In more ways than one, 2020 was a landmark year for the governance of technology in India and the world. There were attempts to moderate the influence of Silicon Valley giants; new coalitions to tackle future challenges were born; the State entered the data management arena, and foreign policy played a role in India’s technology market. We bring you the main headlines from 2020 pertaining to tech governance, and analyses of the same by experts from Vivan Sharan’s Koan Advisory Group. These are some of 2020’s most important developments in technology governance that will continue to make their mark in 2021. Read on.
Modifications to Safe harbour provisions, as we know them:
Demands for greater accountability of social media platforms, vis-à-vis disinformation and misinformation, was a key highlight of 2020. In the United States there was bi-partisan political support for the view that Facebook and Twitter were liable for content posted on their websites. In June, the Joe Biden campaign wrote a letter to Facebook demanding that it “prevent misuse of its platform by President Trump to spread “’hateful content.’” Earlier, in May, the outgoing US President signed an executive order that aimed at removing the legal immunities that these platforms enjoyed.
In India too there are increasing demands for greater accountability and of tech platforms. In August, Congress leader Rahul Gandhi claimed that Facebook was involved in peddling misinformation and his party wrote a letter to Mark Zuckerberg, the tech giant’s CEO, asking for details on how Facebook plans to curb misinformation. In April, Ravi Shankar Prasad, the Minister for Electronics and Information Technology, warned platforms of action if they were found guilty of spreading fake news about the COVID-19 pandemic.
2021 will see governments across the globe narrowing the safe harbour protections for social media platforms, in order to curb the spread of misinformation and disinformation… India too will be following these developments closely, which will contribute to the new avatar of the Information Technology (IT) Act. The country is likely to shift away from a one-size-fits-all- approach, where a uniform law exists for different kinds of intermediaries. It is likely that there will be different thresholds of accountability for social media platforms: Koan Advisory Group
In this context, 2021 will see governments across the globe narrowing the safe harbour protections for social media platforms, in order to curb the spread of misinformation and disinformation. The EU is all set to issue the new Directive – Digital Services Act, which will impact 27 of the continent’s countries and is likely to have a long term effect on the accountability of tech companies and their users’ safety. A few months before the US elections, the Department of Justice issued reform recommendations to provide platforms with stronger incentives to remove illicit material, while continuing to foster innovation and free speech. Competition with China is likely to dilute any extreme measures that may weaken the growth of USA’s tech platforms in the digital world.
India too will be following these developments closely, which will contribute to the new avatar of the Information Technology (IT) Act. The country is likely to shift away from a one-size-fits-all- approach, where a uniform law exists for different kinds of intermediaries. It is likely that there will be different thresholds of accountability for social media platforms. Additionally, specific regulations may be carved out for different types of intermediaries such as cloud service providers, collaborative economy platforms etc.
Foreign policy enters technology markets:
Perhaps for the first time in India, foreign policy played a pivotal role in shaping the country’s technology market. In April, the government ruled that nations which share a land border with it will have to obtain permissions for their investments in India – a clear aim at China. In June, it banned apps from the People’s Republic because they allegedly posed a threat to India’s sovereignty. The move came after 20 Indian soldiers were killed in the Galwan valley along the Line of Actual Control, in a violent clash with their Chinese counterparts. In December, the government decided to create a National Security Directive on Telecommunications, which list “trusted and not trusted sources” of services and products for telecom service providers, “in order to maintain integrity of supply chain security”.
India isn’t the only country that has made national security considerations in technology, the springboard for its foreign policy. In May 2019, President Trump banned Huawei, a Chinese telecom equipment manufacturer, on the grounds that it could spy on American networks. In November 2020, the United Kingdom released a note which will help guide the country’s firms on “ethical, legal or commercial” questions when they work with Chinese companies, in order to safeguard national interests.
As far as India is concerned, it has been slow to marry foreign policy objectives with its strategy on technology networks and devices. Before border issues with China flared up, India had allowed Huawei to participate in 5G travels in the country in order to strengthen ties with the People’s Republic.
However, when it came to apps, India has taken the lead and used technology as an instrument to achieve its foreign policy goals. In fact, the country’s policymakers believe that, for a change, the United States followed in India’s steps when it came to banning Chinese apps. Going forward, we’ll see India using technology as an instrument of diplomacy more proactively.
That said, India will have to be careful to ensure that actions taken in the ‘interest of national security’ do not run afoul of its international commitments. Even though there is no multilateral agreement on investment protection, the World Trade Organisation (WTO)’s General Agreement for Trade in Services (GATS) contains binding rules. Specifically, India is under the most-favoured-nation (MFN) obligation to ensure even-handed treatment to investments from any WTO member across all service sectors.
The GATS has an exception on the grounds of “essential security”, allowing member countries to undertake measures that are inconsistent with their obligations. However, two recent WTO panel reports have held that the organisation’s dispute settlement panel can question the evidence related to the exception’s exercise, for the purpose of assessing whether this has been exercised in good faith.
It is worth noting, at this juncture, that India had also faced an adverse WTO decision in the past. The United States raised concerns about domestic content requirements (DCR) measures imposed by India in the initial phases of its National Solar Mission.
India has taken the lead and used technology as an instrument to achieve its foreign policy goals…Going forward, we’ll see India using technology as an instrument of diplomacy more proactively. That said, India will have to be careful to ensure that actions taken in the ‘interest of national security’ do not run afoul of its international commitments: Koan Advisory Group
Issue-based coalitions/positioning:
In 2021, India will be compelled to participate in international coalitions around specific issues around the future of technology – a visible trend in the year gone by. In June 2020, India, along with countries like the United States and the United Kingdom, became a founding member of the Global Partnership on Artificial Intelligence (GPAI), a multi stakeholder initiative to promote the human-centric use of AI.
