Note On Competition/Anti-Trust Law and its Efficacy in Tackling Issues Concerning Privacy (Part III) – And a Post Script.

[The previous post seemed way too long for a blog post, so decided to split it and post a ‘Part III’. The previous posts can be found here and here. Also as a bonus – an anticlimax post script. ;)]

INDIA

As already stated above, India has also till date been following the traditional model of competition law enforcement. The language and the concepts of the Competition Act, 2002 are heavily borrowed from the Treaty on the Functioning of the European Union (T.F.E.U.) and the enforcement structure enumerated under the act, i.e., the Competition Commission of India (C.C.I.) and the Director General of Investigations (D.G.) is also similar to the enforcement structure of the E.U.

The Commission displayed its cognizance of data collection, though not from a Privacy perspective, in the case of Matrimony.com Ltd. v. Google LLC, Case No. 07 of 2012. In its Final Order dated 31.01.2018, while imposing a fine of Rs. 135.86 crores on Google, it observed:

“In fact, it would not be out of place to equate data in this century to what oil was to the last one. The Commission is not oblivious of the increasing value of data for firms which can be used to target advertising better. Moreover, the data can be turned into any number of revenue generating artificial-intelligence (AI) based innovations.”

However, prior to this, in the case of Vinod Kumar Gupta v. WhatsApp Inc., Case No. 99 of 2016, specifically assailing the acquisition and the privacy policies of the respective entities, the Commission while dismissing the Complaint, specifically observed:

“14. On the issue of dominance of the OP in the relevant market as defined supra, the Commission notes that in India a number of other players such as Apple with iMessage, BlackBerry with BBM, Samsung with ChatON, Google with Google Hangouts and Microsoft with Skype are providing consumer communication apps and are also active in the provisions of smartphone hardware and operating systems. Besides, many other consumer communication apps providers such as Hike, Viber, WeChat and Snapchat are also active in market. As per the information available in the public domain, globally ‘WhatsApp’ is having a billion monthly active users and within India, it is having 160 million monthly active users. According to a study of ‘Jana and mCent’, 97% of the smartphone users in India use a communication app daily and the most popular is ‘WhatsApp’, which is installed on 96% of devices and has more daily active users than any other communication app in India. As per the said report, ‘WhatsApp’ is installed in 2.3 times more devices than home-grown messaging app Hike. According to a study conducted by ‘TNS/TNC Connected Life Study 2015’, 56% of the internet users in India use ‘WhatsApp’ and 51% use ‘Facebook’ every day. Further, amongst India’s internet users, ‘WhatsApp’ tops the list of instant messaging apps. Further, citing a study conducted by Global Web Index, the Informant has submitted that 64% of mobile users in India use ‘WhatsApp’ which is the largest as compared to any other mobile messaging app usage. Based on the the above, the Commission is of the opinion that the OP is in a dominant position in the relevant market as defined under para 13 above.

15. With regard to the abusive conduct of the OP in the relevant market, it is noted that the Informant has alleged that the OP is abusing its dominant position in the relevant market by introducing privacy policy which compels its users to share their account details and other information with ‘Facebook’. In this regard, the Commission observes that the data sharing terms of the privacy policy of the OP as updated on 25th August, 2016 relate to sharing of users’ ‘WhatsApp’ account information with ‘Facebook’ to improve the online advertisement and products experiences available on user’s ‘Facebook’ page. It is noted that the OP provides the option to its users to ‘opt out’ of sharing user account information with ‘Facebook’ within 30 days of agreeing to the updated terms of service and privacy policy. Moreover, the OP has submitted that ‘Facebook family of companies’ will use such information for the purpose of improving infrastructure and delivery systems, understanding how their services are used, securing systems, and fighting spam, abuse or infringement activities. The Commission also finds force in the submission of the OP regarding its users safeguards that all types of ‘WhatsApp’ messages (including chats, group chats, images, videos, voice messages and files) and ‘WhatsApp’ calls are protected by end-to-end encryption so that third parties and ‘WhatsApp’ cannot read them and also the message can only be decrypted by the recipient. Further, as stated in the key updates summary of the OP, nothing a user shares on ‘WhatsApp’, including his/ her messages, photos, and account information, will be shared onto ‘Facebook’ or any other apps of ‘Facebook family of companies’ for any third party to see, and nothing a user posts on those apps will be shared by ‘WhatsApp’ for any third party to see.

……..

