Specific software simulation and testing capability will form the future bedrock infrastructure for regulation and certification5.
The Government must possess certainty and knowledge of existence of taxable transactions with the ability to levy taxes in a transparent manner. A contrarian case is cryptocurrency, where the opacity and sparse availability of transactional data weakens the legitimacy of Governments and Central Banks and their power to tax such transactions. This calls for Governments to closely monitor the development of newer technologies. It highlights the need to track and control online activity, create a national data framework and security database framework to make companies operate within the ambit of laws only after securing the necessary government approvals.
The need for an integrated policy on software, e-commerce and data in an era of galloping technology progress cannot be overemphasised. This calls for finalising India’s model for regulating big technology companies, software, AI, e-commerce and data keeping the overarching need for simplicity, flexibility, self-reliance, economic growth and meeting geo-political and strategic aims. Low cost solutions for a Governing Institution structure incorporating outsourced consulting and retention in-house of core functions such as simulation, testing and threat level monitoring should be adopted. As a high priority starting point, the appointment of a standing “technology policy think-tank” consisting of highly informed, nationalistic professionals and Parliamentarians working in concert with Niti Aayog is called for.
India would do well to adopt an integrated National Data Governance Framework (NDGF), finalise budgeting (in the Financial Year 2023-24 Budget) and staffing to provide lawmakers expertise and assistance to legislate on technology growth spawned disruptions which require new laws and governance by the state. It is necessary to view this need as a strategic national priority which is essential for ensuring that India meets her intermediate target to become the third largest global economy soon.
Conclusion
As the strong blue-water British Imperial Navy acted as one of the main pillars on which the British global empire was built in the eighteenth century, India too needs such a pillar on which our global economic leadership can be built. Strategising Big Tech disruption governance by the formation of a National Data Governance Framework with single minded purpose, setting up the structure, organisation and putting in place finely tuned legislation for the purpose will go a long way in catapulting India into the position of a global leader that she aspires to.
The war between big technology companies and national governments will continue to be a complex and fluid one. Big technology companies will continue to grow more powerful, and this will force national governments to retain control over important aspects of their citizens' lives and the nations security, sovereignty and economic priorities.
Note:
3. https://www.cci.gov.in/antitrust/orders/details/1072/0
5. https://rajtampi.blogspot.com/2023/01/a-governance-framework-for-ai-quality.html
Copyright © Commander P Rajagopal Tampi IN (R) 2023
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