How to realize value from digital markets in 2019

Digitalization has rapidly altered the contours of the Indian economy, especially in terms of improved consumer access to goods and services. Tens of millions of new participants have been added to digital markets through the expansion of telecom and internet services in 2018. In the midst of this feverish activity, confusion persists over what constitutes a definitive and durable vision for a digital India— exemplified by debates on why Indian companies struggle to generate value within domestic digital markets.

China has about 15 times as many unicorns—billion-dollar startups—as India does, despite the fact that the Chinese economy is 2.5 times that of India’s in terms of gross domestic product (GDP) adjusted to purchasing power parity. Such asymmetry of outcomes reflects in global comparisons too. India has some of the lowest average revenues per user in telecom markets despite some of the highest data consumption volumes in the world, and a tiny subscription market for digital products such as audiovisual services, which is dwarfed by small countries such as Singapore.

Value creation tends to involve innovation in the production of goods and services that people are willing to pay for. Naturally, intellectual property must lie at the heart of this process, finely balanced alongside consumer access. However, a form of “digital socialism” seems to have manifested itself in India’s digital economy discourse as a panacea for the lack of value. This school of thought seems to emphasize a large role for state intervention in redistributing the value created in digital markets, which largely resides in data.

The desire for state intervention is most visible in regulatory consultations on areas such as data protection and licensing of online applications, parts of which focus on treating all data as a public good. Ongoing discussions lack nuance in differentiating between the implications of unrestricted access to government data and private data. China is naturally a source of inspiration for those who evangelise the benefits of stateintervention to actualise what is essentially an over-broad interpretation of the notion of “open data”.

Admittedly, China’s micromanaged margrowth has been nothing short of astonishing. The country accounted for just under 4% of world GDP in 1991 and now accounts for 15%. Mandating data-sharing is not dissimilar to mandated joint ventures in China’s industrial ecosystem. However, both dilute incentives to innovation and lower chances of safeguarding privately held intellectual property. It is important to recall that China appropriated space in the global economy from emerging markets such as India. Conversely, countries with a strong culture for innovation and monetization of intellectual property such as the US have held on to their share. The US has consistently accounted for around 25% of global GDP despite China’s swift rise over the last three decades.

It is likely that if India lowers its focus on incentivizing and safeguarding innovation in favour of creating an unqualified and unfettered open data ecosystem, China will be its biggest beneficiary.

Chinese firms are already dominating India’s digital markets, from devices to online applications. And the modus operandi of China’s digital giants strongly resembles that of its manufacturing giants. China’s industry majors are offloading their excess capacity in India and focusing on extracting incremental value. For instance, Chinese smartphone brands account for a two-third market share in India—and seem to be the biggest beneficiaries of India’s aspirational consumption. Similarly, the imposition of digital socialism will not deter China’s cash-rich online giants from extracting value from India’s digital markets— consonant with its expansionist Belt and Road Initiative.

The fact is that Chinese businesses will willingly acquiesce in over-regulation in return for a captive market. They have had more than a practice run at embracing the notion of state-controlled digital economy. So, how should India prevent Chinese colonisation of its digital markets, and build focus on creating competitive IP-based digital ecosysket tem that delivers both access and value?

Value creation will require a fresh policy mindset in 2019. A point of departure could be to better understand how countries such as the US have retained their economic strength in times of global flux. Part of the answer lies in the correlation between trade and intellectual property (IP). The US accounts for around one-third share of global IP exports—far outpacing China, which does not even figure in the top ten IP exporters despite frenetic patenting activity. While China has understood the need for more IP, its markets remain state-controlled.

Nevertheless, it is axiomatic that innovation-centricity impacts the realization of economic value. In 2018, researchers found that while less than 10% of US manufacturing firms made IP filings, those that did accounted for 90% of its total merchandise exports. The nexus between innovation and competitiveness is universal. A balanced vision for domestic digital markets must therefore reflect the centrality of incentivizing and protecting innovation. And to be clear, this will require active state support in the entire spectrum of innovation, from engendering a culture of research to stronger enforcement of IP.

Source: Mintepaper, 14/01/2019

Whims of a digital boss

The rise of app-based aggregators has been a boon for consumers but not necessarily for the workers

Recently, a video of a Zomato delivery agent caught eating the food he was supposed to deliver went viral. This led to criticism, especially from middle- and upper-class consumers who questioned the accountability and monitoring mechanisms of food delivery apps and websites, which are important features of the platform or the gig economy. However, the working conditions of app-based employees are hardly discussed. In this case, given the pressure to fulfil never-ending targets to avail of certain incentives, the worker might not have found time to rest between deliveries or to have his own meal.