19. The Commission also observes that there are no significant costs preventing the users to switch from one consumer communication apps to another. It may be due to the following reasons: (i) all consumer communication apps are offered for free of cost or at a very low price (mostly free), (ii) all consumer communication apps are easily downloadable on smartphones and can co-exist on the same handset (also called ‘multi homing’) without taking much capacity along with other apps, (iii) once consumer communication apps are installed on a device, users can pass on from one app to its competitor apps in no-time, (iv) consumer communication apps are normally characterised by simple user interfaces so that costs of switching to a new app are minimal for consumers, and (v) information about new apps is easily accessible given the ever increasing number of reviews of consumer communication apps on apps store like google play store etc. Furthermore, the expansion of Hike Messenger to nearly 100 million user base within three years of launching their services into the aforesaid market reflects that in this market, there are no significant barriers to entry and consumers appear to be price sensitive. Based on the above, the Commission is of the view that even though ‘WhatsApp’ appears to be dominant in the relevant market, the allegations of predatory pricing have no substance and the OP has not contravened any of the provisions of Section 4 of the Act.”

The most comprehensive discussion by the Commission on the aspect of data collection and sharing appears to be under the combination procedure in the Jhaadu Holdings LLC Case, i.e., the Acquisition of 9.99 percent of the equity share capital in Jio Platforms Limited by Facebook, Inc. The relevant portions of the Order of the Commission dated 24.06.2020 are as follows:

“(ii) Potential data sharing between the parties

50. Most of the data driven businesses are multi-sided platforms where one or more sides of the platform is designed to attract user presence and the other sides are used for monetizing the data relating to user behaviour. For instance, Facebook application is a social media platform. One side of its platform offers free services to users for social interaction and on the other side, the monitored behaviour of the users is used as an input to offer advertisement services (targeted display ads). As noted earlier, the social media and other applications of Facebook group are popular amongst internet users and Facebook is expected to have access to rich data regarding user behaviour. Facebook has submitted that it has a data policy that explains the nature of information collected by Facebook and how it is being used. It inter alia explains data sharing with third party partners.

51. Jio Platforms including RJIO, on the other hand, is also in a position to collect and possess consumer data. The privacy policy of RJIO defines Non-Personal Information as information that does not identify the user or any other individual, and includes session, web beacons and usage and transaction data, aggregate log data and aggregate information. It further states that RJIO uses this information, inter-alia, to tailor its services to the interests of its users, to measure traffic within its services, to improve the quality, functionality and interactivity and let advertisers know the geographic locations from where its users/ visitors come. The privacy policy further provides that the information provided by the users will be used for a number of purposes connected with RJIO’s business operations including (a) verifying the identity, access, privileges assigned and relationship with the user; (b) provisioning of products/services, testing or improvement of services, recommending various products or services; (c) communicating about bills, invoices, existing or new offers, content, advertisements, surveys, key policies or other administrative information; (d) analytics and reviews for improvement of RJIO’s services; (e) improving user experience while using RJIO’s services by presenting tailored advertising, products and offers; and (g) other usages that users may consent to.

52. Business combination between entities having access to user data can be analysed from the perspective of data backed market power. The assessment in such instances needs to focus on the incentives of parties to pool or share their databank and monetize such data in possible means.

53. In the instant matter, it is noted that the Proposed Combination is an acquisition of 9.99% stake in Jio Platforms by Facebook group. This may not result in unrestricted access to each other’s resources including user data. Nevertheless, the parties may have incentives to engage in mutually beneficial data sharing. In this regard, Jaadhu has submitted that “there is no data to be shared as part of the Proposed Transaction” (i.e. proposed acquisition of shares in Jio Platforms by Jaadhu). It has been further clarified in the response dated 12th June, 2020 by Jaadhu that:

“It is clarified that data sharing is NOT the purpose of the Proposed Commercial Arrangement, nor will either side be acquiring ownership of the other’s data pursuant to the Proposed Commercial Arrangement. However, for implementation of the Proposed Commercial Arrangement, WhatsApp and JioMart (which is owned by RRL and operated by Jio Platforms) will receive or send limited data. This data is:

(i)being provided only for the purpose of facilitating e-commerce transactions on JioMart. Its use is limited, proportionate and solely for the purpose of implementing the Proposed Commercial Arrangement. Further, ****** the MSA explicitly prohibits the Commercial Arrangement Partners from using confidential information received from the other party for their own business purposes, or from disclosing it to third parties, *********************************************** ********************************************************** ********************************************************** ************************************************;

(ii)neither exclusionary, inimitable nor rare, and substitutes exist…; and

(iii)processed in accordance with applicable law and parties’ data policies.”

54. The Commission observes that RJIO is a prominent telecommunication player in India with more than one-third of wireless subscribers on its network. The group entities of Jaadhu viz. Facebook Group, on the other hand, are the second leading player in online advertisement space and leading player in online display advertisement services. The user data possessed by Jio Platforms including RJIO and Facebook Group are complementary to each other given the symbiotic interface between telecommunication business and OTT content/ application users. Thus, any anti-competitive conduct resulting from any data sharing in the future could be taken up by the Commission under Sections 3 and/or 4 of the Act having due regard to the dynamics of the concerned markets and position of the parties therein.

