How India was robbed of its data and condemned to an also-ran status in the great digital transformation of our age.
This year has started off badly for some of the big names in the digital universe. Facebook announced sweeping changes to its newsfeed (“Facebook plans sweeping changes to newsfeed”, FT, 12 January), which confirmed that there has been something peculiar about it. Twitter was accused of ‘shadow-banning’ based on how its algorithms silenced content that some employees didn’t like. And of course, there have been continuing allegations of abusive monopolies by Google, Amazon and Apple, with governments getting increasingly interested in anti-trust.
There are at least three issues involved here, and probably more. When I first heard of the European regulators’ interest, I chalked it up to technological penis envy. Since their own continent is a backwater in innovation, the EU’s competition commissioners have frequently handed out punitive fines in an apparent attempt to win back through regulations what Silicon Valley has won through pure creativity. Any such attempt by bureaucrats to hobble free-wheeling market capitalism, I felt, should be opposed on principle.
The second is persistent reports about the ability of social media to sway public opinion through two mechanisms: a) by allowing would-be manipulators to create bots and trolls who use Chinese whispers, targeted fake news, and echo-chambers to get their way in, for example, elections: the instances people talk about most are Brexit and Hillary Clinton’s defeat; and b) the observed phenomenon of addiction to smartphones and personalised media platforms thereon (as distinct from games or video).
Perhaps I am blase, but at least in India foreigners have secretly controlled media players and thus the discourse: there have been occasional pieces in certain media that are verbatim propaganda from entities such as China’s Xinhua propaganda agency, with only an Indian byline attached to it. That mainstream media is biased is no longer in question. Americans seem surprised, even though ‘manufacturing consent’ has been a meme there too for decades: just ask Noam Chomsky.
And there is a certain poetic justice if foreigners are indeed interfering in American elections, because Americans have been doing just that forever. In addition, there have been persistent rumours of ‘moles’ high up in the Indian system who are in CIA ‘assets’. So if the Russians and Chinese are doing unto Americans what they did unto others, well, karma is a b**ch. The moral indignation bit is a little overdone.
The problem of addiction – one wakes up and reaches for the smartphone, and spends hours on things like Facebook, Twitter, Instagram, or YouTube – is more novel; what is intriguing is that it is not accidental, as design ethicist and crusader Tristan Harris, formerly at Google, has emphasised: we are being led by the nose into Pavlovian conditioned-reflex behaviour by some kid in Silicon Valley (who is likely white, male, young, and innocent of any nuanced notions about ethics, in particular the moral compass of artificial intelligence). But addiction is a known phenomenon, and it is possible to de-programme people.
Moreover, the above two issues can be managed through regulation. What it means is that the free-wheeling Wild West days of the digital transformation are over, and that there may be massive restrictions imposed on the big technology firms from the West: the FAANG gang, namely, Facebook, Apple, Amazon, Netflix, and Google plus others like Uber, Microsoft, Twitter and Snapchat. They may have become too big to not regulate through anti-trust laws both in the US and Europe. They may be able to fend it off to an extent, like Microsoft did with some fancy footwork, but they will, by necessity, have to rein in their more aggressive behaviour.
Unfortunately for them, they will face the poignant situation that this sort of regulatory pressure will not affect their Chinese competitors. Companies like Huawei, Tencent, Alibaba and Didi Chuxing are more or less directly arms of the Chinese government, and they have thrived behind protectionist walls. The markets value them highly: See how they have zoomed up in the list of companies with the highest market capitalisation:
The net result of regulation may well be that the buccaneering Chinese will dominate the digital era, in an extreme case of ‘fast-followers’ defeating the ‘first-movers’ via lobbying and government fiat. That would surely be an unintended consequence, and I am sure the regulators will think hard and long about it before ‘too big to not regulate’ becomes a reality.
