To avoid data colonisation and allow for genuine empowerment, people must control the data they generate.
Around the turn of the century, companies started realising the economic value of data. Google started monetizing it, tailoring ads based on search queries. Facebook did pretty much the same thing years later, in the context of social media.
What these companies were doing was essentially using data for commerce to understand a customer’s preferences and selling her just what she wanted (sometimes even if she didn’t know what that was). Between 2000 and 2010, data was used largely for this kind of monetization.
Over the past five years, the new thing has been the use of data in Artificial Intelligence (AI). AI has been around as an idea for 40 years but the availability of data, a lot of it, changed its contours. The breakthrough was deep learning, which uses layers of neural networks to automate problem-solving.
Thanks to data, software and machines have become more intelligent.
Deep learning, combined with Big Data, is at the core of everything from image recognition to self-driving cars. AI has meant an even further increase in the value of data—it isn’t just about commerce now, but about automation and intelligence.
Data is the oil of the twenty-first century.
To look at how data can disrupt, one need look no further than the digital advertising business in the United States of America (US) and the payments business in China. In the US, Google and Facebook have a 71 per cent share of total digital advertising spending. In 2015-16, they captured 89 per cent of all incremental digital advertising.
China’s mobile payments are a staggering $5.5 trillion. The Chinese have done an amazing job of using QR codes for payments. These payments are dominated by two companies—Alipay, part of the Alibaba Group, and Tencent Holdings’ WeChat. These two companies own over 90 per cent of the payments market in China.
Interestingly, data combined with AI creates scale and speed.
Take Netflix in the US. Ten years back, Netflix was stuffing a DVD in a FedEx envelope and sending it to people. Today, it has over 100 million customers worldwide. It also has data on who is watching what, when, how, and what they like. It is using this data to help create better programming. When Netflix began, it was not in the content business but in the distribution business. It started with DVDs, and then video-streamed content it didn’t own. In 2013, it started creating its own content. Its first show was House Of Cards. This year, Netflix got 93 nominations at the Emmy awards. HBO, the grand old company of TV content, had 110.
That’s the power of data.
But where is this data coming from?
Out of 5.5 billion people in the world over the age of 14, 2.5 billion have a smartphone. By 2020, every person will have four personal digital devices. The Internet of Things will soon bring 50 billion devices online.
Smart companies have realised this. Apple, Google, GE, Siemens, Amazon, Tencent, Baidu—all are moving from products and pipes to platforms. These platforms enable products that solve problems, but they also capture and own data produced in the interaction. They also use the data produced to become better at what they do. That, in turn, attracts more customers, generating more data.
Data is its own means. It is an unlimited non-rivalrous resource. Yet, it isn’t shared freely. What began as a differentiator is now the model itself. Platforms that accumulate user data disrupt industries wield disproportionate influence and create silos. This leads to data domination.
The world is just waking up to this. India should too.
There are multiple risks from data domination: violation of privacy, data colonisation, and a winner-takes-all scenario that stifles innovation and competition. This isn’t just a technology challenge but also a policy one.
We must invert the data. It has to be owned by the user and used only with her consent. Individuals should be in control of their data. It should be used to empower the individual, not the state, or the companies.
What we need, apart from a strong data protection law, is an efficient consent process. This could take the form of data consent, Application Programming Interfaces (APIs )that allow consent collection, storage, and audits. And at any time, users have the right to pull out their data. They can choose what they want to be part of, and what they don’t.
This prevents data colonisation, yet enables and empowers AI. It tilts the privacy debate in favour of the user. And it creates real user choice at every level. Data is empowering in the hands of people. Inverting it allows freedom and choice. This is data democracy.
Given the speed at which Indians are adopting the digital life, India will go from a data-poor country to a data-rich one in three years. India has a unique digital infrastructure, a set of serendipitously developed public APIs, such as eSign, Unified Payments Interface, Bharat Interface for Money, the Goods and Services Tax Network and eKYC, developed as public goods.
It also has a robust authentication infrastructure. India is the only country in the world that can empower every resident with her own data, thanks to the technology infrastructure for inversion of data available due to Aadhaar and India Stack. What it now needed is a standard and secure consent process for users to get their own data to advance their lives and a data protection law.
Together, these can enrich India and Indians.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.