55. Considering the material on record including the details provided in the Notice and the assessment of the Proposed Combination based on factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act. The Commission also notes that the parties confirm that the Proposed Combination does not contemplate any non-compete covenants.

56. This order shall stand revoked if, at any time, the information provided by Jaadhu is found to be incorrect.”

Recently, the Chairman of the C.C.I, Ashok Kumar Gupta, remarked that “Lowering of privacy protection by dominant enterprises could be construed to be an abuse of dominant position and therefore fall within the ambit of antitrust as low privacy standards implies reduction in consumer welfare.” However, no fresh investigation appears to have been initiated by the regulator as on date.

P.S. (As promised) –

So we have a bit of an anti-climax in this space, with TechCrunch reporting day before yesterday through Natasha Lomas that Google won’t end support for tracking cookies unless UK’s competition watchdog agrees !! It’s a long article, but well worth the read, especially for grasping the contours of Google’s self-styled “Privacy Sandbox” it announced earlier this year.

My favourite portion was and I quote:

“But the key issue here is how privacy and competition regulation interacts — and potentially conflicts — with the very salient risk that ill-thought-through and overly blunt competition interventions could essentially lock in privacy abuses of web users (as a result of a legacy of weak enforcement around online privacy, which allowed for rampant, consent-less ad tracking and targeting of Internet users to develop and thrive in the first place).

Poor privacy enforcement coupled with banhammer-wielding competition regulators does not look like a good recipe for protecting web users’ rights.”

Note On Competition/Anti-Trust Law and its Efficacy in Tackling Issues Concerning Privacy (Part II).

Continued from our previous post:-

EUROPEAN UNION (E.U.)

In the E.U., the European Commission (E.C.) and its Directorate General for Competition are responsible for the administration of competition law. In regard to privacy matters, the General Data Protection Regulation is regulated by the European Data Protection Board. European authorities have also had the opportunity to deal with data implications on several occasions.

Initially, in the 2014 Facebook-WhatsApp Merger Case, Case No. COMP/M.7217 it took at extremely conservative approach on the issue of privacy. To quote from the Commission’s Order itself:

“For the purposes of this decision, the Commission has analysed potential data concentration only to the extent that it is likely to strengthen Facebook’s position in the online advertising market or in any sub-segments thereof. Any privacy-related concerns flowing from the increased concentration of data within the control of Facebook as a result of the Transaction do not fall within the scope of the EU competition law rules but within the scope of the EU data protection rules.“

On the other hand, in 2016, in the Microsoft-Linkedin Merger Case, Case M.8124 the E.C. approved the acquisition of LinkedIn by Microsoft, subject to several conditions. Both companies retained large datasets comprised primarily of personal information. The E.C. found that the combination of Microsoft’s and LinkedIn’s datasets would act as a barrier to entry. The E.C.’s commitments included granting competing professional social network service providers access to Microsoft Graph, a gateway for software developers which is used to build applications and services that can, subject to user consent, access data stored in the Microsoft cloud, such as contact information, calendar information, emails etc. Software developers can potentially use this data to drive subscribers and usage to their professional social networks. Simply put, the Commission considered Privacy as a parameter for non-price competition Interestingly, the F.T.C. did not find anticompetitive implications in this transaction.

However, it is in fact the German Competition Authority Bundeskartellamt, and subsequently the Federal Court of Justice of Germany which have taken the first proactive to privacy protection through competition law.

In its decision of 6 February 2019 the Bundeskartellamt prohibited Facebook Inc., Menlo Park, USA, Facebook Ireland Ltd., Dublin, Ireland, and Facebook Germany GmbH, Hamburg, Germany from making the use of the Facebook social network by private users residing in Germany, who also use its corporate services WhatsApp, Oculus, Masquerade and Instagram, conditional on the collection of user and device related data by Facebook and combining that information with the Facebook.com user accounts without the users’ consent. The prohibition was based on Section 19(1) of the German Competition Act. The prohibition also applied to terms making the private use of Facebook.com conditional on Facebook being able to combine information saved on the “Facebook account” without the users’ consent with information collected on websites visited or third-party mobile apps used via Facebook business tools and use this data. The Court concluded that there was no effective consent to the users’ information being collected if their consent is a prerequisite for using the Facebook.com service in the first place.

