Why we need to build a framework for global digital governance

Why we need to build a framework for global digital governance

In an interview earlier this month, Telecom Minister Ashwini Vaishnaw spoke about a comprehensive policy roadmap for India’s digital economy. Crucially, he mentioned a Digital India Act that was being prepared to replace the Information Technology Act, 2000. The new law will encompass the whole menu of regulatory challenges facing the digital economy including anti-trust, data governance, intermediary liabilities, consumer protection and the ethical use of technologies.

In the past few years, policies and regulations in India have been tweaked and amended to expand their scope and bring within their ambit internet companies, especially Big Tech. In the new wave of regulation and enforcement, some countries have become trendsetters. The European Union led the way on privacy with its General Data Protection Regulation (GDPR) followed, more recently, by the Digital Services and Digital Market Acts. In the UK, the Digital Regulation Cooperation Forum is bringing together regulatory cooperation between the competition authority, privacy regulator and telecom and financial services regulators. The US and Australian initiatives are still brewing, as are those in several other parts of the world. The principles of regulation are mostly aligned, reflecting their unease with the inconceivable growth and influence of Big Tech.

In 2019, Kashmir Hill, a journalist, wrote about her experiment with cutting out the “Big Five Tech Giants”. It explained her challenges of not knowing how to get in touch with people without the tech giants and in the following weeks of not being able to find easy digital replacements for sending huge files on the internet, searching the web, using maps, video calling, etc, without trespassing on the territory of the Big Five.

In a post-Covid world, one can imagine that this is much more pervasive. Hill made a point, which is now better understood and academically packaged as the doctrine of essential facilities. Digital platforms have now become our gateway to the internet. Many arguments support why private digital platforms are now seen as infrastructure and until regulations are future-proofed, the essential facilities theory offers a method to carry out anti-trust investigations. This also resonates with the EU’s Digital Markets Act, which refers to gatekeeper firms.

The platform economy is global. While convergence may not be possible across the spectrum of regulatory challenges, Robert Fay from the Centre for International Governance and Innovation suggests that a patchwork deal may be possible among countries. Under the G20, the International Labour Organisation has already placed a proposal in the employment working group for digital labour platforms to develop an international governance system determining minimum rights and protections for platform workers. Similarly, on digital money, a reincarnated Bretton Woods is being advocated to address the distrust in private currencies and to coordinate the implementation of central bank digital currency projects.

Leaders from the financial sector including governments have emphasised the need for regulation of digital money at the international level. The envisioned Digital Bretton Woods is said to become the thinking pad for key questions related to the interoperability of digital asset wallets across countries, among other issues of cross-border financial transactions. This conversation is already happening at the bilateral level and within the small self-selected group of countries. Finally, in the deeply contested area of digital taxation, the OECD facilitated Base Erosion and Profit Shifting (BEPS) negotiations and helped arrive at a global solution. The Pillar 1 and Pillar 2 proposals attempt to address the distribution divides in profit that accrued to big multinational internet companies and largely remained within the territory of their resident countries.

Another emerging area of cooperation is anti-trust enforcement. As countries including the US move away from traditional competition tools, there is an implicit agreement on regulatory responses that include ex-ante regulations and new guidelines for merger analysis. Faced with common challenges, countries are learning from each other. EU regulations, as mentioned above, have already become a global benchmark in this area.

The internet is splintering and digital sovereignty is now commonplace; yet, there is no better time for countries to come together and build a framework for global digital governance. As in every negotiation, countries will come to the table with their own vested interests — China’s great firewall, US’s national champions, EU’s focus on strategic regulation. Not every regulation will see consensus and those that do might be a compromise. But the world is accepting of the theory of the second best. India’s G20 presidency is a chance to propose a global governance framework that brings together common challenges of regulating Big Tech.

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A common minimum digital governance framework can become a win-win for both governments as well as internet companies. Most countries are currently struggling to strike a balance between reining in Big Tech versus boosting their digital economy. On the other hand, companies are burdened with the idiosyncratic regulatory requirements of the different countries they operate in. While such frameworks will allow for room to accommodate different values and cultures, there may still be countries that don’t feel compelled to operate within a global framework — the digital counterpart of tax havens. For the majority, however, a global response to the risks and challenges of a borderless digital economy dominated by Big Tech will work much more effectively than independent unilateral efforts. The timing is perfect.

The writer is Senior Fellow, ICRIER. Views are personal

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