The third issue is that of ‘data as the new oil’ as various pundits have proclaimed, and is far more important to India. There is serious concern about the ability to, in effect, form a panopticon to watch over us in not-so-benign ways. That construct by British philosopher Jeremy Bentham consists of a prison where a hundred (or a thousand, or any number of) prisoners are potentially watched over all the time by a watchman. The prisoners do not know when they are under surveillance by the lone watchman, so that they end up self-censoring themselves and confining themselves to good behaviour. This was a theoretical construct earlier, but with modern technology, it is actually possible to watch over all the people all the time: a total Big Brother scenario.
This is an extreme nightmare case of the privacy argument that has been made by many in the West. In fact it will probably become a reality first in China, which recently introduced a three-digit ‘credit rating score’ which will determine your standing with the government, and thus affect you in all sorts of ways: getting an apartment, getting your kids into good schools, whether you get promoted, and so on, not just whether you are a credit risk for a loan. Couple this with 750 million CCTV cameras, and you get the drift. Big Brother is watching you, and you better behave.
India may not be at that level, but with Aadhaar, there is the possibility of widespread surveillance as well. But more alarming is the fact that it may not only be the Indian government, but the Chinese government that knows all about you: on the one hand, there is all this Chinese-built electronics that we happily buy, and nobody has any idea about what’s in it. There is the distinct possibility that your friendly smartphone has trap-doors in its software, or that it may be sending your data discreetly to some server in China.
In an instance of not quite understanding the diamonds in our backyard, the Indian government has allowed Chinese investment into Indian startups, which is another likely cause of leakage. For instance, the e-wallet provider Paytm is now about 60 per cent owned by the Alibaba Group of China. Startlingly, the Indian government may be tacitly enabling the acquisition of data by foreign-owned e-wallets by allowing them to be used for payment for government services.
Let us note that the US, in contrast, blocked Chinese acquisition of MoneyGram, a money transfer company, directly quoting the danger of its citizens’ data being vacuumed up by the Chinese.
In a further illustration that it doesn’t understand the value of data, India has allowed CIBIL, the consumer credit agency, to be bought by TransUnion, an American consumer credit entity. This means that anybody who does anything in the finance space – which means practically anybody who has a bank account or uses a credit card or debit card, which, by government mandate, should soon be everybody, as per the Jan Dhan Yojana – will be known to Americans.
This is a self-inflicted wound, and comes from babus not quite comprehending the value of data. The reason why Alibaba and Tencent are becoming so big so rapidly is that they have exclusive access to Chinese data. The reason why Alphabet, Amazon, Apple, Facebook and Microsoft collectively had $100 billion or so in net profit – that’s right, net profit – in 2017 is because they control American data. India is also spewing out data by the petabytes, and this is truly the black gold of our times. And no Indian company is getting a share of this pie because Indian data is leaking to the Chinese and the Americans. And that means to the selfsame Alibaba and Tencent, and to Google, Facebook, Amazon, Apple and Microsoft.
To put it bluntly, the biggest reason no Indian company has been able to shine in the digital era is that the Indian government has unwittingly participated in the biggest theft of our time – that of our data. Apart from the obvious commercial implications, there are very serious security implications as well. It is a fair bet that Chinese and American eavesdroppers have a good idea of what’s going on in government (it’s only recently that there has been an attempt to stop using Gmail for government employees’ accounts).
I can think of two insidious thefts of valuable resources: one is that of Owens Valley’s water in the early 20th century by Los Angeles city councilmen, which made Owens Valley a desert but allowed parched Los Angeles to become a great city (as in the background in the masterful film Chinatown); another is as alleged by Claude Alvares in Great Gene Robbery, where he says India was robbed of its genetic inheritance.
In days to come, how unwitting India was robbed of its data and thus condemned to also-ran status in the great digital transformation will be a business school case study. It is a tragedy happening right under our noses, and we don’t have the wits to stand up and say, “Nevermore!”.
This article was modified to reflect the fact that Paytm is not the only foreign-owned wallet allowed by the government.