The Bundeskartellamt found Facebook had abused its market power based on the extent of collecting, using and merging data in a user account and imposed on Facebook far-reaching restrictions in the processing of user data. The Bundeskartellamt saw the use of the conditions of use as an abuse of dominant position. It found Facebook dominant in the national market for the provision of social networks. It abuses this position by, contrary to the provisions of the General Data Protection Regulation (G.D.P.R.), making the private use of the network dependent on its authorization to link user and user device-related data generated outside of facebook.com with personal data without further consent of the users. With a resolution dated 06.02.2019, the Federal Cartel Office prohibited Facebook and other group companies from using the corresponding terms of use and processing personal data accordingly. The Federal Court of Justice on 23.06.2020 upheld this decision.

Margrethe Vestager, the current European Commissioner for Competition since 2014, has also recently stated before the European Parliament’s economy committee on Tuesday that there could be scope for “investigating if it’s actually legal for a dominant provider to stop supplying” services, adding that the EU “would have a number of tools to use.”

To be continued further….

Note On Competition/Anti-Trust Law and its Efficacy in Tackling Issues Concerning Privacy (Part I).

The traditional competition/anti-trust law paradigm, both in India and jurisdictions abroad, aims to tackle all abuses under two broad heads:

Violations through Anti-competitive agreements
Violations through Abuse of dominant position

While action is possible against the first only post the agreement coming into effect, competition law allows action against the second even at a pre-execution stage, through the mergers and acquisitions/combinations regime.

Furthermore, traditional competition law enforcement (including in India) has till date limited investigations to pricing models of goods and services on the presumption that companies with greater market power are incentivised to monopolise profits by charging more or limiting supplies. However, with the proliferation of “free” services in exchange for information whose hidden cost appears to be evidently a degradation in privacy protection, competition/anti-trust regulators around the world are now required to tackle a different threat to competition posed by digital businesses other than that of cost of goods or services or its demand and supply.

This would help partially explain why as of today, none of the competition/anti-trust investigations and suits which have recently been launched against ‘Big Tech’ companies in the E.U. and the U.S.A. have focused on consumer privacy protection. Google and Facebook have been charged with allegations of abuse of dominant position, but with respect to their commercial conduct against competitors and not against consumers. Apple has been charged with enforcing unfair policies on its App Store against application developers but not for consumer privacy harm. This coupled with an inability to properly understand technology and its stupendously fast evolution in the last two decades has left regulators picking low hanging fruit, i.e., anti-competitive harm which is possible to fit within the block pegs of comprehensible economic theory.

The traditional train of thought across jurisdictions has been that privacy issues are covered under a separate regulatory mechanism and do not fall under the purview of competition law enforcement. There has also been a second train of thought that competition law enforcement and privacy law enforcement cannot go hand in hand, as they are antithetical to each other, i.e., enforcing privacy or data protection leads to the dominance of a select few, thus stifling innovation in markets. However, there is now a developing strain of thought, particularly in the E.U., that compelling a consumer to access a service only on a pre-condition of their acceding to particular terms of agreement could constitute an abuse of dominant position on the part of such a service provider as the user loses the right of self determination or choice, particularly in the context of dominant social media services like Facebook or WhatsApp.

UNITED STATES OF AMERICA (U.S.A.)

Anti-trust enforcement in the U.S. has relied on an adversarial litigation process, mostly guided by the consumer welfare standard, i.e., a focus on lower prices and greater output. This is the primary reason why ‘Big Tech’ companies like Google and Facebook have received virtually no anti-trust scrutiny until recently. In fact, both companies have in response to the litigations raised against them, have countered by saying that the Federal Trade Commission (F.T.C.), the anti-trust enforcement body in the U.S., had cleared their respective acquisitions after careful scrutiny and reopening them or divesting them now would amount to a violation of the sanctity of the law concerning mergers and acquisitions process itself.

The matter of Nielsen Holdings N.V. and Arbitron Inc., FTC File No. 131 – 0058 demonstrates the F.T.C.’s ability to identify the importance of data in merger and acquisition review. By way of background, Nielsen and Arbitron competed in the supply of syndicated cross-platform audience measurement services to media companies and advertisers. The F.T.C. found that access to data posed a significant barrier to entry and obtained a consent order “requiring divestiture of assets to Arbitron’s cross-platform audience measurement services business, including audience data with individual-level demographic information and related technology, and intellectual property.”

