With the monsoon session about to begin, all bets are off regarding data localization and its impact on the industry. Zuckerberg will have his fingers crossed hoping it is the third time lucky. In the meantime, the fate of the Reliance Jio deal hangs in the balance.
Data Sovereignty: The Biggest Stumbling Block For Big Tech
Mark Zuckerberg is betting big on India with his recent mega-deal to pick up a stake in Jio Platforms. He’s surely hoping to break the jinx that has dogged Facebook in the Indian market so far. However, there is still some way to go. Data localization – an issue that has all but stalled the launch of WhatsApp Pay in India – is still very much alive, even if the Personal Data Protection Bill itself has been delayed. Zuckerberg is no stranger to the data privacy phenomenon that has swept much of the world. From Europe to Asia, lawmakers are asking Big Tech companies to tone down their defiant stance on end-to-end encryption.
Last year, Facebook told the Indian Supreme Court that it “wasn’t obliged to share data with the Indian government under existing laws.”
The battle for control of user data – described as nothing less than “the new oil” by Mukesh Ambani, Zuckerberg’s newfound ally – has been brewing for years, including at the highest levels of government. A stalemate on the issue has even stalled the progress of a vaunted trade deal intended to take Indo-US ties to the next level. Analysts say the matter would have surely come for discussion between the two companies in the run-up to the $5.7 billion equity deal, though details are being kept under wraps for now. The large size of the Indian market – estimated by Bernstein at $2 trillion by 2025 – alone may not be enough for Facebook to agree to invest billions of dollars in setting up data centers in India.
Ambani has been lobbying the government to make data localization mandatory for Big Tech firms in a bid to drive up costs for competitors like Amazon. He is seeking to use a ‘data colonization’ pitch to set the stage for JioMart – a local alternative to the global data cartel. Ambani’s assertion that “India’s data must be controlled and owned by Indian people and not by corporates, especially global corporations” has not gone down well with Facebook. Nick Clegg, Facebook’s Head of Global Policy likened data to a ‘borderless ocean of currents and tides’ rather than ‘a finite commodity that could be owned and traded’. He seems to have overlooked the fact that though trillions of dollars worth of global trade passes through the world’s oceans each year, the busiest shipping lanes are also hotly contested by nations in the vicinity. The ‘oceans of data’ are bound to witness similar power plays between governments wanting to secure their own interests.
Trial by fire
Facebook may have little wriggle room when it comes to data protection given its implicit involvement in the Cambridge Analytica scandal a couple of years ago. In a damning revelation, the personal information of more than 5.62 lakh Indian FB profiles was found to have been accessed without authorization by the London-based firm. The government itself has been under pressure to regulate the flow of data within and outside the country since the gaping holes in the Aadhar UIDAI system came to light.
A private company, IT Grids India, had not only been accessing data from the UIDAI server but also storing it in data centers abroad. The Opposition will be watching keenly how the government interprets public and private data. In light of the recent furor over the Citizenship Amendment Act (CAA), the bill could well become another political flashpoint for the Modi government. Given the high stakes, the government will probably have little incentive to accommodate Facebook’s apprehensions, despite the US Trade Representative Robert Lightheizer labeling it a barrier to trade.
Finding middle ground
Though Facebook argues that the free-flow of data was essential for innovation and value creation in the Indian startup environment, it is well-aware of its implications for national security and law enforcement. It’s prescription for the problem: better dialogue with the US on cyber-security.
“In our view, a major priority for the US and India should be to revive their bilateral relationship on cyber co-operation and for India to seek access to these existing mechanisms for data sharing”, a Facebook executive said.
“Now is not the time to drift further apart, now is the time to get around the table and agree on a data-sharing relationship that suits both sides,” he continued. The Supreme Court’s observation that the onus of providing decryption was not necessarily on social media companies could lead to the two sides arriving at a mutually acceptable solution.
Watch: Facebook’s India Boss remains discreet on Data Localization
Calling it quits?
Though it is too early to predict the course of events should the government refuse to budge from its stand of data localization, Zuckerberg’s wait for the stars to align might take longer. Perhaps Ambani’s personal astrologer might be of some assistance to the social media Tzar.