- The words digital and digitalization are spoken across the spectrum frequently over the last few years as information technology leapfrogs dynamically ushering in an unbelievable transformation in the way we conduct our daily lives. The electronic workings have assumed no less than ubiquitous presence on the back of a perpetual digital revolution completely altering the way hitherto conventional existence pervaded all around. And then came the pandemic which brought in even more changes where the tremendous emphasis was laid on embracing the digital mediums to reach out owing to restrictions.
PC: Marcus Marques
- As a consequence, the lockdowns imposed during the pandemic across the world to cope with the Covid saw the quickening pace of economic transactions shifting from physical to digital marketplaces. During the last year and a half, the pandemic hit societies around the globe have irrevocably moved towards more digital engagements. So much so that the virtual and online worlds have seamlessly merged in our lexicon. In the absence of physical movement owing to travel restrictions imposed by the governments, the digital world enabling virtual connections with the near and dear ones has proved to be a big boon even for the technologically challenged people.
- Easy reach and availability of smartphones have only helped in empowering common citizens courtesy digital mediums. However, regulatory architecture to ensure all rough edges are smoothened preempting potential unpleasant occurrences has not kept pace though. It is in the public domain that large gaps exist when it comes to dealing with proliferating digital markets. The experience playout out in the Indian context amply demonstrates that the regulatory architecture always lagged technological advances. The situation has reached a stage where the slow pace of regulatory retooling may hurt the nature of digital markets.
PC: Vikram Sinha
- It is worth noting that digital markets have a set of unique features that make the need for a new regulatory architecture essential. First and foremost, the digital markets offer hitherto unavailable economies of scale where following a high initial cost, incremental customers can be added on at practically no further cost. Moreover, the so-called network effect will ensure an increase in the number of participants concurrently enhancing the value of service too. In doing so, the ability to accumulate huge amounts of data on users offers economies of scope as well inconceivable for a dominant firm in a traditional industry like steel or cement. For example, look at Amazon that started as an online bookstore less than three decades ago finding itself among the world’s top five firms by sales.
- Thus, the danger of large digital platforms starting as mere intermediaries later competing against businesses using their platforms is the real calling for a regulatory mechanism to address. Against this backdrop, the Personal Data Protection Bill was introduced in Parliament in December 2019 and referred to a joint committee of both houses. Sadly, even after 66 sittings, nothing concrete has emerged. The continued inaction in regulatory space denotes early-mover advantages accruing to some firms may eventually weaken the competitive nature of the market. Therefore, the Indian digital marketplace needs comprehensive umbrella legislation to cover digital platforms as any further delay could lead to irreversible distortions. Given the above, the Data Bill must see the day of light now.