By K. Yatish Rajawat
A global undercurrent is shaping products, companies and whole swathe of markets. It’s happening at a rapid pace and needs a rethink by the government, business and civil society. It’s not the internet, it is the digital footprints of consumers captured as clicks, likes, location and buys. This trove of digital data, capable of providing insights is shaping social science, psychology and marketing. Focus group are passé, extrapolating on a sample survey is dead, there is now real data about what people like, use and shop along with what influences the buying behavior. The science of big data using machine learning is building artificial intelligence that predicts buying behavior. It can even influence behavior from selecting a candidate to a spouse.
This is not happening because of technology; it is happening because technology has massive amount of data to crunch and build hypotheses. There is so much data to test the output backwards into input, till it is fine-tuned into an algorithm. Entrepreneurs are massaging this data to redefine products and create new markets that never existed before.
Data is not the new oil as that analogy distorts its importance. It also assumes ownership in the hands of a few like the Big Oil monopolies. Data is more like water. We intuitively know its importance but have never defined its ownership clearly. Data like water is renewable and its ownership and usage will determine the future.
Data, like water, also has individual and distributed ownership. Individuals have clear rights to their own data and its usage. But anonymous non-personal citizen data has to be governed in such a manner that it promotes entrepreneurship and innovation. Therefore, a set of data’s ownership can be distributed and treated like a public good(s).
The rules for keeping big data open is important as it affects competition, entry level barriers, new products and entrepreneurship. Data incumbents are trying to skew the debate on data to protect their monopolies. A social media company entering payments will share data with its payment subsidiary but not the ecosystem. The incumbents cannot determine the law that should govern data generated by citizens. India has to set clear rules for usage of data irrespective of the platform create a perfect market. These rules will determine future economic growth.
An example elucidates this. E-commerce is small as compared to the total size of retail but it has already started making a dent in pricing, branding and growth of established companies. Any large consumer good company knows its customer through the distribution chain. It has sales data of its product location wise. This data is used to plan production, pricing, inventory and growth. The distribution network is used as a data point for testing new products, pilots, surveys of consumer preferences, etc. The crucial gap in the network is the final consumer, the leap to the final consumer. His/her buying behavior is available on e-commerce platforms. While consumer behavior data is available it is not accessible.
As more and more sales moves digital, all the nuances along like what is influencing buying behavior can be identified if companies get access to it. But because they don’t get it they will sooner or later lose their consumer. Especially young consumers, digital first consumers platforms will monopolize future product innovation. The classical example of this is the cloud kitchens created by food delivery platforms.
Food delivery companies like Swiggy and Zomato which started as passive platforms connecting restaurants with consumers have become data powerful. This power arises from their control over consumers and their data. Almost every restaurant association in the country has complained to Competition Commission of India (CCI) against them. Unfortunately, the outdated competition laws do not address abuse of data by internet platforms. Competition law is important for free markets and economic growth. These food aggregators are not governed by the E-commerce rules either.
They have opened up budget priced food kitchens that serve home cooked food to a large section of office goers, affecting not just the restaurant business but even tiny home food entrepreneurs. This innovation of both cuisine, pricing and location comes from data insights of consumption on the platform. The location of the kitchen is the single most important insight in this business and it determines success or failure. Which is why the National Restaurants Association of India (NRAI) is asking food aggregators to share data with its members so they do not get left out? Here, it is important to know that the food aggregators are no longer passive platforms; they have entered the domain of the suppliers.
This is happening across sectors like travel, hotels, where data is allowing platforms to enter new domains. While the consumer benefits in the short run because of lower pricing and easier access to home delivery. In the long run the choice and competition will shrink. Therefore a proper market for data has to be created, rules need to be framed for the operation of such a marketplace.
This obviously will also raise a wider debate needed on privacy, data security and even pricing of such data. Platforms will not part easily with the data as they see it is a competitive edge. They have lobbied hard to prevent any legislation on it
The best way is to move forward is to recognize data as a public product or good. Certain broad principles need to be followed for this wherever the law is talking about data. The confusion of which law or Act will determine data sharing is a spanner thrown to delay the process. Unnecessary conflict is being created between ministries and pending legislation to prevent basic data principles from being followed.
Ten data principles for a free market
- Citizens to have the right to opt out or opt in from databases
- Rules to define non-personal data sharing and use
- Platforms can’t deny suppliers or vendors consumption data
- Define non-personal data in line with privacy
- Norms for pricing, usage and download to develop a market
- Non-personal customer data is a public resource
- Define government data as a public good
- Use of public data governed by privacy and security
- Prevent monopolistic ownership of data
- Local laws to govern data generated in India
K. Yatish Rajawat is a policy analyst.