29 January 2021: The Hindu Editorial Analysis

1) Global antitrust and the challenge of Big Tech

The issue is about checking their monopoly power while encouraging their positive externalities  

GS-3: Challenges to internal security through communication networks, role of media and social networking sites in internal security challenges, basics of cyber security;

GS-1: Effects of globalization on Indian society.

GS-4: ethical concerns and dilemmas in government and private institutions; laws, rules, regulations and conscience as sources of ethical guidance; accountability and ethical governance.

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CONTEXT:

1. The issue is about checking their monopoly power while encouraging their positive externalities and consumer surplus by the Big Tech firms.
2. There are ongoing investigations worldwide, including in the European Union and the United States, on the abuse of monopolistic power, especially Facebook and Google.
3. Possible solutions for their monopoly power of private firms and this arrangement poses several problems.

Is Monopolistic led to Corruption?

1. Contemplate a market system where the number of enterprises are large, there is free entry and exit of enterprises, but the commodities manufactured by them are not homogeneous. Such a market system is known as monopolistic competition.
2. corruption formula C=M+D-A given by Professor Robert Klitgaard, ‘C’ stands for corruption, ‘M’ is for monopoly, ‘D’ is for discretion and ‘A’ stands for accountability which means “Corruption equals monopoly plus discretion minus accountability”.

The earlier investigations against big Tech firms:

1.  The information good that is being provided by the Internet firms of today is largely non-rival due to private clues in laws.
2. The consumption of information by one does not alter the value for the others. due to limited network capacity, the consumption by one has an effect of decreasing value for the others and, it is rival in nature.
3.  Telecom services are within the jurisdictional boundaries of regulators and the regulators have the power to lay down rules of the orderly behaviour of the licensed telecom operators.
4.  The Internet firms operate globally, thanks to the ubiquitous Internet. Therefore, it is often difficult to lay down international rules of obligation and fulfilment by the different country regulators.
5. The goods and services provided by the Internet firms are excludable, telecom is certainly excludable due to the need for consumers to obtain connections from the respective telcos and pay the subscription charges for the same.
6. The Internet firms to provide search, navigation, and social connectivity with no charge to the consumers, and, consequently, making these services non-excludable.
7. The commercialization of Internet has created this new avatar of non-excludability that includes subtle trade-offs of personal information for availing services of the Internet firms.

 

Number of internet users in India:

1. In 2020, India had nearly 700 million internet users across the country. This figure was projected to grow to over 974 million users by 2025, indicating a big market potential in internet services for the south Asian country.
2. Mobile internet has been such a positive development in the country's digital progress, that in 2019, over 73 percent of India's total web traffic coming from mobile phones.
3. India also saw the biggest jump in video consumption, of 40%, to over 2.9 billion hours during the week starting March 22 as compared to the last week of December 2019, when it was 2.1 billion hours.
4. Percentage of population using the internet in India from 2000 to 2025:

year	Population using the internet in India(%)
2015	17%
2016	22%
2017	34.45%
2020	53.5%
2025	69.5%

 

Monetization models of public goods:

1. It must be pointed out that such non-excludable and non-rival goods, also known as public goods, are provided by governments.
2. The information goods as described above are being provided by private firms. This arrangement poses several problems.
3. The governments can cover the expense of providing public goods (such as police protection, parks and street lights) through tax-payers’ money, private firms need to have monetization  models to cover the costs of providing their services.
4.  The Internet firms have resorted to personalised advertisements and third-party sharing of the personal information of their users for monetisation purposes.
5. The strong network effects present in these Internet platforms warrant increasing the subscriber base and garnering as much market share as possible.

 

Incredible applications:

1. The, network effects create a huge consumer surplus. Even without our knowledge, these Internet firms have now become an indispensable part of our lives.
2.  We cannot do without Google Maps for our day-to-day commute to various destinations; Google Searches are indispensable in our quest for information and news;
3. Google Scholar is a necessary tool for academicians to explore relevant research artifacts.
4. The Google Maps Application Program Interface (APIs) is being used by almost all logistic and transport companies;
5.  Facebook APIs are used for advertisement by almost all firms across the industry.
6. Google recently announced that its Search is being expanded to provide accurate and timely information on vaccine distribution to enable quick recovery from the COVID-19 pandemic.

Why big Tech firms have monopoly:

1. Limited network capacity for consumer.
2. Private clues in laws and deferent country different laws.
3. Outside the jurisdictional boundaries of regulation.
4. The orderly behavior of the licensed telecom operators.
5. Lack of international rules and UN resolution.
6. The Internet firms are excludable in service.
7. Extra free services by big tech farms.
8. Commercialization of Internet.
9. Strong network effects of big company.