Similarly, the United Kingdom has also proposed to create a D-10 (Democracy 10) group of countries, which comprises the G-7 nations plus India, South Korea, and Australia, to address both 5G mobile communications and vulnerable supply chains.
Taxation policy is another area where India wants to help develop international consensus. Tax authorities are of the view that tax planning by multinational entities (MNEs) allows them to artificially reduce taxable profits using low-tax jurisdictions, where there is little or no economic activity.
Such restructuring puts domestic companies at a disadvantage, as they are less active internationally during their initial growth period. Levelling the playing field will require more policy as well as political consensus in international discussions on taxation and the digital economy at the Organisation for Economic Co-operation and Development (OECD), as well as the UN.
Similarly, as part of the WTO’s Work Programme on Electronic Commerce, India allied with South Africa to argue against the extension of moratorium on customs duty on “electronic transmissions”, in March 2020. Both countries contended that such a clause had adverse effects on job creation, economic growth and a loss of duties and charges. They added that the moratorium would be feasible if it was restricted to “transmissions”.
However, if it is extended to “digitized and digitizable goods”, developing countries will incur losses of revenues, duties and charges. Both countries also contended that there would be an “impact on Industrialisation due to the Loss of the Use of Tariffs as a Critical Trade Policy Instrument”.
Principles-based regulation:
Perhaps for the first time, an important arm of the government embraced the concept of principles-based regulation. In December 2020, NITI Aayog released a draft report on the regulation of online fantasy sports in India. It recognised that a principles-led governance mechanism “would enable Indian OFSP [online fantasy sports platforms] operators to focus on innovation and achieve scale and expand their operations in a clear and principle-based regulatory environment”.
It added that such guidelines must be “recognised by relevant national and state-level institutions and organisations” to enable a single national policy on fantasy sports. NITI Aayog’s decision to embark on a principles-led regulatory environment is a departure from the past.
Traditionally, India has chosen a rules-based regulatory mechanism to achieve policy objectives. The tendency to look at the new digital ecosystem, through the lens of prescriptive regulations, is increasingly being challenged because they are increasingly diverse and fluid environments. This makes it difficult to predict the impacts of such regulations and the different functions that may evolve from it.
Therefore, rather than a prescriptive approach, a principles-based approach is more effective in technology markets. It is output-oriented and gives policymakers the agility to respond to dynamically changing environments. For example, the principle of co-regulation is especially useful for Internet-based platforms that exhibit shape shifting characteristics.
It combines the strengths of State oversight and an industry’s capability to self-regulate – the former lays down objectives and the latter works together with stakeholders to fulfill them. The EU regulatory framework on content moderation also identifies co-regulation as an alternative dispute resolution mechanisms.
In India, the telecom sector has adopted this principle to implement network neutrality. The Telecom Regulatory Authority of India (TRAI) has recently recommended its monitoring and implementation through a multi stakeholder body. The increasing acknowledgement of co-regulation as a practical approach, is likely to motivate lawmakers to use it to regulate technology markets.
Decoupling gatekeeping and big tech:
We now see a trend where State-backed intermediaries are entering the arenas of consent and data management. In August 2020, the Niti Aayog laid out the framework for the Data Empowerment and Protection Architecture (DEPA), a consent-based framework to help accelerate financial inclusion. Once implemented, DEPA will allow people access to their data and to securely share it with third party institutions. The paper was prepared by iSpirt, the Bangalore-based private think-tank, which also created IndiaStack, the government of India’s open API programme.
Three broad strands emerge out of this development. First, data and consent management will no longer be the preserve of big tech companies. They will have “competition” from State-backed intermediaries who will become custodians of user data and share it with platforms. Second, DEPA will be extended to cover non-financial sectors too, like health.
“DEPA is also being piloted in the health sector in 2020: On August 15, Prime Minister Modi announced the National Digital Health Mission, which includes a Health ID and a data sharing framework for personal health records,” according to Niti Aayog’s report. Third, when State policy creates intermediaries, the role of gatekeepers gets diluted. Essentially, what the government is doing is creating services which, it claims, users can trust. It is also implying that the outsourcing of this trust engenders more trust.
Notion of proportionality:
2020 saw technology giants being held accountable by lawmakers in India and the United States, for content management practices. In July, Silicon Valley CEOs Mark Zuckerberg (Facebook), Tim Cook (Apple), Jeff Bezos (Amazon) and Sunder Pichai (Google) testified before the US Congress about their competition practices. In November, Zuckerberg was joined by Twitter CEO Jack Dorsey to discuss the “censorship and suppression of news articles” and the “handling of the 2020 election” by the platforms, at another Congressional hearing. In India too, Facebook officials deposed before Parliamentary committees to answer questions on data flows, revenues and tax liabilities, among others, at various points in 2020.
The Congressional and Parliamentary Committee hearings are a manifestation of a notion that is now being mirrored in law: the larger a platform, the more its accountability. India’s draft Personal Data Protection Bill, 2019 provides that social media intermediaries, whose user base is above a certain threshold, and whose actions may affect the country’s security will be classified as “significant data fiduciaries” by the government.
India’s taxation rules for digital players also focus on entities that are above a certain threshold. Enacted in 2020, a two percent Equalisation Levy on e-commerce operators is applicable where the consideration is more than Rs 20 million per annum. Similarly, the European Union’s Digital Services Act contains provisions to ensure a level-playing field between tech giants and smaller companies, hold platforms liable, and create a safer internet for its citizens.
Koan Advisory Group, is an India-focused public policy research and advocacy firm, informing client strategies by providing empirical insights to successfully navigate India’s dynamic regulatory landscape. Koan Advisory works with a wide range of clients in the technology, media and entertainment, logistics, e-commerce, and digital financial services sectors in particular.
