How economic actors, communities and developing countries fare in the digital economy will depend in large part on how much control they have over the data they produce.
Digital data and the pervasive intelligence that it provides about people, and about artefactual and natural phenomena, is the very basis of a digital economy. With the industrial revolution, machines soon became practically unavoidable everywhere. The same will be true of much of digital intelligence-based economic processes and systems as a digital economy takes center stage. The efficiency dividend is just too high, and a host of entirely novel services simply too alluring for societies to resist them.
An important digital policy requirement is to enable people to retain control over their personal information. They should be able to entirely deny access to some kinds of it, and share others only with trusted parties. They should further be able to know and control any subsequent uses of their personal information, abuse of which can cause serious harm. These are the main principles underlying various personal data protection regimes like the EU's General Data Protection Regulation (GDPR) and India's proposed data protection law.
Access and control
As the digital economy increasingly pervades most economic relationships, access to and control over various kinds of data determines the comparative economic advantage or disadvantage of the involved actors. This is a very different matter from privacy. It is true between consumers and corporations, between small actors on digital platforms — like Uber drivers and sellers on Amazon — and the corresponding platforms, and among nations.
Just as industrialization threw up new winners and losers, so will the digital economy, and in a far shorter time. How much will corporations profiteer at the expense of consumers, whether small economic actors will survive, and if so at what terms, and which countries will move up the global ranks and which face colonization-like conditions, will all be determined by how access to and control of various important data gets configured.
Laws aimed at data privacy may have some implications for safeguarding individuals against data-based economic exploitation. But these are minimal and mostly not very effective, going by more than a year of GDPR's reign. The reason is that current data protection laws do not focus on the economic dimension even in terms of individuals. But even more importantly, as the digital economy's mainstay shifts from targeted advertisements — for which personal data is key — to data-based intelligent management of sector-wide activities, it is anonymized and aggregated data that is increasingly most importance. AI, for instance, is built on such data, and is increasingly the key power behind digital economy.
Such anonymized and aggregated data — as many other forms of important data — currently has no legal protection, or ownership rules, whatsoever. The default is that whoever collects such data entirely and exclusively owns its entire value. It is this entirely untenable default that set the stage for a few digital corporations to become globally the richest by market cap in just over a decade, and for all countries other than the two digital superpowers — the United States and China — to fast settle into a debilitating, digital dependency.
Data's economic aspects, and proper policies and laws around them, are key to India's digital future.
These clearly visible early trends will only intensify, and the scenario at the end of a decade or so is really not hard to make out. Either we accept this fast closing-in future, or try to avert it, towards a digital economy that is fair to users and consumers, to small actors in the economy, and to developing countries.
Data as a resource
At the heart of digital economy is the asset of data, something that is universally acknowledged today by businesses and global business related discussions, whether at the World Economic Forum or in the Financial Times and The Economist. In these circumstances, it appears very incongruent that "data as an economic resource" almost never figures in policy discussions at global levels. At the national-level, its mentions remain mostly superficial.
The simple reason for this is that the United States and its allies, who have a strong hold over global policy discourses, do not want to talk about it. Any "data as a resource" discussion will immediately go in the direction of challenging U.S. companies' global extraction of valuable data. With the support of its allies, the United States is right now busy trying to get all countries to sign on a "free global flow of data" regime.
The latter is simply a eulogy for the current default of "whoever collects data owns it." Because once countries give up their right to check data from freely flowing out, no data ownership rules — or other kinds of economic rights over data — can ever be meaningfully instituted by them. That would be the end of any chance of a digital economy that is fair to small actors and to developing countries.
Most digital activism, even in developing countries like India, remains exclusively focused, unfortunately, on the privacy issue, which without doubt is very important. But it completely ignores economic rights over data. There seems to be an elite bias here, whereby it is hoped that markets would by themselves ensure fairness.
Any economic rights argument brings state agencies into data-related roles, which is judged as a cure worse than the disease. But the market logic does not seem to be working for the Uber driver, the merchant on Amazon, and the small restaurant and hotel exploited respectively by food delivery and accommodation-booking platforms. It does not seem likely to work for the vast majority of consumers with low-purchasing power. And it would certainly leave India in a position of inextricable digital dependency on U.S. or Chinese companies in almost all sectors, taking all Indians down collectively.
