Can India Defeat Tech Colonisation?

For India’s digital future, 10 May 2018 should be seen as a turning point. It was the day Walmart paid $16 billion to buy Flipkart, ending effectively the biggest Indian challenge in e-commerce, globally dominated by Amazon. Sure, there are still some smaller players around like Snapdeal, and niche companies in specific markets, or Chinese and Japanese-backed Paytm Mall, but matsya nyay — big fish eating the small — is very much in evidence.

You can also read this article in Hindi- क्या भारत तकनीकी औपनिवेशीकरण को हरा सकता है?

A few months before Flipkart, Alibaba bought into Big Basket, the online groceries chain. Soon Amazon bought up offline retailer More from the Birlas, and is now in talks to acquire a stake in Kishore Biyani’s Future Retail (owner of Big Bazaar).

Tech colonisation is now driven by oodles of global capital — capital that is now in plentiful supply, especially with tech companies from the US and China. Between them, eight major tech companies — five from the US and three from China — have a market capitalisation (19 December market quotes) of over $4.158 trillion. Only the US, China and Japan have a gross domestic product (GDP) larger than this number. The five US companies are Amazon, Apple, Facebook, Google and Microsoft, while the three Chinese companies are Alibaba, Baidu and Tencent.

Now consider two other milestones, 11 April 2016 and 5 April 2018: on the first date, the then Reserve Bank of India (RBI) governor Raghuram Rajan announced the launch of an upgraded unified payments interface (UPI) for mobile payments based on unique IDs. At one stroke, UPI yanked the power of payments away from banks and global oligopolies like Visa and MasterCard, enabling peer-to-peer payments and facilitating money movement between bank accounts by anyone owning a mobile smartphone.

As for the second date, the RBI struck a blow against tech colonisation by mandating that all payments companies must maintain their Indian customer data in India, in other words, data localisation. Even as foreign players in the payments space gnashed their teeth in impotent rage, a third government initiative, the Jan Dhan no-frills banking account, in conjunction with UPI, was instrumental in catapulting another home-grown digital initiative, the RuPay card, to the big league.

In November 2018, Finance Minister Arun Jaitley blogged: “Today Visa and MasterCard are losing market share in India to (the) indigenously developed payment systems of UPI and (the) RuPay Card, whose share has reached 65 percent of the payments done through debit and credit cards.”

These may be small successes in a landscape dotted by India’s gradual tech colonisation, but they are signs of hope that India can occasionally get its act together. Can it make this a habit?

The road to colonisation, if one were to use the British East India Company’s playbook as guide, runs something like this. First, offer to bring in trade and consumer benefits; then, once you have a foot in the door, and as the profits accumulate, use the economic power to build military power to protect the monopoly advantages gained; at a later stage, negotiate with weak rulers, offering them military protection in lieu of some personal lucre and/or other benefits, and expand your trade and military monopoly area; then, as your military and economic control of the country becomes larger and larger, establish the entire territory as a colony.

And yes, during the whole process, it helps if you can ‘educate’ the people being colonised so that at least the elite begin to see colonisation itself as some kind of boon — the Macaulay project so to speak.

Cut to the present, where the prospect of India being politically colonised is not on the cards, but tech colonisation is an ever-present possibility, given the sheer money and US political power backing it.

If you were a Google, you will bring free services (email, maps, payment systems, et al) to control Indian cyberspace; if you were a Facebook, you will offer free Internet (Free Basics), free messaging, free social interaction; if you were Amazon, you will offer subsidised products delivered to your home until it becomes a default way of shopping. Unlike the East India Company, Google or Facebook or Amazon don’t need armies to defend their growing monopoly power in the Indian digital marketplace; control of technology platforms and the ecosystem surrounding it provides them all the defence they need.

As weak Indian players either sell out to them, or compromise with them, they end up strengthening the foreign-owned ecosystems and their control of the playing field. When, occasionally, we manage to give our own home-grown tech a leg-up, the big diplomatic guns will be rolled out to browbeat us.

Thus, when the RuPay payments system rose to market leadership, MasterCard, Visa and American Express used US politicians and the India-US Joint Business Council to bat and browbeat on their behalf. When Aadhaar and UPI enabled breakthroughs in micro-payments and fintech, Google, Amazon and the rest tried hard to prevent it from becoming the default platform for micropayments and microcredit.

When the RBI mandated data localisation, the US tech biggies piled on the pressure. There are significant bureaucrats and ministers in the government who are willing to listen, as they lack any kind of knowledge on how tech colonisation happens. Or, maybe, they are compromised personally in some way.

The British colonisers got weak rulers to play their game by offering them titles and petty privileges; the global tech monopolies, backed by their governments, achieve the same objective by facilitating Indian bureaucrats to send their children to Ivy League colleges, or offer them plum posts in the World Bank and the International Monetary Fund, or tenured positions in universities.

Apart from being lucrative, these options also colonise the mind to tom-tom the virtues of free trade and globalisation, without realising that this story won’t sell in an era where US citizens themselves believe they have been sold a pup. Globalisation and automation have impacted the US middle class more than anybody else, and the election of Donald Trump is proof number one here.

Another technique used to suborn Indian tech entrepreneurs and compromise their independence is by literally throwing cash at them. Hundreds of Indian entrepreneurs will become millionaires, if not billionaires, by selling out, as has been the case with Sachin and Binny Bansal at Flipkart. Big cash brings salvation to the losing entrepreneurial soul.

