Neither Chinese Nor Western Model — India Needs To Chart A Third Way To Regulate Big Tech

by Swarajya Staff - Aug 7, 2021 05:19 AM
Neither Chinese Nor Western Model — India Needs To Chart A Third Way To Regulate Big TechGoogle, Amazon, Facebook, Apple, and others -- these companies may have become too big for everyone’s good.
Snapshot
  • While the EU model is a good one to ape as far as anti-trust violations by these companies are concerned, there is a case to be made to give some Chinese-style treatment for foreign companies.

Two models of regulating the big tech — leading technological conglomerates of the world — are emerging. One is the Western world’s way and the other is the Chinese method.

From exciting small startups one-and-a-half decades ago, to global monopolies with trillions of dollars of market capitalisation today effectively governing the online lives of hundreds of millions of people worldwide, these tech companies have come a really long way in a very small span of time.

This has never happened before in the history of mankind. The staggering challenge posed by them has every government worried, not least because at some level, these companies are eroding the authority of the State.

Surely, the concerns are also about the threats to safety of the citizens’ data (it’s the new oil, right?) and the illegal activities that lurk on the internet behind the massive dump of data everyday that is impossible for anyone to monitor.

As a majority of man hours on any particular day are now spent online — for leisure or work (the latter now a reality in the Covid-19 pandemic) — the challenge has become that much more important to tackle.

The Chinese, to their credit, have never allowed the big tech to gain a foothold in their country. The Communist Party erected the internet firewall quite early in the game to keep these foreign companies out of its borders.

But it was wise to promote its homegrown tech companies and create its own Google, Facebook, Twitter and Amazon — of course with terms and conditions of censorship and surveillance that come attached with any entity in a communist dictatorship.

But, that the influence big tech has gained over the citizens despite tight oversight, has unnerved Chinese premier Xi Jinping — a control freak who doesn’t brook any parallel centre of power.

Take stock of Xi’s purge of his country’s tech industry, which is currently underway. First, the regime cancelled the IPO of Ant Financial followed by dismantling of the company. It took a series of actions against Alibaba (China’s Amazon) including slapping a multi-billion dollar antitrust fine and deleting its browser from app stores.

Jack Ma, founder of both Ant and Alibaba, disappeared for weeks following a meeting with government officials. The financial empire he created, once touted to take over the world, crumbled in a matter of a few months.

Next in line was Didi (China’s Uber). Just two days after Didi launched an initial public offering on the New York Stock Exchange, which attracted $4.4 billion from US investors, Chinese regulators started a crack down on the company, announcing various penalties, and Didi’s app was pulled down from the app stores because the regulators said they were reviewing it on national security grounds.

The stock fell 30 per cent soon after the IPO was launched, costing US investors serious money.

Similar actions of levying fines have been initiated against two other Chinese tech giants — Tencent and Baidu — on opaque grounds. In April, China summoned the tech executives of 34 internet companies and told them to rectify their anti-competitive practices within the next month to avoid meeting the fate of Alibaba.

The comprehensive industry-wide crackdown is too alarming to miss.

The word ‘antitrust’ is for consumption of the western world so that they think that the Chinese are taking action against the tech monopolies just like the US and Europe have over the last century on various occasions against their corporations, for indulging in practices that curb competition and prevent alternatives from emerging.

But Chinese actions are not limited to one or two companies. They are going after the whole sector.

The Western method is indeed driven by antitrust concerns, especially in the European Union. In the United States, though there is a long history of disciplining monopolies whenever they have become too big for the country’s good, on the tech front, the real hounding of the giants started after the shocking victory of Donald Trump in 2016.

The Democratic Party found a scapegoat in big tech and blamed the Googles, Facebooks and Twitters of the world for amplifying Trump’s message ,which was seen as a hate speech and incendiary by the leftist establishment.

The big tech fell hook, line and sinker in a systematic cleanup of voices from social media platforms that were deemed heretic to the leftist worldview.