 The question before policymakers over internet monopoly:

1.  How to regulate these Internet firms from abusing their monopoly power while at the same time encouraging the positive externalities and consumer surplus they create.
2. The firms engage in the abuse of their monopoly power. Due to strong network effects,
3.  It is not possible to ban or curtail these services. Even if other options are available alternative (such as Signal and Telegram for messaging),
4. The network effects bind customers to their often used platform (WhatsApp), even if it is not their favorites.

 

Possible solutions:

1. The government may wish to regulate monopolies to protect the interests of consumers.
2. The stop the tax subsidies that governments provide tax subsidy to these Internet firms in return for their orderly behaviour in the marketplace.
3. GAFA stands for Google, Apple, Facebook and Amazon and the tax aims to provide a level playing field to local companies which pay taxes to the tune of 35 per cent in India as corporate tax
4.  The governments mandate sharing of Non-Personal Data (NPD) owned by these firms for societal and economic well-being as pointed out in the expert committee on NPD.
5. Implement Justice BN Srikrishna committee submitted its report on the data protection law ,report has proposed penalities for violations, criminal proceedings, setting up of a data authority, provision of withdrawal of consent and concept of consent fatigue.
6.  It is legitimate as media legislation, that Google and Facebook must negotiate a fair payment with news organisations for using their content in Facebook’s newsfeed and Google’s Search.
7.  Controlled expansion of products and services without hurting the interests of consumers and smaller competing firms shall be the mantra used by these firms to minimise litigation, lawsuits and, eventually, wastage of tax-payers’ money.
8. The control any abusive behaviour of the Internet firms is to use the power of public voice.
9. The million mails that were sent to the Telecom Regulatory Authority of India in March 2015, effectively put an end to the Free Basics programme of Facebook in India,
10.  The prohibiting any violation of Net Neutrality principles.
11. The huge public outcry and subsequent government actions have delayed the recent changes to privacy policy relating to the sharing of personal information between WhatsApp and its parent firm, Facebook.
12. Why not the Internet firms adhere to core ethical principles in conducting their businesses. and put self regulation principal.
13.  Other ways like Anti Trust Legislation, Organised Consumer’s Associations, and Creating Fair Competitions.
14. Outsourcing Censorship to Social Media Companies

CONCALUTION:

1. the firm may regulated by them self’s and  firm may resort to anti-competitive behavior including acquiring rivals to vertically integrate; erecting entry barriers by refusing to interconnect and inter-operate with competing firms, and leveraging their capital base, thereby engaging in predatory pricing, and driving out competitors.

 

2) “For one and all”

 China should show global leadership, and not go down the path of arrogant superpowers.

GS-2: International relations: India and its neighborhood- relations, Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.

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CONTEXT:

1. The China’s delivered a robust defence of globalization when On January 25, Mr. Xi on the Davos platform, give his speech. 
2. The china calling for global unity, closer coordination on macroeconomic policy, and more equitable growth.
3. It did also carry two messages that appeared to be aimed at Washington, a reflection of four turbulent years of a tariff and technology war between the world’s two biggest economies. Show its capacity to become global leadership.

Is world accept china as Global leadership:

Argument in fevers:

1. Economic superpower: China has become the world's largest economy (on a purchasing power parity basis), manufacturer, merchandise trader, and holder of foreign exchange reserves
2. China's Belt and Road Initiative (BRI): is a strategy initiated by the People's Republic of China that seeks to connect Asia with Africa and Europe via land and maritime networks with the aim of improving regional integration, increasing trade and stimulating economic growth.
3. China's Military power: Has Surpassed US in Ships, Missiles and Air Defense. The PRC has the largest navy in the world, with an overall battle force of approximately 350 ships and submarines, including over 130 major surface combatants,
4. Soft power of China: Chinese culture and made an impact. Buddhism was a coherent set of beliefs which forced the native traditions to define themselves as an alternative to the Chinese influence.
5. China world leader in science and technology: China was a world leader in science and technology until the early years of the Ming dynasty. Chinese discoveries and Chinese innovations such as papermaking, printing, the compass, and gunpowder (the Four Great Inventions) contributed to the economic development in East Asia, the Middle East and Europe.
6. China E- technology growth: Now worth $3 trillion a year, a third of national output, the digital economy is helping China manage debts in the old economy and keep growth alive. By 2017, tech accounted for as large a share of output in China as in Germany. A Tufts University survey ranked China the world's most rapidly evolving digital economy.
7. China's strong productivity growth: China's strong productivity growth, spurred by the 1978 market-oriented reforms, is the leading cause of China's unprecedented economic performance.
8. The liberal international order policy of China: China is one of the biggest beneficiaries of the current global order. It integrated into the “order with a speed and intensity rarely seen in the developing world.
9. China has a fixed goal of national revival: China has a fixed goal of national revival by a flexible and pragmatic approach.
10. China’s foreign policy: China’s foreign policy interests and objectives are the objects of fixity, yet the global environment in which they are practiced remains fluid and evolving. to adapt and take advantage of the volatile flow of global developments.
11. The Chinese leadership: The Chinese leadership remains cautious to the seeming opportunities created by current liberal order upheavals.
12. Weak world leader: USA, EU, Russia now weak in leadership, and India, Brazil not ready for global leadership.