Similarly, in The Dun & Bradstreet Corporation Case, FTC File No. 091-0081, the F.T.C. sued The Dun & Bradstreet Corporation, challenging its February 2009 acquisition of Quality Education Data (QED) and alleging that the deal hurt consumers by eliminating nearly all competition in the market for kindergarten through twelfth-grade educational marketing databases. The data sold by these companies was used to sell books, education materials, and other products to teachers and other educators nationwide. The combination of the two companies had given Dun & Bradstreet, through its subsidiary Market Data Retrieval (MDR), more than ninety percent of the market for K-12 educational marketing data, according to the complaint filed by the F.T.C. Dun & Bradstreet acquired QED from Scholastic, Inc. for about $29 million, which was below the threshold amount that would have required the companies to notify U.S. antitrust authorities before finalizing the deal. It ultimately chose to settle the case. The F.T.C. settlement required Dun & Bradstreet to divest certain assets to MCH Inc., an institutional and educational data company active in the K-12 data market, to restore competition that was eliminated as a result of the transaction. Under the terms of the settlement, Dun & Bradstreet sold MCH an updated K-12 database, the QED name, and certain associated intellectual property.

Both these cases clearly display the trend in the U.S.A. The F.T.C. DOES NOT enter into privacy issues when enforcing anti-trust law on data issues. Rather, the trend is rather the opposite – to prevent the monopolisation of data. It is believed, both in academic and enforcement circles, that using anti-trust law to vindicate privacy interests could make it harder for innovative companies to thrive with new products or technology-based offerings and this could potentially result in less competition. Thus, it is not per se considered an anti-trust issue if a company holds a lot of data.

The F.T.C. though has under its Consumer Protection Authority sued Facebook in the past for multiple privacy violations, which ultimately culminated in a five billion dollar settlement in 2019.

To be continued….

The Best of “Big Tech” (Part – II)

Following our previous post from yesterday, listed below is the next set of links. Happy reading !!

Rowland Manthorpe, Google’s Nemesis: Meet the British Couple who took on a Giant, Won… and Cost it £2.1 billion (Wired)

Rahul Matthan, Google’s Play Store Policy isn’t Simply About Toll Charges (Mint)

Manish Singh, Indian Startups Explore Alliance and Alternative App Store to Fight Google’s ‘Monopoly’ (TechCrunch)

Prasid Banerjee, CCI Seeks Investigation on Allegations against Google for Play Billing, Pre-Installation of Google Pay on Android Phones (Mint)

R. Jagannathan, Marx Misread Capitalism but We Must not fall into the Same Trap (Mint)

Kelvin Chan, EU Files Antitrust Charges Against Amazon Over Use of Data (AP)

Katie Canales, Apple was Just Slapped with a Lawsuit that Accuses the Company of Monopolizing the Mobile-Gaming Market by Blocking Apps like Xbox Game Pass and Google Stadia (Business Insider)

AP, Google to Pay $1 Billion Over 3 Years for News Content (Times of India)

Marcy Gordon, For Big Tech, Biden Brings a New Era but no Ease in Scrutiny (AP)

The Best of “Big Tech” (Part – I)

The past two months were inundated with articles and opinions on “Big Tech”, to the point that with literally everybody fulminating on their respective (and often repetitive and generic) opinions, I got completely put off from writing any of my own.

Things seemed to have cooled down for sometime though, with a new administration about to take over in the U.S. and the mundane grunt work of investigations underway elsewhere including India, and I thought why not put out a list of the best and most prominent news events and opinions concerning Big Tech ? So listed below, in no particular Order, are in my personal opinion, some must read reports, write ups and op-eds on all that’s been going on since “Big Tech” became the next giant problem to tackle after Climate Change and Inequality. I may or may not agree with everything that’s been written in these, but its always important to read and attempt to understand views contrary to your own as well.

Salil Tripathi, Saving the News Biz from Google, Facebook (Mint)

Cheng Leng, Keith Zhai and David Kirton, China preparing an Antitrust Investigation into Google – Sources (Reuters)

Tom Warren, Microsoft Hits Out at Apple with its New Windows App Store Policies (The Verge)

Shivdeep Dhaliwal, Microsoft Plans to Skirt Apple Ban on Cloud Gaming Apps Via Browser – Based Service (Benzinga)

Mihir Dalal and Prasid Banerjee, Why Vocal for Local Won’t Bother Google (Mint)

Bloomberg Wire Agency Feed, E.U.’s Failure to Hit Google Where it Hurts is a Lesson for U.S. (Mint)

Ajai Sreevatsan, How Big Tech Reset will Impact India (Mint)

Aaron Holmes, Tech Giants have Skirted Regulation because of how Monopolies are defined by law. Democrats Now Want to Rewrite Those Laws (Business Insider)

Gerrit De Vynck and David McLaughlin, U.S. Antitrust Case Against Google Mimics Lawsuit that Attacked Microsoft (Business Standard – via Bloomberg)

AFP, Google Strikes Payment Deal with French Media (Economic Times)

Facebook – Reliance Jio Tie up: Try, Try and Hope that you will Succeed.

