A borderless economy that will be controlled

Digitisation of society is unfortunately becoming a key means for increased corporatocracy

May 11, 2016 01:28 am | Updated 09:55 pm IST

Jack Ma, the founder of Chinese e-commerce giant Alibaba, has proposed a new business-led initiative for framing global e-commerce rules. Announcing it at the Boao Forum for Asia, he said: “Let businesses drive it with governments and NGOs and other organisations participating”. Mr. Ma’s proposed setting up what he calls the World e-Trade Platform (WeTP). The

WeTP is supposed to complement the World Trade Organisation which can remain in charge of global rules for offline trade. Alibaba will present this plan in the G-20 meet later this year in Hangzhou, China, where it is headquartered. In short, this means that those who run e-commerce businesses are proposing to draft the rules for e-commerce too, because in their view, they know best.

Mr. Ma’s announcement is apparently a political shocker — corporate power is making a direct political challenge to governmental actors. However, a former vice minister of China, the Indonesian Trade Minister, and the President of the Inter-American Development Bank — all of whom were present at the Boao Forum — reacted positively to the announcement. To understand what is happening here, let us step back a little.

Digital monopolies

In the digital realm, it is said that code is law and architecture is policy. Those who control the software code, and the architecture of large ‘platforms’ around which key social systems are organised today, get to set the rules for these sectors. ‘To organise the world’s information’ is Google’s stated noble function. As Google developed monopoly over this sector, it increasingly

manipulated its algorithms for its own commercial gains. It judges what content needs to be pulled down for violating intellectual property rights or on grounds of defamation, normally a public function. Facebook similarly makes the global social rules on its monopoly social media platform, as Apple does for the mobile app ecology on its App Store, rivalled only by Google’s Android market.

Things get more complex as we move to sectors that are not purely informational/digital. But even in these cases, any first mover who can organise the digital connections between the suppliers and consumers in any sector, and the valuable data that arise from the ensuing digital interactions, can expect to quickly develop a monopolistic position. The first mover comes to own the ‘platform’ around which the digital avatar of the concerned sector takes shape. It can become the Airbnb of accommodation booking, the Uber of city transportation, or the Amazon/Alibaba of e-commerce.

Similar monopoly platforms are expected to develop in all areas, including key sectors such as education, health, and agriculture. Monsanto has graduated from a manufacturing company to being intellectual property-based and now to becoming an agriculture data company. It plans to monopolise macro and micro data about farming, right up to the soil type and micro-climate of each farm, to be able to fully control all agricultural inputs, both hard and soft. With privileged access to information about what is going to come out of the fields and when, it can, in due course, also expect to dominate the agri-output market. The automobile sector is similarly undergoing major digital transformations, with Google and Apple moving in. Daimler’s CEO recently expressed concern that traditional car-makers may get reduced to becoming the Foxconn (the China-based i-Phone manufacturer) of the car industry, while others own the all-important digital operating systems.

As all sectors go digital, some interesting reorganisation is happening. There is a marked tendency towards greater monopolisation with the key positions held by whoever can control the ‘platform’ that digitally connects different actors, especially with consumers, and, even more importantly, control the data about the sector. These two kinds of controls are related as data mostly gets generated from digital interactions in the sector — among human actors, but also increasingly with and among ‘things’, what is called the ‘Internet of Things’.

Fixing regulation

Strong network effects implied in both these controls is the reason for increased monopolisation. We see its extreme expression in pure digital services such as search and social networking. In non-digital areas, there are still the traditional manufacturing/intellectual property competencies and brand loyalties to contend with, even as digital behemoths make audacious moves to take on these sectors. There also exists a good amount of innovation outside the current industry giants. However, starts-ups are fast being bought out, and mergers and partnerships are taking place, overall tending towards a very few actors dominating each sector — some competing while others occupying complementing roles. Even competitors are entering into cooperative understandings (Microsoft and Google agreed recently to not go to court against each other). The main understanding among big businesses is that they themselves frame the rules in every sector, keeping the political bodies or regulators out at any cost.

Transformation in all sectors is of a global nature, with mostly the same digital companies dominating everywhere in a given sector, whether a Google or an Uber. As the digital transformations redefine sectors in fundamental, globally-integrated ways, individual nations in any case may have limited policy or regulatory rein. Following Google and Facebook, AirBnB and Uber have now begun taking on regulatory regimes. They have mobilised their users to stage political protests against regulators. It is unprecedented for a corporation to openly flex its political muscle.

So, first, a few global corporates get to make the rules of our society just by owning the digital systems underpinning different sectors, on the basis of code is law. Next, by their monopoly control of sectoral ‘platforms’, they challenge the regulators, at times making ad hoc arrangements with them. But it is made clear that their own dominant practices should substantially shape the sector’s regulation, if any. Major business actors further enter into formal and informal alliances to write the technology and practices standards for each sector, pre-empting any public intervention.

And to the extent that certain policy/lawmaking simply cannot be done without involving some social actors other that just the mega businesses, there is a new kind of business-led process of policy/lawmaking called multi-stakeholderism. It co-opts select government and civil society actors who can bless the business-dictated frameworks, with a few concessions thrown here and there to the co-opted parties. This is what Mr. Ma’s proposal is; it represents an increasingly favoured approach in Internet/digital governance.

This business-led multi-stakeholderism approach has till now been mostly spoken of in somewhat vague terms, especially when involving issues of clear public policy, though the basic intent has been strongly evident. Mr. Ma just made the first outright proposal in this regard. Alibaba says that it is already working with many groups on this proposal. All of this good in a way to the extent that the real meaning and implication of business-led multi-stakeholderism is now out in the open and various actors should be able to better assess their stand on it.

A future to stop

The problem is equally on the side of governments and public interest actors who have been, as if in a state of complete paralysis, bewildered at the pace and intensity of digital changes. Governments seek piecemeal benefits from these digital changes, without realising how the very political ground may be shifting from under their feet. It is, for instance, surprising that even a country as statist as China could let Alibaba make such an extreme neoliberal move. As things in China often are, the proposal may even have the government’s support, even if tacit. No one apparently wishes to see beyond their noses, blinded by the lure of short-term possible economic gains.

Most public interest organisations too have not moved beyond celebrating the digital opportunity to also appreciating the dangers at the larger systemic level. Meanwhile, the spectre of corporate takeover of society, or corporatocracy, is creeping closer than ever, through the unsuspected digital route which was supposed to be liberating. Alibaba’s website proclaims: “Ma’s ultimate goal is the creation of a virtual, borderless economy not constrained by politics”. But of course this economy will be closely guided (read: controlled) by global corporations like Alibaba.

What is urgently required is to construct political institutions that are adequate to the new digital realities. This work has to be done at both the national and global levels.

Parminder Jeet Singh works with the Bengaluru-based NGO, IT for Change.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.