While there is broad support for India’s digital public infrastructure achievements, a small, vocal chorus of voices has begun to question some aspects of the approach. Their concerns, for the most part, relate to the role played by the self-regulatory organizations at the heart of these ecosystems. Smriti Parasheera, a well-known analyst of Indian tech policy, argued in a recent paper that these organizations have become “Alt Big Tech” and need to be regulated to ensure fairness and competition.
The main thrust of the paper is that India’s new technology infrastructure, while a necessary alternative to the monopolistic forces of big tech, is controlled by a few private non-profit organizations that operate without regulation. Unless these entities themselves are subject to oversight, they could become a new version of Big Tech—as harmful as the companies they were supposed to provide an alternative to.
The paper makes two broad arguments. First, in the absence of measures to ensure transparency and accountability, these entities have access to vast amounts of data, which, either unknowingly or carelessly, can cause all kinds of harm to users of the ecosystem. For example, the National Payments Corporation of India (NPCI), processes a large amount of payment data. This is transactional data that, if misused, can significantly impact the privacy of individual users. There is so little visibility on how this data is collected and processed that we have little or no knowledge of the harms it may cause.
Second, because these entities, almost single-handedly, have to decide the future direction of these ecosystems – by determining what types of products can be offered, the way they should be implemented and what features they should have. – We have been denied innovation benefits that we could have got if there was healthy competition among the digital ecosystem. This is precisely why new umbrella entities were proposed in the digital payments space – so that we can have alternatives to NPCI to experience a variety of competing payment ecosystems. That proposal is, for all practical purposes, now on hold.
The extraordinary power these organizations hold, the paper concludes, has given rise to a new form of Big Tech, where power resides not with commercial entities but with new non-profit organizations that have the power to control the direction of the digital ecosystem. Amazing ability to do it. on which the country depends. This “new brand of power and control”, it suggests, will have long-term consequences for competition and innovation.
The wider concerns raised in the paper should be considered. I see no argument for subjecting these entities to a robust set of governance principles that address concerns about privacy and data protection. What I question is the emphasis on the ownership of the entities in charge of the ecosystem and the fact that control of it is in private hands. I’m not sure that this alone is grounds for questioning the suitability of the construction.
In fact, all these entities work under the supervision of the regulator. In the case of NPCI, there is also a seat on the board of the Reserve Bank of India. While they may be owned by market participants, given the diverse range of entities represented on their boards, none of them parlay this advantage into business profit, unlike the large tech companies being compared. Can do But even more unfortunate, the paper fails to appreciate how this construction may well signal an essential development in regulatory design, which, if successful, could show that all modern technology How ecosystems should be regulated.
The techno-legal ecosystem needs new regulatory institutions. What traditional regulatory institutions can provide is their need for governance so far that the need for older forms of supervision is meaningless. Central to the functioning of digital ecosystems are registries that establish the authority according to which the various ecosystem participants operate. Someone needs to set up and maintain these servers with an assurance of neutrality to ensure that no one gets an unfair advantage. The same person is required to evaluate the technical systems of new participants, certifying that they are compatible with the laid down protocols before going live. When new products are proposed, one needs to technically evaluate them to ensure that they do not cause any unintended harm to the ecosystem.
These are some of the demands that the modern techno-legal ecosystem imposes on our regulatory system. Traditional regulators have neither the technical expertise nor the organizational bandwidth to deal with this, but since these are all core regulatory functions, they cannot easily be outsourced to private enterprise to perform.
It is in this context that we need to look at the quasi-regulatory organizations set up by India. While not themselves regulators, they work under the supervision of regulators. While private, they can be incentivized to work in the interests of the entire ecosystem through a diversified ownership model and carefully designed governance. And of course because they’re privately operated, they can build all the technical capabilities that need to be done.
This is exactly the kind of intermediate regulatory body we need to govern modern techno-legal infrastructure.
Rahul Maithon is a partner at Trilegal and has a podcast called Ex Machina. His twitter handle is @matthan
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