(Business Today)

Initial informed rumours have finally culminated in an official announcement a few hours ago. Facebook will invest an amount of Rs. 43,574 crores for a 9.99 percent stake in Reliance Jio Platforms. The limited percentage is probably to prevent the investment from facing a regulatory hurdle before the C.C.I.

(Official video statement by Mukesh Ambani via Moneycontrol)

Financially, it makes sense for Reliance. It has for some time now been scouting for means to reduce Jio’s growing debt burden, and with the Reliance – Aramco investment deal definitely on hold for the foreseeable future as a consequence of the oil market debacle, it seems to have worked out fine for him (AS USUAL, if I may add). And an operations and commercial tie up with Facebook can only accelerate Jio’s growth and dominance in the country, and perhaps, over time even abroad (Africa is still one of the major markets with relatively low mobile and internet penetration).

Facebook, on the other hand, is relishing the opportunity to take another crack and penetrating the Indian market beyond social media (Remember the PR disaster that was “Free Basics” ?? – Our previous posts can be found here and here). And what better way to do it than to invest in the telecom company with officially the largest user base in India as well as revenue. Add to this the double icing on the cake which is the series of acquisitions made by Jio over the last three to four years with the obvious intent to create a formidable digital platform and the Promotor of the Company being without a doubt the biggest corporate influencer in the country. In fact, subject to correction, “Free Basics” seems to have been the first attempt by both the companies to try to work together and this is the second major attempt. Looks like Facebook has learnt a few lessons from its previous debacle.

While my previous concerns with Facebook’s attempts to penetrate the Indian market were primarily concerning network neutrality and the threat of information manipulation which accompanies Facebook everywhere in its “walled garden”esque operation style, a lot has happened since then. Typical of technology, issues concerning such investments have now jumped to a whole new dimension, where every big technology company is under scrutiny in multiple jurisdictions on competition and privacy concerns. In the past, the transaction probably shouldn’t have raised much concern for competition enforcers because Reliance would not be competing directly with Facebook. Today however, concerns are mounting on how tech companies are leveraging their control over data to push their own dominance not just in their original market, but also across vertical segments. And Facebook’s acquisition of both WhatsApp in 2014 and Instagram in 2012 has already created a Social Media behemoth which many worry about.

Even though C.C.I. has only recently begun to take nascent steps in examining Big Tech transactions, there is an additional dimension to the Reliance – Facebook tie up which definitely merits the C.C.I. taking the transaction seriously. My personal opinion is that this will definitely go through without any major hiccup, but how the two companies cooperate commercially is something to keep a watch on. Jio has today forayed into almost every form of digital media, including social media (Jio Chat). This coalescence which one sees in Jio’s acquisitions is however, not innovative. It is merely copying the playbook of a number of companies all across the planet, the most notable and successful examples being Alibaba and Tencent, of building entire ecosystems of digital media, communications and commerce with B2B and B2C connect. Google appears to have succeeded the best at this outside China, with a Google ID sign in now becoming a norm for most login transactions and a Google App available for almost every internet transaction you can think of. (On a side note, Google’s acquisition of FitBit has also raised similar concerns). Consequently, the lines between social media and other forms of entertainment have blurred over time. Facebook was simply late to the game, and is now playing catch up, and since it suffers from no dearth of cash, such investments help it to gain ground quickly, with a long term potential growth with Jio helping it to succeed where it has managed to only take a few tottering steps till now.

Information Manipulation: An Important Side Note of Network Neutrality

Freedom of Speech and prevention of a “walled garden” have been one of the prime arguments for network neutrality since the inception of the contest. Expanding on this argument, a side note to also be taken into consideration is the information manipulation which has come to be highlighted since the election of Donald Trump, where the particulars of the information “allowed” to be brought in front of you “help” you to make “your” decision accordingly.

Facebook can be an excellent example to help understand this argument for two reasons. Firstly, it came up with the extremely controversial (but still operational in some countries) FREE BASICS programme. Secondly, it is without a doubt one of the, if not THE most accessible websites on the internet (Google may be the only serious rival, but since Google in my opinion can today be considered a full fledged platform integrated over multiple websites as well as the Android OS rather than just the regular Google website, we’ll stay out of this debate for now and keep it simple.)

Facebook has of course been facing flak in the U.S. over its alleged contribution to last years presidential election, but what it actually more of a worry is the abuse of it’s service in communities outside the U.S., particularly Asia. We’ve partially discussed such issues before on this Blog (see here and here), but the latest example is that of Myanmar, where the rise of Anti-Rohingya sentiment seems to have coincided with a huge boom in the use of social media, a large chunk of which is attributable to Facebook itself. Why ?? Because in 2016, Facebook partnered with MPT, the State run telecom company, to give users access to its Free Basics Programme.