Argument in against/issues /Challenges:

1. Violation of Intentional laws: inside example Tort Liability is mainly based on the current PRC Tort Law first effective as of 1 July 2010, outside Chinese goods violated WTO international trading rules, South China Sea, and human rights international laws.
2. Democracy factor: The Chinese Communist Party calls China's system a "socialist consultative democracy but its system work like Authoritarian regime.
3. Data and privacy factor: Article 111 of General Provisions of the Civil Law of the People's Republic of China sets out the basic principle that natural person's personal data shall be protected by law. Because of this many independent media service doubtful.
4. Border dispute with all never: China has the largest number of border dispute sharing its 22,000 km land borders namely, Russia, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Afghanistan, Pakistan, India, Nepal, Bhutan, Myanmar, Laos and Vietnam and the country is embroiled in territorial disputes all the countries.
5. China is upper-middle-income: China is an upper-middle-income country and the world's second largest economy. But its per capita income is still only about a quarter of that of high-income countries, and about 373 million Chinese are living below the upper-middle-income poverty line of US$5.50 a day.
6. The nine-dash line issue :at various times also referred to as the ten-dash line and the eleven-dash line—refers to the undefined and vaguely located demarcation line used by China (People's Republic of China) and Taiwan (Republic of China), for their claims of the major part of the South China Sea.
7. China's claim : to the sea is based both on the Law of the Sea Convention a historic decision in 2016, an international tribunal in The Hague ruled against part of China's claims to the sea in a case brought by the Philippines.
8. USA and China policy: A tariff and technology war between the world’s two biggest economies.

POWER CULTURE PAST:

1. What do ring the alarm are arrogance, prejudice and hatred; it is the attempt to impose hierarchy on human civilization or to force one’s own history, culture and social system upon others.” He also hit out at attempts “to build small circles or start a new Cold War,
2. to reject, threaten or intimidate others, to wilfully impose decoupling, supply disruption or sanctions” and said a “misguided approach of antagonism and confrontation, be it in the form of cold war, hot war, trade war or tech war, would eventually hurt all countries’ interests.”

Is a crisis in capitalism?

1. The Davos speech found a broadly receptive audience amid a crisis in capitalism, with the rise of populism in the West creating the space for China to try and fill a void in global economic leadership,
2.  China and His message “to stay committed to international law and international rules instead of seeking one’s own supremacy” and for “the strong not bully the weak” will appear especially jarring to those in China’s neighbourhood.
3. The day before the speech, military commanders from India and China spent over 16 hours in talks, the latest unsuccessful attempt to disengage two forces that have been eyeball-to-eyeball for months, after China’s unprecedented military mobilisation across the LAC starting in May.
4. It is not only India that is dealing with a harder Chinese military posture in the midst of a global pandemic.
5.  On January 23, eight bombers and four fighters from China entered Taiwan’s air defence identification zone, the latest warning to Taipei.

Way Forward:

1. The “decisions should not be made by simply showing off strong muscles or waving a big fist”. Indeed, its importance is in its relevance to all the big, militarised powers.
2. China’s approach of following the flow aims at creating a conducive environment for its continued economic growth and expanding global influence while repelling the China threat theory.
3. The breathing room it needs to improve domestic social conditions, increase the legitimacy of the governing regime, expand the nation’s economic and technological capabilities, strengthen its military, and enhance its standing and influence in the international political order.
4. If China can maintain its economic growth and national power, it will certainly become a strong global power under President Xi’s leadership, and increase its ability to fill the global governance deficiency caused by USA  “America First” doctrine and by India  in “India First policy”

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