October 10, 2022The Intersectioninformation ageliberal democracy

India, and other liberal democracies, must prevent any app, foreign or home-grown, from coming to dominate our information space.

Why an everything app’ is bad news for liberal democracies and free markets

Monopoly, the board game, is often held up as a demonstration of capitalism, teaching players how business works. Actually, it does more than that. While it is true that a budding capitalist’s goal is to grab as large a market share as possible, the game shows that allowing a player to do so is bad for society as a whole.

This is the difference between pro-business” and pro-market” policies which are often conflated. The former leads to concentration of wealth and power. The latter is desirable because it promotes growth through competition.

Now there is nothing wrong in a businessperson seeking a monopoly. It is for society — through its political institutions — to protect its broader interests and check monopolistic tendencies through public policy.

It is not surprising then that technology entrepreneurs should dream of an Everything App”, a smartphone application that will deliver everything to everyone on the planet. Elon Musk has become the latest investor to declare an ambition to build such a super-app, declaring that his shotgun aquisition of Twitter is an accelerant to creating X, the everything app.”

Connie Chan’s post at a16z shows the awe Silicon Valley has for WeChat. There is negligible concern for the social consequences of such an app.

There are others like him, just as there were others before him, who want to emulate the success of WeChat, a Chinese super-app that elevated Tencent, its developer to the apex of that country’s tech ecosystem.

Mint This is from The Intersection column that appears every other Monday in Mint.

Much of the immediate reaction to Musk’s declaration centred around the immense difficulty of creating an everything app outside China today. Yes, it is true that WeChat’s timing was important in its success, that integrating payments is tricky because financial regulations are strict and vary across jurisdications and that user behaviour in China might differ from that in other countries. But these are Musk’s problems.

What is of greater concern to free societies around the world is that an everything app” presents massive risks to personal, economic and political freedom. As John Gruber of Daring Fireball says, It’s no coincidence at all that WeChat is the only everything app” anyone can cite, and it comes from China, an authoritarian regime. In practice, the concept really only makes sense there. It doesn’t benefit users that WeChat dominates all aspects of digital life — it benefits the authoritarian Chinese Communist Party. (And investors in Tencent, WeChat’s Chinese-government-controlled parent company.)”

It is practically impossible for person in China to opt out of WeChat. The user is socially locked in to a private’ company for performing any or all socio-economic functions. Tencent and the Chinese Communist Party thus have massive power and influence over hundreds of millions of Chinese citizens. The company behind an everything app will have a greater hold over citizens minds, choices and actions than religious, social and political leaders ever did. No sovereign state, let alone a liberal democracy, should accept such an outcome.

It does not matter if everything apps are foreign or indigenous. To the extent that they dominate markets, media and psychological influence, they are a threat to individual freedom and state sovereignty. Instead of waiting until it is too late, public policy must act to prevent firms and apps from acquiring socio-economic dominance in the first place.

This can be done in two ways. The first is to ensure that the market for apps, operating systems and platforms to be competitive. In addition to applying consumer protection and competition laws, India needs stronger privacy and data protection laws as part of the Digital India legislation that the Union government is contemplating. Already home-grown apps that started off as ride-sharing, food delivery and apartment entry services are moving towards becoming super-apps. Legislation should inject the desired regulatory hurdles, frictions and legal firewalls to prevent ambitious entrepreneurs from acquiring multi-market dominance.

While there is a debate over UPIs business model, I think it is in the public interest for a second UPI player, that interoperates with NPCIs UPI. Openness ought to enable that.

The second way is for the government to promote open public digital infrastructure and require interoperability. The Unified Payments Interface (UPI) and the newly launched Open Network for Digital Commerce (ONDC) are examples of how this can be achieved. Even these should be pushed in the direction of greater openness, sustainable business models and greater competition.

Compared to the earlier more-libertarian generation, contemporary Silicon Valley leaders are either oblivious to the cause of liberty or do not think it is important enough. Since they have a lot more power relative to their predecessors, the case for democratic oversight over Tech Bros’ has become critical.

At a deeper level, Musk’s desire to emulate the Chinese model alerts us to the danger of the interests of Big Tech increasingly diverging from those of liberal democracies. That their advertisement-based business models are problematic is well known and is already under public scrutiny. What is less recognised is that national interests can be undermined by thoughtless adoption of technology business models that willy nilly take us to a dystopia of unfreedom. Engineers and management professionals generally lack a broader education in civics, humanities and ethics, they are poorly equipped to make socially responsible choices. The risk of doing wrong is especially high when our entrepreneurs begin to take inspiration from Chinese apps and business models.

I have been deeply concerned that Indian entrepreneurs are unthinkingly adopting business models that can, inadvertently, cause great harm to Indian society.

Investors, founders and educational institutions must make a special effort to educate technology professionals on social issues. Preserving our freedom may indeed be their most important corporate social responsibility. India’s interests are much better served if technology companies use their CSR funds to invest in giving their workforce a liberal education than in doing social welfare.

Tailpiece. Elizabeth Magie patented The Landord’s Game in 1904 to demonstrate that an economy that rewards individuals is better than one where monopolies hold all the wealth” and could be played with either monopolistic or anti-monopolistic sets of rules. Ironically, the former turned out to be more popular and are the basis of the Monopoly board game since 1935. The market for board games though is fragmented and competive.

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