This is not to insinuate that Facebook is directly attempting to control the world and actively working with state regimes to incite hatred against minorities and in all fairness, the issue is excruciatingly complicated, but since Facebook dominates the Social Media space (along with Instagram and WhatsApp), the potential for abuse of its Free Basics programme becomes all the more potent. To quote from a recent article:

“Facebook is not directly responsible for violent conflict, of course, and viral
misinformation is hardly unique to its services. Before social media, there were email hoaxes and urban legends passed from person to person. But the speed of
Facebook’s growth in the developing world has made it an especially potent force
among first-time internet users, who may not be appropriately skeptical of what they see online.”

T.R.A.I. Consultation Paper on Differential Pricing for Data Services (A.K.A.) What Has Now Become The Fight Over “Free Basics”. (Part – II).

Now coming to the the Scheme which has been grabbing all the attention in the mass media, which includes news and paid correspondence !! Frankly, don’t remember the last time I saw the kind of advertising and media blitzkrieg which Facebook has released on the Indian public to promote “Free Basics”. The past week has been a mixture of multiple full page advertisements in all major newspapers giving us an insight into “what Network Neutrality Activists Won’t Tell You”, “A First Step Towards Digital Equality” and “Support Ganesh: Support Digital Equality”. Some of Facebook’s tactics displayed in full the desperation of the omnipresent social networking website as well as the gullibility of the Indian (atleast online) populace. Mark Zuckerberg has himself become part of the PR overdrive in order to push support for what he genuinely seems to believe should be the next big leap in connectivity in India.

Now lets get two facts straight at the very outset. There is NO DIFFERENCE between “Free Basics” and “Internet,org”. “Internet.org” was a failure because it generated too much unexpected negative publicity for Facebook and the websites/organisations joining the initiative. This led to most of them opting out of the service, which is why Facebook decided to re-christen the programme and to push it through this time they decided to also launch the “Free basics – Digital Equality” campaign in order to generate some public support for the Scheme. So far, it has been an expensive campaign with little to show for it, except for a lot (allegedly 3.2 million as per facebook itself) of virtual verbatim blind click mails and signatures which Facebook claims is the “support” they have received from the Indian online community. [UPDATE: The T.R.A.I. has now stated that it considers these mails/signatures as a valueless opinion poll and are not an adequate response to the questions framed by it.] Secondly, it would be most unfair to not acknowledge the fact that “Free Basics” has the potential to be beneficial to the citizens of India, especially the unconnected parts of the country. However, as I outline below, the Scheme as it’s terms and conditions stand today, are more harmful for internet connectivity in the Country than the ancillary benefits which may accrue.

FACEBOOK CONTROLS EVERYTHING ON FREE BASICS/INTERNET.ORG

It is Facebook which acts as a guardian of the gate who will decide who enters the Free Basics platform and who doesn’t. Frankly, I am not comfortable with one entity exercising such overarching controls over a programme which it aims to spread itself throughout the country, and further throughout the world. Make no mistake, philanthropy aside, there are two major reasons why Facebook actively pursues “Internet.org/Free Basics”:- One, more eyeballs for the advertisements generated on its website as new users sign into Facebook. Second, for the shear amount of data it will generate for analysis through its user-base. Facebook is at the end of the day a business and while it is natural for a business to want to expand its customer base and generate higher revenues/profits, this cannot come at a cost of taking advantage of an individuals lack of literacy or understanding of how expansive the internet really is and attempt to keep him or her confined to select websites which have “conformed” to the standards set by Facebook. In simple terms, Facebook has no right to act as a hand holding teacher and “guide” people through a particular path. People must be allowed to understand that the internet is more than what they will see through “Free Basics” and choose for themselves what they wish to do or see on it, whether it be researching on new farming techniques or even be as voyeuristic as watching porn. Don’t get me wrong. Am sure the “Ganesh” in the Full page newspaper ads must have genuinely benefited, but did he have any idea that what he saw was just perhaps two percent of the accessible internet ??

Let me substantiate this with a real life example of what is happening in poorer parts of the world. Millions of Facebook users have no idea they’re using the internet !! A research survey, with a special focus on Indonesia and Nigeria where surveys were carried out, displays how people were not aware about the internet, but yet used to directly access Facebook, to the extent that in opinion polls a higher percentage would state that they had accessed Facebook, but a lower percentage would state that they had accessed the internet !! And do note, the article discussing the findings is dated 9th February, 2015 and states that the trends were noticed three years ago, when “Internet.org” was merely a concept in discussion and roll out had not even started. Imagine what internet connectivity could become with “Internet.org/Free Basics” implementation at its peak ?!?!

