Why we need to build a framework for global digital governance

In an interview earlier this month, Telecoms Minister Ashwini Vaishnaw talked about a comprehensive policy roadmap for India’s digital economy. Above all, he mentioned a Digital India Act which was in preparation to replace the Information Technology Act 2000. The new law will encompass all of the regulatory challenges facing the digital economy, including anti-trust, data governance, intermediary responsibilities, consumer protection and ethical use of technology.

Over the past few years, policies and regulations in India have been changed and modified to broaden their scope and include Internet companies, especially Big Techs, in their scope. In the new wave of regulation and enforcement, some countries have become frontrunners. The European Union has led the way on privacy with its General Data Protection Regulation (GDPR) followed, more recently, by the Digital Services and Digital Marketplace Acts. In the UK, the Digital Regulation Cooperation Forum brings together regulatory cooperation between the competition authority, the privacy regulator and the telecommunications and financial services regulators. American and Australian initiatives are still brewing, as are those in several other parts of the world. The regulatory principles are mostly aligned, reflecting their unease with the inconceivable growth and influence of Big Tech.

In 2019, Kashmir Hill, a journalist, wrote about her experience suppressing the “Big Five Tech Giants”. This explained his challenges of not knowing how to get in touch with people without the tech giants and in the following weeks not being able to find easy digital replacements for sending huge files over the internet, searching the Web, use maps, video calls, etc., without intruding on Big Five territory.

In a post-Covid world, one can imagine that this is much more ubiquitous. Hill made a point, which is now better understood and presented academically as the essential facilities doctrine. Digital platforms have become our gateway to the Internet. There are many arguments as to why private digital platforms are now considered infrastructure and until regulations are future-proofed, the essential facilities theory offers a method for conducting antitrust investigations. This also resonates with the EU Digital Markets Act, which refers to gatekeeper companies.

The platform economy is global. Although convergence may not be possible across regulatory challenges, Robert Fay of the Center for International Governance and Innovation suggests that disparate agreement could be possible between countries. Within the framework of the G20, the International Labor Organization has already tabled a proposal in the working group on employment for digital work platforms in order to develop a system of international governance determining the minimum rights and protections for workers in platforms. Similarly, on digital currency, a reincarnated Bretton Woods is advocated to address mistrust of private currencies and to coordinate the implementation of central bank digital currency projects.

Financial industry leaders, including governments, have highlighted the need for digital currency regulation at the international level. It is said that the envisioned Digital Bretton Woods will become the think tank for key issues related to the interoperability of digital asset wallets between countries, among other issues of cross-border financial transactions. This conversation is already taking place bilaterally and within the small group of self-selected countries. Finally, in the highly contested area of ​​digital taxation, the OECD facilitated negotiations on base erosion and profit shifting (BEPS) and helped find a comprehensive solution. The Pillar 1 and Pillar 2 proposals attempt to address the disparities in the distribution of profits that accrued to large multinational Internet companies and largely remained within the territory of their countries of residence.

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

The internet is fragmenting 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 all negotiations, countries will come to the table with their own interests – the Great Firewall of China, the national champions of the United States, the EU’s emphasis on strategic regulation. Not all regulations will achieve consensus and those that do may be a compromise. But the world accepts the second-best theory. The Indian presidency of the G20 is an opportunity to propose a global governance framework that brings together the common challenges of Big Tech regulation.

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A common minimum digital governance framework can become a win-win solution for both governments and internet companies. Most countries are currently struggling to find a balance between mastering Big Tech and boosting their digital economy. On the other hand, companies are burdened with the idiosyncratic regulatory requirements of the various countries in which they operate. While such frameworks accommodate different values ​​and cultures, there may still be countries that do not 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 Big Tech-dominated borderless digital economy will work far more effectively than independent unilateral efforts. The timing is perfect.

The author is Senior Fellow, ICRIER. Views are personal

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