India’s Resolute Stand On Data Protection Is A Challenge To Tech Giants Business Ambitions

Under Modi 2.0, data protection will be given priority. Ravi Shankar Prasad, the new telecom and IT minister has indicated that The Personal Data Protection Bill, 2018 will be “quickly” taken to the Parliament for final amendments. This has implications for consumers, business and even inter-government relations particularly between India and the US.

The Bill, originally submitted by the Justice BN Srikrishna committee to the government on July 27, 2018, prescribes how organizations should collect, process and store data of India citizens. It deals with privacy and security of their personal information and data. There is a proposal to amend the intermediary rules that regulate internet companies and social media firms such as WhatsApp, Facebook, Twitter, and Google among others. The aim is check the ability to collect and use data. It also seeks to curb spreading of misinformation and prevent alleged snooping on Indian users.

The proposed Bill, which in its current form is full of loopholes, is inspired by the General Data Protection Regulations of the European Union. According to Google CEO Sundar Pichai’s recent op-ed, the US lawmakers should follow to bring in legislation.

And, the Indian government has made it mandatory for every data fiduciary (any entity processing personal data) to locate the storage or server or data centre in India. Failing to abide by these will attract fines.

One of the critical features of the proposed Bill is to give users the right to choose. Right to privacy is a “fundamental right”. Naturally, it’s the users who would then give consent to companies to collect, store and use data that they generate, while using products or services of these internet-backed companies. Thus, the onus is on the users to make informed choices.

That may be good on paper but in reality, users may not know what they are agreeing to. In reality, users should have always read the long winding privacy policies that can run into pages, before clicking “I Agree”. But, as Wired noted in an article, most people do not read them.

If privacy is one side of the coin, then convenience or even indifference resides on the other. Most consumers, it is said, may prefer convenience over privacy concerns, believing in the inherent goodness of digital corporations to keep their data safe and not misuse it.

But data remains vulnerable to misuse. Many episodes of data leaks, including of passwords and personal details have been reported, while some may have even gone unreported.

All that stands between you and the misuse of your data is your implicit consent to the privacy policy.

What’s interesting is that India’s decision to fast tract data privacy Bill comes with in few weeks after Google’s India-born CEO Pichai said in an op-ed privacy should not be a “luxury” and that the Internet giant is trying all it can to make ‘privacy for all’ a reality.

The good part of Pichai’s op-ed is that the Google CEO has ensured “Google will never sell any personal information to third parties”. He further says “you get to decide how your information is used”. That’s great.

Both the companies as well as the governments want users to take the responsibility of what access they give to technology firms. But, the question is how many of the users would actually understand these privacy policies or how their data can be used by tech firms once they give consent? Also, if someone decides to disagree to the privacy policy, will the person be able to use that product or service of companies like Google or Facebook?

It is concerns such as these and the lack of collective bargaining ability with individuals that is leading to governments to step in and attempt to fill the breach. Once India’s Bill is passed, not only social media firms, but all companies that run their business backed by the internet will fall under the Act.

The fact that India is taking a strict stand on data protection was made clear by the Narendra Modi-led government towards the end of its first tenure. India’s proposed e-commerce policy, a draft of which was released in February, is entirely built on the theme of protecting data. The draft policy has declared data as “national asset” if generated in the country. Thus it demands its sovereign rights protected.

The protectionist policy not only demands setting up of data centres in India, but also brings the option of making these companies disclose source codes that companies use for technology transfer and development of applications suited for local needs. This essentially is in line with the proposed data protection Bill.

E-commerce companies, especially foreign-funded ones like Flipkart-Walmart and Amazon, are going to face stricter regulations in the coming days. In February, the poll-bound Modi government had proposed an e-commerce policy that is built on the idea of protectionism – something that China had followed for years. That, according to industry observers, will continue. The idea is to create a home grown technological ecosystem where domestic entrepreneurs invest and benefit from the growing demand for these services, and the fruits of these endeavours — such as employment, creation of technology and intellectual property rights — accrue to India.

In a recent piece, the Wall Street Journal said “Modi’s re-election means more scrutiny for US tech giants”. It further mentioned that the Modi Government has “acted more like Beijing” aiming to restrict dominant foreign companies and “foster the growth of home-grown startups”.

A similar approach have helped China over the years to have their own versions of big technology and e-commerce companies, which now give US biggies run for their money. Whether that would eventually create India’s own version of an Amazon, Google or Facebook is a billion dollar question that will get answered in the coming decade or maybe even earlier.

But, the United States will not sit quiet as this push by India will be seen as stepping on its toes, as many tech giants are US-based companies. The US has already removed India from the list of nations that get access to the US market under the Generalised System of Preferences. This may just be the beginning of a trade war, where the US will seek greater market access for its products and services in India.

But if the Indian government’s approach does not change, tech giants and e-commerce biggies who are pinning hopes on India’s largest digital economy to drive growth will find themselves under intense scrutiny.―Money Control