THE PROBLEM IS NOT PRESENT ABUSE. IT IS POTENTIAL FOR ABUSE

As of now, Facebook has stated that it has never rejected an Application which fulfill’s the qualifying parameters for developers on “Internet.org/Free Basics”. That’s fine for now, but what about the future?? Is Facebook willing to give a commitment that the “parameters” will always be broad and will never be to the detriment of a genuinely useful Application for the people?? No it won’t, not because it may or may not want to, but because it can’t !! The engineers at Facebook are not oracles to see the future, and what can be good or not got good or worthy or not worthy to be accessed by the Indian internet community cannot be subject to parameters laid down at a single given point of time, no matter how broad they may be. This will always be subject to the ever changing values of any given society and furthermore, to the ever important evolution of technology which in today’s furiously paced world is not just extremely hard, but downright impossible to predict. Anybody could come up with a technology or programme to give Facebook a run for its money. Can Facebook give an absolute guarantee in writing that such an Application/Programme would be allowed on Free basics?? I highly doubt it. (You can already see a potential for such abuse relating to an upstart Facebook rival “Tsu.co”)

One look at the Reliance Free Basics website for details on the websites which as of today on the platform shows that only thirty one websites/Applications are part of the Free services available under “Free Basics”. The only social networking websites, no guesses required here, are Facebook and Facebook Messenger. Over and above this, the only search portal was “Bing”, the only Jobs portal was “BabaJob” (I hadn’t even heard or read of them before seeing them here) and the only shopping website was “OLX”. The result is a potentially serious anti-competitive scenario over the internet resulting

THE INTERNET IS NOT A BUSINESS.

David Kirkpatrick, in a Linkedin Pulse Blog Post, is one of the few who has come out in defence of Facebook/Free Basics. He opined a marxist argument questioning in bold words “Do all these elite and generally upper-class and affluent Indian pundits, professors and anti-corporate activists have a better way to get many millions of less-privileged Indians onto the Internet?” and further goes on declare as follows:

“But in my view Free Basics is a fine example of what many call “doing well by doing good.” There is nothing wrong with being in business. There is nothing wrong with a business trying to acquire new customers. There is nothing wrong with offering something for free that you might charge for later. And however ruefully people elsewhere sometimes view it, there’s nothing wrong with Facebook being an American company operating successfully around the world.

Do all these elite and generally upper-class and affluent Indian pundits, professors and anti-corporate activists have a better way to get many millions of less-privileged Indians onto the Internet? If they don’t, their arguments are hollow. It’s hard to understand why Facebook shouldn’t be able to subsidize new customers’ entrance into the contemporary world of information power. For the poor, the opponents’ arguments add up to literally nothing. That’s what those people would get without Free Basics. But then, that’s what such people have had in India for millenia.

As I have already acknowledged, I too believe that Mark Zuckerberg is pursuing his endeavour with such zeal partly due to the obvious enormous potential advantage it can generate in favour of Facebook as well as a sense of idealism and an intent to do some good. But Kirkpatrick misses the point. THE INTERNET IS NOT A BUSINESS. It is a resource. You may use the internet to build a profitable business, but one cannot be allowed to make a business of the internet itself. The internet is a resource which is first and foremost, in the custody of the State which acts as a custodian of the resource on behalf of the citizens of that State. Which is why you have spectrum auctions. The Central Government, which is the custodian and owner of all spectrum in the Country, effectively leases bandwiths in different circles to different businesses which can harness the spectrum to provide internet services and/or use the internet itself. What Free Basics aims to do is to make a business out of the Internet itself. by allowing access to some applications while denying access to others (on technical grounds, if not more nefarious reasons), it effectively seeks to control what you consider as “The Internet”. Furthermore, it is important to note that Facebook itself has acknowledged that it is open to advertisement on the Free Basics platform to generate revenue in the future.

LACK OF CONNECTIVITY IN INDIA IS BECAUSE OF LACK OF INFRASTRUCTURE. NOT LACK OF FREE BASICS

The lack of connectivity in India is not because of lack of money. If a man or a woman can afford a smartphone, it’s safe to presume that he or she can also afford a 3G/4G pack along with it or be able to access wi-fi from some point, either at home or work or both. The problem of connectivity has more to with lack of infrastructure, both in rural and urban areas, and “Free Basics” does nothing to solve this. It does not help to build mobile towers or help in contributing additional spectrum for public use. All that it does is allow access to some websites for free. But what would be the point to allowing free access to websites on the internet if they cannot get the signal/bars to access the internet in the first place ?!?! If anything, it has the potential to add to the burden of the overused and under developed mobile connectivity services.

CONCLUSION

To conclude:

(R. Prasad)

Facebook may have just lost some serious love and respect in one of its biggest markets.

P.S. : HAPPY NEW YEAR. 🙂