The Indian citizen, meanwhile, enticed by free this and free that — mail, maps, messaging, discounted products, and what-have-you — has been roped into silent complicity in tech colonisation when actually nothing is coming free. She has bartered away her entire data thinking it has no particular value. When data is the new oil, we have presented our new tech colonisers with the equivalent of Saudi Arabia’s oil reserves in exchange for little personal conveniences.

In the process, the tech giants essentially own us. Google knows where you go, what you do, what you buy, what news and web content you consume; Amazon knows what you buy, where you live, what your monthly discretionary spend may be, and how you entertain yourself every month; Uber knows where you travel and how frequently, which locality you live and work in, and, increasingly, what you may order online for food. And so on. We don’t know what they do with this knowledge they have of us, some of it may not be kosher.

Facebook, as the recent Cambridge Analytica scandal showed, allowed sensitive user data to be accessed by the latter for electoral misuse. If Russian hackers can try to influence a US presidential election, one wonders how weak Indian cyber-security laws and enforcement will prevent any foreign or domestic entity from influencing our electoral outcomes.

Tech colonisation can easily facilitate the use of Indian customer data that is already with the global tech companies for influencing our political destinies. The report that the Congress party may have made initial approaches to Cambridge Analytica, even if wrong, shows where this trend can lead us.

The fightback against tech colonisation thus needs to be fought at several levels: capital inflows and shareholding power, regulation, data security and localisation, and selective support for domestic technology platforms and entrepreneurs.

Even though there are no easy solutions, the questions we need to ask ourselves, and find answers to, include the following:

One, the big advantage the tech biggies have is loads of capital, which means they can invest in or buy out Indian entrepreneurs before they can scale up. This means we need ways to protect our entrepreneurship from premature exits forced by their need for large amounts of capital. Are non-voting shares and the creation of multiple classes of investors the way out? Can we give investors lower capital gains taxes in lieu or lower voting shares?

Two, when new platforms are created, whether by government initiatives (as in the case of Aadhaar unique IDs, UPI and RuPay), or through public-private partnerships, should Indian-owned companies be given first crack at operationalising them and scaling up, before they are thrown open to all comers? This way, while ultimately there is no protectionism, Indian startups and businesses will get a head start. We don’t need to pick winners. Those who have good business models, will succeed. Those that don’t can fade away. We don’t need to create 10 more losers in the name of promoting domestic capabilities and ownership.

Three, should private-public partnerships be promoted to create new open-source technology that will benefit the Indian economy and create jobs? For example, instead of letting Uber take over the ride-hailing services market by sheer use of capital, why not create a not-for-profit app, where all taxi-owners can plug in for a small monthly fee, serve their customers, and keep more of their earnings with themselves.

The rival to Uber need not only be an Ola; it could be a simple not-for-profit app with the same kind of user-friendliness, which anyone can plug into. It will not only widen the shared mobility market, but ultimately facilitate even private car owners, once they convert their cars to dual use, private and commercial, to participate in public transport. Shared mobility is a public good, unlike the use of private vehicles only for limited private use.

Four, given the poor knowledge of tech developments in government and regulatory circles, any decision in these fields, whether for the purpose of writing regulations or for helping Indian tech entrepreneurship hold its own against global big tech, should always be informed by Indian tech expertise.

If decisions on tech and regulation are left to babus, who may either lack the knowledge or be compromised in other ways, it would be a tragedy. In this context, organisations like iSPIRIT can play a huge catalytic role. iSPIRIT, short for Indian Software

Product Industry Round Table — is a think-tank that hopes to catalyse the transformation of India’s software industry from services to products and platforms, apart from helping government formulate policies that can have a big impact on India’s growth story.

Five, data security, privacy and regulation. Data localisation, which the RBI is already insisting on, is a must, but at some point India needs to pioneer a new model for the use of data that benefits the public rather than only enriching the tech giants. Vasant Dhar, professor at the Stern School of Business, wrote in The Washington Post last September, there are four models for control of data.

One is the US model, which essentially allows big tech to more or less use the data they acquire legally for commercial purposes, subject only to privacy limitations and consent.

The Chinese model is to allow the state to control data and giving unbridled protection to domestic champs, who play the game the way the Communist party wants them to.

The European Union model, as enunciated in its General Data Protection Regulation, imposes risks on companies for any data they collect, and further burdens them with the need to prove that they are only collecting data that is ‘absolutely’ essential for a particular kind of service or transaction.

Thus, a company could face a penalty if your location is collected by a taxi app and this information is used for purposes other than what it is intended for. It cannot sell your location data to someone else for his commercial purpose.

The Indian approach, as enunciated in the B N Srikishna report on data protection and privacy, is still to be legislated (beyond the Aadhaar law used for delivering government benefits), but it constitutes a fourth way, as it treats digital data platforms like public goods, says Dhar.

He wrote: “regardless of how India’s data protection bill shapes up as law, the new data fiduciary entity or entities that it creates will ensure that any data transaction is consensual — getting the individual’s consent expressed explicitly in code that specifies how long that data can be used.

Initially, data fiduciaries are expected to oversee transactions in financial services; they’re expected to expand to health, employment and education, areas involving authentication and sensitive personal data. If we want control over data, the Indian model offers a path toward individual data empowerment for the Internet age.”

Clearly, we seem to have stumbled on something that is a good way to go, something that could prevent excessive tech colonisation even while empowering our citizens to use their data for their own benefit.

But between the intent and the final form, there could be many a slip. India is famous for succumbing to global pressures when it comes to the crunch. We need to ensure that our fractious and self-defeating nature does not trip us once more.

India can duck, deflect and defeat tech colonisation only if it can create a public-private partnership that marries good policy-making with technology platforms developed and grown for our needs. If Indian tech can dominate India, they will dominate the world.