Our notes: Session on ‘New rules for the internet – Shaping the digital economy’

1. Preliminary

1.1 On 12 September 2019, Facebook and the Ananta Aspen Centre organised an event titled “New rules for the internet – Shaping the digital economy”, with Sir Nicholas Clegg (Facebook vice president of global affairs and communications) as the key speaker and Mr. Baijayant Panda (Bharatiya Janata Party national vice president), as the chair. Vihang Jumle and Tuhina Joshi, associates at Ikigai Law, attended the event. This blog post presents key points from the discussions that took place during the seminar.

2. Key points from the session

2.1 Baijayant Panda:

2.1.1 Many economists consider India to be a fast-growing market for digital technologies.

2.1.2 Global regulations on data protection and privacy have developed in four silos:

• The European Union’s General Data Protection Regulation (“GDPR”).
• Data protection laws in the US.
• Data protection laws in China.
• Evolving data protection frameworks in India, Russia, etc.

2.1.3 The Indian government is actively contemplating the pros and cons of data localisation. Per Mr Panda, he has no position on the issue at present.

2.2Sir Nicholas Clegg:

2.2.1.Views on privacy, data protection and the internet:

• It remains unclear if the internet will remain universal and be governed by global standards, or if it will fragment into blocs and follow the rules of individual countries in the future.
• India’s technological prowess has the potential to steer the direction of the internet’s evolution going ahead. India’s current position on privacy and data protection laws will have wide-ranging and lasting consequences on the future of the internet.
• The internet did not have a blueprint at the time of its conception, it grew somewhat haphazardly. However, with conversations around data privacy gaining momentum now, it is imperative to introduce global new-age rules to govern the usage of data generated on the internet. It is also necessary for all nations to constantly revisit the values that they want the internet to be built on.
• Individuals’ data privacy and the ability of a state to access individuals’ data has often been debated in the European Union.
• Users are now recognising the risks to their privacy by using the internet and have become conscious of their online activity. The international community should therefore cooperate and strive to secure the internet and make it empowering for its users. Failure to do so may lead to the disintegration of the internet into smaller countrywide networks with increased online surveillance. Such a bordered internet will go against the ethos of the originally envisaged global and free-flowing internet.
• In fact, there is no longer a single, unitary internet, but rather two ‘internets’ – China, and the rest of the world. The Great Firewall of China means great swaths of what we think of as the internet — Facebook, Instagram and WhatsApp included — are unreachable by its citizens. The decisions India makes, will likely do more to shape the global internet — or end it — than those made by any other country.
• It remains disputed if a protectionist approach towards the internet, such as in the case of China, is useful. Some may say that this protectionist approach reaps many rewards, since large and successful tech firms like Alibaba have emerged out of China’s protectionist internet. However, focusing on these companies alone may paint a misleading picture of the real consequences of a clamped down internet. A protectionist approach towards the internet can impede innovation and make it difficult for companies to function. It is therefore suggested that India should turn outwards and let the usage of the internet be global instead of turning inwards and having stricter control over the internet. There are many in India and around the world who think of data as the new oil – and that, like oil having a great reserve of it held within your national boundaries, will lead to sure-fire prosperity. But this analogy is mistaken. Data isn’t oil – a finite commodity to be owned and traded, pumped from the ground and burned in cars and factories. Of course, no analogy is perfect, but a better liquid to liken it to is water, with the global internet like a great borderless ocean of currents and tides.
• The value of data comes not from hoarding it or trading it like a finite commodity, but from allowing it to flow freely, and encouraging the innovation that comes from that free flow of data – the algorithms and the services and the intelligence that can be built on top of it. It is that innovation that has the potential to bring much greater wealth to India – and it is that innovation that will place India, with its entrepreneurial society and its bedrock of engineering talent, at the forefront of the global internet for decades to come. To contain data within geographical boundaries and restricting its flow outside the country would be to turn this great ocean of innovation into a still lake.
• The analogy of portraying data as the new-age oil has done more harm than good to our understanding of data and its many uses. The scope of data, unlike oil that can only be mined, purified, owned and traded, goes beyond being a mere commodity and presents opportunities that the international community is yet to fully conceptualise. The value of data lies in allowing it to flow freely across borders and hence India should allow for cross-border flow of its data in its data protection laws. Moreover, data sharing is crucial for national and international security as well. By disallowing the cross-border flow of data, India is locking itself out of major global data-sharing initiatives that are designed to clamp down on serious crime and terrorism, like the Clarifying Lawful Overseas Use of Data (CLOUD) Act and the Budapest Convention on Cyber Crime.
• India could structure its data privacy and protection laws by referring to existing frameworks such as the GDPR and strike a balance such that the laws are strict enough to safeguard individuals’ privacy but do not stifle innovation.
• Data portability is another upcoming issue. Currently, there are no laws to facilitate such a transfer of data footprints from one platform to the other.
• India should remain wary of introducing contradictory privacy and data protection laws. Regulatory confusion and internal conflicts should be kept to a minimum.
• Multilateralism seems to have lost momentum and it is unrealistic to expect the United Nations to introduce global rules to govern the internet or usage of data.
• Digital taxes are unnecessary but inevitable in the current global economy. The prevailing tax systems were designed to tax brick and mortar industries and not online economies. Tax systems hence need to be redesigned collectively in a logical fashion by all participating countries and not unilaterally.

2.2.2 Views on Facebook:

• Facebook is driven by its foundational value of providing a means of communication to people. It seeks to tap into new technologies to make this communication easier and more accessible for its users.
• India is Facebook-owned Whatsapp’s largest market. This is why Facebook choose India as the first country to introduce Whatsapp’s digital payments facility. This move can increase India’s financial inclusion.
• Facebook actively engages with the Indian government to close the country’s skill gap. Facebook aims to skill five million Indians by 2021 and has already initiated its projects in 10 Indian villages.
• Facebook is criticised for its attitude towards the use of data, unethical work with Cambridge Analytica, and other user privacy concerns. Facebook now acknowledges that privacy has become a priority and strives to ensure that user data is dealt with caution. Facebook has set up an internal committee to overlook data privacy and ethical sharing of data with third parties, and has agreed to pay a penalty imposed by the Federal Trade Commission of the US.
• Facebook in the past only focused on making technology available to its users and not the unintended usage of its platform. Now, Facebook concerns itself with striking a balance between ensuring individuals’ privacy and overall data security. Facebook has taken down approximately 2.2 billion fake accounts and 19 million terrorism-related activities from its platform.
• Facebook is currently seeking solutions to curb the spread of harmful content and misuse of its platform during elections. It is also working to enable data portability.
• Facebook supports the Organisation for Economic Cooperation and Development’s accord on global tax systems for digital companies and does not support the balkanisation of tax policies.

2.2.3 Views on emerging technologies:

• India is making rapid progress in developing and deploying emerging technologies. The unified payment system, direct benefit transfers and the rise of numerous tech start-ups have set great examples for other economies.
• Emerging technologies have the potential to improve the quality of people’s lives. These technologies can be employed for both productive and counterproductive purposes.
• The dangerous use of emerging technologies needs to be controlled, without stifling emerging technologies themselves.
• Emerging technologies follow a three-stage process before smoothly integrating into people’s lives: (i) Euphoria from the technology and its opportunities; (ii) rising fear from the misuse of technology; and (iii) a state of equilibrium.

(This post has been authored by Vihang Jumle, Associate, with inputs from Tuhina Joshi, Policy Associate at Ikigai Law)