The issue is bigger than money. It is about power and control. If India does not rein in foreign technology companies, it will suffer under corporate colonialism.
The Rs 136 crore fine imposed on Google for discriminatory search operation was nothing more than a slap on the wrist for the company.
The Google issue, though, is bigger than money. It is about power and control. If India does not rein in foreign technology companies, it will suffer under corporate colonialism.
Companies such as Google, Facebook and Amazon will be able to monitor practically all Indian citizens and influence their social and political preferences — while they crush competitive businesses. This is because technology creates a winner take-all system and captures more information than Big Brother did in George Orwell’s 1984. These are the things India needs to worry about far more than about search results.
Through our smartphones and their applications, Apple, Google and WhatsApp track our movements and habits, and know who we speak to and what we say. They read our texts and emails. When we do web searches or watch YouTube videos, we tell them our thoughts and preferences.
When we post our photos on Facebook, they recognise our faces and our friends’ and use them to learn who we know and where we were.
There is a saying in the tech industry: data is the new oil. These companies capture all these data to sell ads to us. That is how they make their billions.
The problem, as we saw with the reported Russian hacking in the US elections, is that they lack scruples and ethics. They will allow a person or government to serve misinformation and propaganda to anyone who fits specified criteria.
India needs to develop legislation even more stringent than Europe’s Data Protection Regulation. Not only does it need to prevent the export of data, it has to also ensure that all data, on all Indian residents, are owned by them and used only with their knowledge and explicit permission.
The second issue that Indian regulators need to concern themselves with is technology monopolies. Silicon Valley’s moguls openly glorify these, and tout their ability to gain unfair competitive advantage by dumping capital. The big tech companies use their massive war chests to copy or steal from competitors. When all else fails, they acquire them.
Drowning in the Amazon
They tout free markets only when they want other countries to open their doors. In the Valley itself, investorstake pride in having an economy in which money is the ultimate weapon.
The most aggressive company of all is Amazon. It dominated bookstores, publishing and distribution first. Then cleaning supplies, electronics and assorted home goods. Now it is set to dominate all forms of retail — as well as cloud services, electronic gadgetry and small-business lending. And it is planning to launch delivery services that will enable it to eat into the business of United Parcel Service and FedEx. It will have a finger in every pie and a hand in every pocket.
Amazon has been losing money — or earning razor-thin margins — for more than two decades. But because it was gaining market share and killing off competition, investors rewarded it with a high stock price. With that, it raised money at below-market interest rates and used it to increase its market share. Again, this is hardly the way free markets are supposed to work.
Uber has used the same strategy to raise billions of dollars to put potential global competitors out of business. It has been dumping massive amounts of capital into India to kill off local companies.
Here, India needs to learn from China, which used every trick in the book to close off its markets and create barriers to foreign companies. Doing so, let local technology companies gain in size and power and learn to innovate. China, very smartly, opened its doors at first to Silicon Valley companies, letting them bring their ideas there to train its entrepreneurs. Then it abruptly locked them out so that local startups could thrive. It realised that Silicon Valley had such a monetary advantage that local entrepreneurs could never compete.
Having lost the Chinese market, US tech companies see India as the consolation prize. Their timing could not be better, because the Indian market is only just forming. With the prices of smartphones and internet access approaching affordability for everyone, the country is about to experience a technology boom next in size only to China’s. There are huge fortunes to be made in India.
A Silly-Con Job
India doesn’t have to lose this battle to the modern-day East India companies. It has the talent to build its own infrastructure and to leap ahead. It has millions of engineers who have been trained to develop IT systems for the West, giving it a huge advantage. It could be creating worldchanging technology companies that challenge Silicon Valley itself, as well as China.
This will not happen if India allows the foreign tech giants to cannibalise India’s young startups and starve the emerging giants. This is a choice that India needs to make very soon.
The article has been reprinted here with permission of the author.
The writer is a Distinguished Fellow at Carnegie Mellon University, and author of The Driver in the Driverless Car: How Our Technology Choices Will Create the Future.