Opinion | Data nationalism could hobble the world’s progress4 min read . Updated: 20 Jul 2020, 09:15 PM IST
The rise of data protectionism could call for an information age equivalent of the World Trade Organization
In my last column, I wrote that the European Union (EU) has been leading the way in data privacy, China in censoring and surveilling citizens, and America in having legislative hearings to determine how much US Big Tech can get away with.
Last week, Mint reported that the European Union’s top court struck down a key method called Privacy Shield, used by Facebook Inc. and other companies to transfer data across the Atlantic, amid fears over potential surveillance by the United States. With impeccable comedic timing, news simultaneously leaked out that US President Donald Trump has secretly given the Central Intelligence Agency more powers to launch cyberattacks against countries like China, Iran, North Korea and Russia. This could include other nations as well, at least according to a former US government official quoted in the news report here.
The scrapping of Privacy Shield means that over 5,000 businesses that ship useful European data to the US will have their activities in disarray. They will have to structure a new arrangement for such data to continue to flow. It is worthwhile to note that Privacy Shield was itself put together after the earlier arrangement called Safe Harbor was struck down by the same court for the same reasons in 2015.
As long as computing “clouds" were small, such free data transfers by companies between nation states they operated in did not pose a threat. No one noticed until leaks by Edward Snowden revealed widespread cyber spying by America’s spooks. It was only after those 2013 leaks did individual governments start to understand the relevance of such data infrastructure to their security and data economies. The original Safe Harbor for trade in EU-US data was itself a result of increased EU activism after Snowden’s revelations.
Enough has been written and said about India’s decision to ban 59 Chinese apps that were collecting data from Indians to train Chinese Big Tech’s algorithms. People have poked fun at this decision on social media platforms. Yet, the truth is that the Indian government’s decision is brilliant. If the ban stands, it will have a significant negative impact on the speed at which Chinese Big Tech is catching up with US Big Tech. Indian digital data is very valuable to both US and Chinese Big Tech—and, of course, to home-grown data giants such as Reliance’s Jio Platforms.
Speaking of data generation and collection, the fact that many builders of data algorithms are still very dependent on manual labour is not something that Big Tech likes to admit. I have written before of the tribulations faced by human beings who act as filters and have to pore over horrific videos to keep them off social media sites such as Facebook.
But manual labour in the digital space does not stop with real-time censors. All sorts of artificial intelligence algorithms, such as those needed for self-driving cars, need to be trained by humans who can exercise judgement to label pictures. Manual processes are also needed for, say, exceptional cases of mundane matters such as invoices that automation vendors’ offerings are unable to deal with. The Indian business process outsourcing (BPO) industry, which should by now have been automated out of existence, is still alive due to this. In fact, BPO still thrives because it has used the automation of lesser tasks to pivot into tasks that are less repetitive and therefore less amenable to automation.
Countries such as those of the European bloc, the US, Russia, China, India and several others are all likely to respond with uncoordinated national moves around data protection. This has not escaped the attention of international associations. For instance, last July, the “Osaka track" was formed after the G-20 met in Osaka, Japan, to thrash out global rules that could govern data traffic in a way that would allow “the free flow of data with trust"—whatever that means.
In my opinion, it is unlikely that in the post-covid scenario, nations will arrive at a coordinated plan on how to handle data. It is even less likely that they would follow the rules, even allowing for a fairy-tale scenario that they could actually create a coordinated set of data tenets to live by.
It is more likely that we will see a greater wave of nationalism over each country’s data “throw-off" from its citizens. Data is now synonymous with national interest, and we will see a protectionist environment in the short to medium term. This does not bode well for global trade. The 5,000-plus firms that are dependent on the shipping of data from the EU to the United States might find a workable solution to the problem that the EU court’s 16 July decision has created for them. But there is nothing to stop the same court from dismantling the new agreement in future.
Meanwhile, China began censoring what its citizens can read, see and hear on the web and shut down data flows from that country long before Snowden’s 2013 expose. In hindsight, China’s censors now look like expert long-range economic planners. After some years of protracted negotiations between data trading blocs and nations, we might see the equivalent of the World Trade Organization, which was set up for the trade of goods, come into being for the information age. Until then, we may have to live with the lowest common denominator of tit for tat.
Siddharth Pai is founder of Siana Capital, a venture fund management company focused on deep science and tech in India