Torn between its geo-economic loyalty to the United States and fast eroding digital economy prospects, the EU has started to make some tentative noises about economic rights over data, including of the non-personal kind, which could be collective/group data, or artefactual and natural data. Its policy documents speak about mandated access to digital data with private companies that is needed for public interest purposes. EU competition authorities are investigating who has the rights to data about goods put up for sale by third party sellers on the Amazon platform, the seller or Amazon. Another EU policy document questions whether the owner of a factory premise should own the machine data originating from the factory or the provider of digital applications that may run those machines.
Even if somewhat half-hearted, all these are allied explorations, beyond privacy protection towards various kinds of economic rights over data, of individuals, and of groups and communities, and including data coming from artifacts and natural phenomenon. The EU perhaps needs to be questioned how these emerging domestic policy positions square with its support to the United States at global trade forums on "global free flow of data" regimes.
Roadmap for data rights
Such policy directions need to be underpinned by an explicit overarching framework about economic rights over data, of individuals and their communities/groups. The EU is yet to muster enough geopolitical courage to break away over such a fundamental digital economy issue with its geo-economic ally, the United States. It still hopes that it can play on the data-extractor side of the global digital economy equation.
But this looks increasingly unlikely, with only China able to compete with the United States in this regard. It is therefore left to the stronger developing countries to begin shaping the urgently required economic rights frameworks around data, especially of the collective kind.
"With the industrial revolution, machines soon became practically unavoidable everywhere" — Jeff Hardi
This is the main effort of the "community data" and "national data" elements of the draft e-commerce policy of India. It declares community ownership of data that is contributed by a community of people, and is about them. It says that legal and technical means will be developed for making such data available for India's digital economy development, including on special terms to small businesses. The policy also seeks localization of community and national data, which is required to enforce economic rights of domestic actors, groups or communities on such data.
Declaring the intention for developing domestic economic rights over Indian data is the most important first step. It will need to be followed up by a lot of hard as well as innovative work, at policy-legal, technical and business model levels. But without taking this key first step, it is just one direction for India — towards complete digital subjugation and dependency. With the digital economy increasingly becoming the central and driving paradigm of all economic sectors, unless such an economic policy on data is formulated and implemented, India can well forget any aspirations of making it big on the global stage.
Just as industrialization threw up new winners and losers, so will the digital economy.
Maintaining their leadership and control of the digital economy discourse, and sensing the increasing discomfort of developing countries over global flows of data, America's key ally Japan has come up with a new framework of "Data Free Flow with Trust." It condescendingly claims to take care of the concerns of developing countries by including privacy and security protections in global data flow frameworks. But the most important issue that developing countries have is about domestic economic rights over data flowing from their shores.
These are not intellectual property rights of collectors of data but the rights of people, communities and small economic actors that contribute data, and whom data is about. Such data is used to develop digital intelligence about them that will be employed to control and even manipulate them, not just individually but also collectively. Developing countries, and their people and communities, should logically have some inalienable rights over such data.
India's digital future
Indeed, if the United States and its allies are ready to accept some kind of framework of "global data flows with trust and economic rights protection" we should be able to discuss it. But that first requires instituting and accepting various kinds of economic rights over data which the United States and its allies are yet a long way from even acknowledging the very notion of.
India refused to endorse Japan's proposal of "Data Free Flow with Trust" at the recent G20 meeting, claiming that data was part of a nation's wealth and every country had the right to use its data for its own development.
The questions that need to be squarely addressed are: do users of various digital services retain some economic rights to the data they contribute, and whether they require collective means to exercise them; do Uber drivers have some economic rights to the vast value of data that Uber sits over, but which data mostly came from them; do sellers on Amazon and Flipkart have similar rights over data about goods that they put up for sale on these platforms, and; does India as a nation have the rights to utilize various data arising from India in ways that best serves its digital industrialization needs?
It is important that India stands firm on the community/national data part of the draft e-commerce policy. A lot of pressure is being applied for its roll-back, especially from the United States. Unfortunately, Indian privacy activists often join forces with such retrograde demands, without an appropriate understanding of the digital economy and India's mid to long-term stake in it.
One demand has been to shift all data related policy issues to the IT Ministry, which is already preparing the bill for personal data. That would be a huge mistake. There is a sustained effort to conflate privacy issues with economic rights over data, often as a deliberate stratagem. "Data as an economic resource" is very different from "data as a privacy concern," and the former also prominently includes collective economic rights to data.
The two must not be confused. The Department for Promotion of Industry and Internal Trade — in charge of the draft e-commerce policy — is the right one to deal with economic resource aspects of data. Data's economic aspects, and proper policies and laws around them, are key to India's digital future. Many other developing countries too are looking at India to take the conceptual and policy leadership in this regard.