India Drafts Policy to Reduce Influence of Large Tech Companies

The following has been re-posted from Loyalty360. The original article can be found here.

The draft of a new e-commerce policy has emerged in India, one that calls for a “level playing field” between Indian businesses and global competitors.

The policy, if enacted, would require tech companies like Amazon or Google to store data collected from Indian users of social media on local servers. The companies would also have to grant the Indian government continuous access to the data.

The policy draft states that these new regulations are designed to encourage “domestic innovation and to boost the domestic digital economy to find its rightful place with dominant global players.”

Besides local data storage, the policy would also widen restrictions against foreign ownership of retail. Commentators suggest that the policy is an attempt to duplicate the success of Chinese tech companies in the wake of similar regulations there.

The policy could have a huge impact on Amazon, which has spent $5 billion to improve its presence in India. After finding minimal success in the Chinese market in 2014, Amazon CEO Jeff Bezos directed the company to focus its efforts on India.

Two years later, Bezos reported, “We are winning now,” alluding to Amazon’s competition with Indian rival Flipkart.

Given that India has 390 million internet users, with an e-commerce market worth an estimated $33 billion, other tech companies like Google, Facebook, and Apple would face troubles as well.

Such companies would need to put money into new infrastructure and data systems. For example, paying for electricity, because it costs more in India, would pose a significant problem.  They’d also have to revise their practice of keeping data out of government hands.

Daniel Kahan, a consultant for W. Capra Consulting Group, weighs in on the issue. “E-commerce has evolved to represent a significant share of the global economy. As we enter the Age of Privacy, it was inevitable that the tech giants would be challenged on their stance of sharing consumer data with governments. For digital platforms, the question supersedes a business decision to become an ethical matter of consumer relations, as their data policies define their relationship with the party they are ultimately most beholden to—their users.”

A dispute between Apple and India’s main telecom regulator may herald tensions to come. The regulator designed a spam-blocking application for Apple’s App Store, but Apple refused to make it available, claiming it violated users’ privacy.

In response, Indian authorities have threatened Apple with cutting off iPhone service if the company doesn’t make the spam blocker accessible. Unfortunately, similar conflicts may arise if the new policy’s regulations become law.

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