Keeping up with Technological Advancements

AI, cryptocurrency, social media apps, gene editing, multinational e-commerce, fintech companies and more – today, technological advancements outpace the political system’s ability to bring in laws that deal with the ethical challenges they may pose. 

It would be fair to assume that a majority of laws in most nations, and surely in India, have been outpaced by the emerging challenges of a technologically dynamic, ever-evolving world. This leads us to a bigger question – Is India’s political system well-equipped and willing to understand these changes and introduce pertinent laws?

Let’s look at India’s fintech industry. The growth of multiple payment platforms and the use of multi-tenant cloud services to host them have given rise to concerns of data privacy, data localisation and fraud, among other things. The use of such platforms can not only have legal ramifications, but also ethical ones. For instance, something as seemingly minor as whether or not these platforms take the consent of users before storing their card details can pose serious challenges. The strict legal requirements regarding data localisation (RBI’s data localisation norms), explicit consent, and fraud prevention that we see now were a result of the political and legal system playing catch-up with technological enhancements.

Tech Giants & Anti-competitive Practices 

Big names like Google and Facebook have long been accused of using their dominant position in the market to indulge in anti-competitive practices, increasing their ad revenues and creating entry barriers for smaller firms. The Facebook-Cambridge Analytica scandal clearly showed that these tech giants don’t give enough thought to aspects of user privacy on their platforms. In the absence of clear laws that deal with their actions in India, as well as around the world, they have gone relatively scot-free in the past. In the absence of specific provisions against data breach, companies in India have even escaped fines. The comprehensive General Data Protection Regulation (GDPR) – EU law on data protection – was adopted as late as in 2016. While the GDPR also applies to Indian companies in some ways, India still doesn’t have a comprehensive data privacy law of its own. In India, it is only now that the Parliament is discussing a personal data protection law to monitor and regulate data protection and privacy concerns, which are currently inadequately serviced by the Information Technology Act, 2000. But the process remains slow and larger players often find loopholes to bypass laws, rendering them ineffective.

Take Amazon as an example. As discussed in this note in The Yale Law Journal:

“Amazon is the titan of twenty-first century commerce. … Although Amazon has clocked staggering growth, it generates meager profits, choosing to price below-cost and expand widely instead. Through this strategy, the company has positioned itself at the center of e-commerce and now serves as essential infrastructure for a host of other businesses that depend upon it. Elements of the firm’s structure and conduct pose anticompetitive concerns—yet it has escaped antitrust scrutiny.

This Note argues that the current framework in antitrust — specifically its pegging competition to “consumer welfare,” defined as short-term price effects — is unequipped to capture the architecture of market power in the modern economy. We cannot cognize the potential harms to competition posed by Amazon’s dominance if we measure competition primarily through price and output. Specifically, current doctrine underappreciates the risk of predatory pricing and how integration across distinct business lines may prove anticompetitive.”

Tech behemoths have built their products and empires on innovations that have changed the world radically in the recent past. We need a consultative system that collaborates with various stakeholders and experts to understand the issues and devise regulations to deal with them. This has to be an ongoing process, but that can happen only with a committed political system which needs to be sufficiently aware of the issues and their details to be able to take a balanced and rational view on all of this.

In India, Parliament committees and the consultative processes, to be followed before introducing laws and policies, are ways of ensuring that the political class takes into account knowledge, opinion, and challenges tabled by experts and stakeholders. However, with the increasing tendencies to bypass all these procedures in Parliament, half-baked laws that do more harm than good may emerge.

Are Bans the Solution to Emerging Concerns? 

Let’s answer this with the cryptocurrency example. Given its current speculative nature, investing in cryptocurrencies can be a risky proposition for small investors. In the absence of taxation laws specifically covering cryptocurrencies, money laundering is another serious concern. The huge energy requirements of crypto mining also raise environmental concerns. Then, are bans the solution to these concerns?    

The starting premise for cryptocurrencies in particular, and blockchain technology in general, was that of making the financial system more decentralised and free from governmental stranglehold. The idea was to make the process more transparent, tamper-free, secure, and within the control of people. Apart from its use in financial systems, blockchain technologies can be used in various other fields, right from food security to creating immutable land records. Therefore, a ban on  cryptocurrencies could also lead to a ban on blockchain innovations – essentially, throwing the baby out with the bathwater. 

Bans in general should very rarely be an instrument of public policy. They only drive the banned activity underground, making it even more difficult to regulate and ensure that there is a level playing field. Governments should seriously weigh the pros and cons of intervention, and even then go with the least intrusive action. How do we analyse all these complex issues and then devise laws that can effectively safeguard rights, alleviate ethical concerns and protect people, while at the same time give enough space for innovation and technology to flourish? The first step would be for the state to earnestly involve experts and civil society participants. There would also emerge a need for a mechanism that periodically re-looks at laws and their relevance, and updates the same if so deemed necessary. 

The Parliament and State Legislative Assemblies need to be more proactive and serious w.r.t their independent legislative function. They must also be subject to scrutiny in case of neglect of their crucial deliberative roles and for operating merely as an extended arm of the executive, which rubber stamps the legislative agenda of the government of the day. Parliamentary committees and working groups have a tremendous role to play in vigorously discussing concerns and evolving consultative mechanisms to thrash out issues in detail.

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