Data” is rightly being termed as the new “oil”. It is an essential input not only for commercial entities to be competitive in the emerging digital economy but also for national economies and good governance. Unexpectedly, the digital economy is creating humongous data pools, which are worth billions of dollars to the enterprise that has gathered it. This is evident from the recent business takeovers in the disruptive economy. From the economic point of view, the most worrisome part is that this control over data is leading towards market concentration and dominance in terms of “value” proposition, as well as posing entry barriers.
Consumers around the world are busy enjoying various free Web services, like browsing, social networking, e-commerce, e-payment, ridesharing, music, movie, news etc., either in standalone apps or bundled up together. In this zeal, they go on agreeing to all pre-ticked boxes while installing such apps. More often than not consumers have no choice but to take it or leave it, and at times they find their favourite apps pre-loaded in their mobile set. In the whole process, consumers are giving unfettered control over their valuable usage data to the platform/app owners.
On the business side, there is an increasing trend in business models using big data and different strategies to attract more and more users. The user interactions, coupled with the use of algorithms and artificial intelligence, can significantly enhance firms’ competitiveness. But this can also lead to monopolistic situations, because algorithms gets further refined due to consumer interactions, which in turn enhances quality of service and attractiveness to users. This vicious cycle of service refinement and attraction of consumers towards a particular platform eventually leads to a dominant entity — winner takes all.
Recent acquisitions of network firms like LinkedIn by Microsoft for $26bn in 2016 and WhatsApp by Facebook for $19bn in 2014, were to acquire such valuable usage data.
The key question here is who owns that data — the consumers who generate it or the businesses which put it to use? If the consumers own the data, then not only the operators should seek permission from consumers to allow data usage, but also it would be a right of the consumer to obtain copies of all the collected information and switch it from one firm to its competitor — “Right to data portability”. Such a right to data portability could be an important ex ante tool to promote competition, particularly when the traditional competition enforcement tools appear to be helpless.
A private bill on data protection introduced in Parliament by BJD MP Jay Panda, too, spells out the need for “data portability”. The Telecom Regulatory Authority of India has also come out with a consultation paper throwing, among others, the following pertinent questions: What are the measures that should be considered in order to empower users to own and take control of his/her personal data? What are the new capabilities that must be granted to consumers over the use of their personal data? What should be the rights and responsibilities of the data controllers? Can the rights of data controller supersede the rights of an individual over his/her personal data?
Recently, speaking at a CUTS event on Future of Digital Economy on August 11, Ram Sevak Sharma, chairman, Trai, expressed concern over the way the consumer usage data is being used for commercial gains that is leading to winners take all situation i.e. a monopolistic market situation. He stressed for more and more inter-operability, which promotes economic democracy.
Leading jurisdictions have also taken cognisance of control over data and resulting competition concerns. For instance, the European Commissioner for Competition, Margaret Vestager, had observed that: “If a company’s use of data is so bad for competition that it outweighs the benefits, we may have to step in to restore a level playing field.”
It is hoped that the newly-formed Srikrishna Committee on data protection gives due weightage to the importance of “data portability”. It must consider data as an infrastructure, which can be used by all competitors, so that the emerging digital economy does not turn into “technological authoritarianism”.
A caveat in conclusion: any regulation on disruptive technology must be optimal while being pro-competition it must not hamper innovation.
In order to arrive at an optimal solution, coherence in deliberations at different forums, including that of Trai and the Srikrishna Committee, is a necessary first step.
Ujjwal Kumar of CUTS contributed to this article