It didn’t help that the ones owning, running and administering these companies shared the same ideological framework of the US Democratic Party.

In 2021, when Trump was still President, he was removed from all tech platforms — Twitter, Facebook and YouTube — to name the three most important ones.

He was left with his megaphone on Twitter-like platform Parler, but Google and Apple first removed the app from its app stores followed by Amazon taking down the site from its web hosting service, finishing a fast emerging alternative to the big tech companies.

No anti-trust action was initiated against anyone when it was crystal clear what had happened. One needn’t look further to blame than the politicisation of US big tech (now firmly following the leftist Democratic Party agenda).

It’s no different than what the Chinese had been forcing their own tech companies to do all these years.

This doesn’t mean that genuine cases of anti-trust violations by big tech are not being pursued in the US. They are. But the President can’t do anything on his own and the Congress is too fractured to achieve anything concrete.

The whole system is so divided on partisan lines that a comprehensive law regulating the excesses of big tech will probably take years to come to fruition, if at all it ever comes.

The entity leading the charge against big tech in the West is the European Union. In 2016, it passed the General Data Protection Regulation, which came into force in 2018 and this put the onus of data security of users on the companies among many other measures for benefit of citizens.

It was a landmark law to ensure privacy and has inspired many similar regulations in various other countries. Last December, EU proposed two legislations — Digital Services and Markets Acts, which require tech companies ‘to take more responsibility over illegal content and goods distributed on their platforms, and aim to prevent them from giving preference to their own services over those of rivals.‘

The Digital Markets Act even proposes fines up to 10 per cent of the firms’ annual global revenues and mandates that repeat offenders are forced to divest parts of their business.

The EU must be the only region which has slapped maximum fines on these tech giants running into hundreds of millions of dollars.

One can find a comprehensive list of actions taken and fines imposed by governments against Big Tech here (Most scrutiny has come from outside of the US, majority of it from EU).

Where does India stand? It seems to be following the EU model. The Personal Data Protection Bill introduced by the government in Parliament in 2019 seems inspired by EU’s GDPR.

Since 2014, it has made constant and concerted efforts (changing regulations) to put a leash on Amazon’s efforts to monopolise the online retail market using its platform.

In 2018, the Competition Commission of India (CCI) had fined Google Rs 136 crore for giving undue space to its flights option via its search homepage, discriminating against its rivals.

In June 2019, the CCI highlighted how Google abused its dominant position in the domestic smartphone market and recommended an investigation. In November, the CCI initiated an investigation into abuse of dominant position by Alphabet Inc to promote its payments app Google Pay.

The Information Technology (Guidelines for Intermediaries and Digital media ethics code) Rules, 2021 framed under the IT Act, 2000 which came into force in June is another attempt to curb the powers of social media platforms and make them more accountable.

However, as this Swarajya piece argued, the rules are too complex and impractical.

What should India do then? While the EU model is a good one to ape as far as anti-trust violations by these companies are concerned, there is a case to be made to give some Chinese-style treatment for foreign companies.

One is not advocating a firewall or complete ban on these tech giants. But the political tilt of these companies (influenced by the US left ideology) needs to be checked at the earliest.

This should be treated as nothing but interference in India’s internal matters and an affront to its sovereignty.

India needs to simply bar the significant social intermediaries (the tech platforms as defined by the IT rules) from exercising any editorial control except on directions from the government to take down content which is illegal as per Indian laws.

Publishers can be allowed some leeway.

This would mean that YouTube can’t legally take down videos of anyone. But Netflix can choose to have anyone on board and de-platform someone it doesn’t like.

The former‘s content is user-generated, not the latter’s.

Ditto for Facebook, Twitter, Quora, and Google among others, which will be classified as ’significant social media intermediaries’ while Amazon Prime, Hotstar, etc, can choose to host whatever and whoever they want.

Neither the west’s or China’s model is perfect. We need a third way — a mix of both.

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