The rise of app-based aggregators has been a boon for consumers to access at their doorstep and with the touch of a phone a range of services including cabs, food, and retail. It also purportedly creates decently paid employment opportunities for millions of literate people. But what is the nature of employment arrangements, contracts, quality of work, security, grievance redress mechanisms and accountability in such cases?

The first “person” that app-based workers — whom the companies ironically label “partners” — must report to is the app itself, which is effectively their digital boss. This “boss” gives instructions, sets targets and provides incentives such as boosts, bonuses, star ratings and badges for the workers. It also provides disincentives in the form of fines and penalties. This “gamification” system, seen in apps such as Uber, puts insurmountable pressure on the app-driven worker, who tends to overwork even at lower pay to earn higher scores. And even if the driver or delivery “partner” aspires to be a self-employed mini-entrepreneur, it is the app companies that decide what commission rates to deduct from their earnings and what monetary incentives to give. Even the fares, prices and surges, including the locations and frequency of duty requests, are not determined by these workers. Thus, we may meaningfully ask whether this is a model of self-employment or self-exploitation.

Further, cases of technical glitches in the app, or incorrect payment or deductions from their earnings are no less than a crisis for these workers, since getting justice from these apps or from tedious helplines and zonal offices that get hundreds of complaints each day is often not feasible. Most importantly, we must ask why, in cases of accidents, to which these delivery persons and drivers are highly prone given the rush they are in, shouldn’t there be accountability and compensation, as well as job security, provided by these companies. Finally, why shouldn’t these workers be allowed to organise and unionise to exercise their right to collective bargaining? It appears that app-based companies have realised that there is a simple strategy to avoid these outcomes — keep workers busy with their next duty and block their app IDs in case of any aberration.

The writer is a Ph.D. Scholar at the University of Delhi, and Founding Partner, Jan Ki Baat

Source: The Hindu, 21/12/2018

Digital dungeons & dragons

It is high time we held Zuckerberg and other digital dungeon masters to higher standards.

I often liken my research to that of a medieval mapmaker. My research teams and I are charting the “digital planet”. This is a landscape whose contours are being shaped by many actors — by the titans of Silicon Valley and their counterparts elsewhere, by venture capitalists and entrepreneurs, by regulators desperately attempting to keep pace, by half the world’s population that now has access to the internet and by many in the remaining half dying to be let into the club. In its early stages, mapmaking is an imprecise art. One cannot definitively fill in all the land masses or bodies of water. Our medieval predecessors closed such gaps with dire warnings, such as “Here there be dragons” or resorted to images of serpents, elephants with gigantic teeth, and, of course, dragons.

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My team and I are still tracing the outlines of the emerging digital landscape using a “Digital Evolution Index” that we created and a soon-to-be-released “Ease of Doing Digital Business” ranking of countries, among other measures. We find that on this emerging map, the dragons, serpents and elephants with dental issues are representations of what we fear the most, the loss of trust: We may be awash in data, but we still have no good ways to separate the tangible from the virtual, the human from the algorithm, the real from the fake.

When challenged to fix the problem of, say, fake news and pernicious rumours, perhaps the most palpable breakdown of trust, the hapless leadership of the digital platforms lacks the imagination to figure out solutions. In fact, they seem to be adding to the problems. Consider everybody’s whipping boy these days: Mark Zuckerberg. The latest story to break on this front is that, not only is Facebook and Facebook-owned WhatsApp among the largest transmitters of misinformation, Facebook — the company itself — may be the creator of misinformation. According to the New York Times, it paid an “opposition research” firm to spread misinformation about the billionaire George Soros. The reason: Soros’ foundation funded the Open Markets Institute, which, in turn, was critical of Facebook. This isn’t the first instance of concerns over Facebook fathering — not just furthering — falsehoods. A lawsuit, filed by an aromatherapy fashionwear company, alleges that Facebook’s numbers for the number of users that are targeted by advertisements were vastly inflated, to the extent that the reported number of target users reached in a particular demographic exceeded the total number of Facebook users belonging to that same demographic.

Where are the digital planet’s dragons that are likely to be lurking? In other words, who are the most vulnerable? I fear that the digital dragons congregate in the parts of the world with the least safeguards — among users in the developing world. Moreover, WhatsApp, which is more popular for spreading news in the developing world than Facebook, may be more vulnerable to manipulation for many reasons. For one, it is end-to-end encrypted, making it hard to manage or trace the content. Second, Facebook, the company, has stepped up fact-checking on its main platform, Facebook, but not on WhatsApp, largely because the pressures from American lawmakers are focused on the main platform.

Among developing nations, India, of course, is a prime case study. The country has experienced a slew of violent incidents and killings incited by rumours over WhatsApp. The BBC recently released a report that suggests that in India, narratives that relate to Hindu power and superiority, national pride and “personality and prowess” of Prime Minister Narendra Modi are powerful in spreading rumours over social media. With an election around the corner, this means there is even more opportunity for mischief ahead. Interestingly, while neither end of the political spectrum comes across as clean, according to the BBC study, the volume of fake news messages from the right was much more prominent. I recently met the Egyptian activist and originator of the Arab Spring, Wael Ghonim, who made an interesting distinction that the right sends messages that focus on fear while the left focuses on shame. Well, fear travels further and faster.

Unfortunately, India is far from alone. Of course, we now know that neighbouring Sri Lanka and Myanmar witnessed similar (and even worse) rumour-triggered atrocities. While Facebook made some superficial and incremental changes in response, it appears they did little to anticipate similar issues elsewhere. Consider Brazil as an even more recent case in point. There were widespread false rumours of Venezuelan interference in Brazil’s elections and about now-president, Jair Bolsonaro’s opposition distributing baby bottles with penis-shaped tops at schools. The rumours were started on WhatsApp and were reinforced over Facebook and Twitter.

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Now that we have a sense of where the dragons lurk, who are the dragons?

Back in November 2016, Zuckerberg said that fake news influencing the US election was “a pretty crazy idea.” However, by the time he made that statement, insiders at Facebook already knew that this was simply not true. Today, after many hearings and public eatings of humble pie, Zuckerberg and his colleagues still have no long-term plan for countering the problem. One reason is that the spread of rumours gets attention and feeds the social media business model that does well when more people click and share. Zuckerberg is like the dungeon master from the Dungeons and Dragons game whose job is to be the game organiser. It is high time we realised that a clueless dungeon master who does not take responsibility for the game he has organised is also the dragon to be feared the most. The rumour-mongers that use the platform are the lesser dragons.

It is high time we held Zuckerberg and other digital dungeon masters to higher standards. They must now put their game design genius to work, to take responsibility for what is propagated by their platforms and to reinvent their business models that are designed to monetise attention at any cost. It is essential that they figure out how to grow profitably while keeping the digital planet civil, productive, honest and safe. And free of dragons.

Source: Indian Express, 3/12/2018

Mapping the growth of digital learning in India

In a country as diverse as India, along with overcoming the infrastructure barrier, there needs to be a focus on overcoming the barriers of language and content.

The education divide in India with respect to quality and accessibility has existed for far too long. The Indian education system has remained more or less the same, since last 150 years. It is difficult for the existing physical infrastructure to meet the learning needs of the burgeoning population of our country which will touch 1.5B by 2030 and 1.7B by 2050 (equal to the population of China and USA combined). Digital is gaining acceptance across numerous sectors and it is only right that the education sector too reaps benefits of this digital transformation.

In a country as diverse as India, along with overcoming the infrastructure barrier, there needs to be a focus on overcoming the barriers of language and content. It is impossible to have great teachers in each and every village/district in India. Similarly, the best teachers should not be restricted to certain institutes of the world. This is where e-learning comes in. It can level the playing field for all students. Students, in both rural and urban areas, can get access to the best learning resources, learn at their own pace and in the comfort of their own homes. Another key advantage with e-learning is that it is much easier to design courses with the latest online reference material than publishing crores of books. With the significant rise in internet penetration and the drop in the prices of smartphones in India, access to online learning resources will soon become ubiquitous.

Today, whether it is finding a new word on Google, or watching a photography video, without realising it, we are already using the internet to constantly learn. A major chunk of learning is already happening on the internet, with the government’s push we can expect it to grow to exponential levels.

The launch of the second phase of the Digital India campaign with a renewed focus on education is a welcome step towards the faster development of the education sector. Online education is also receiving its due importance in the New Education Policy drafted by the Kasturirangan Committee. Massive Open Online Courses (MOOCs) under the government’s SWAYAM initiative have the tremendous potential to make higher education accessible to India’s youth, that forms more than 50% of our population.

The government’s push for e-learning reinforces the efforts of online education providers to empower both learners and educators, create more engaging learning experiences and foster personal development. With the push, students will also realise that the accessibility to great teachers can take their learning to the next level.

Going forward, the e-learning space will witness new developments with respect to unconventional methods of learning. Availability of unique courses across categories will encourage students to expand the breadth of the content they consume. Gamification will ensure that the learning process is more interactive and fulfilling. Students will be able to set goals, measure their progress and celebrate their learning achievements. Live online interaction between the students and educators can offer personalised learning that will benefit students in remote areas as well as overcrowded schools. The role of AI and technology in all of this will be huge. AI Bots can act as Study Assistants, that will accompany you along your learning journey. It will know your strengths and weakness inside out and will even recommend what you should read on a given day to maximise your learning outcomes.

The future of e-learning in India is promising. Location, language and financial resources will no longer be a barrier to a great education.

Source: Hindustan Times, 8/11/2018