Uncovering the Terms and Conditions for Technology

Legislators and industry leaders need to work together to ensure the benefits of innovation do not come at the cost of fairness, choice, and privacy, says Zilliqa co-founder Max Kantelia.

Amid the throes of the 1980s, the Information Age encouraged a concerted effort to emphasise innovation, connectivity, and the dissemination of knowledge. Digitalisation was not only an enterprise effort, but served as an integral aspect of nationwide agendas and economic priorities for some of the world’s most developed nations.

From West to East, the exchange of knowledge and expertise would come to underscore international relations. With the aid of modern globalisation, the emphasis on progressive trade policies, foreign investments, and international accessibility to patents and copyrights, helped to not only promote knowledge and technological transfer, but heightened international competition. Today, fledgling startups and multi-billion dollar enterprises continue to place innovation at the forefront of their business agendas.

With the ever-growing complexities of nascent technologies, lawmakers must now deconstruct and manage their social, political, and psychological implications in order to both protect users and guide enterprises alike. From adequate consumer protections in the realms of data privacy as much as fair market competition, the world has changed significantly since the dawn of the digital age.

The fine line between progressive and protectionist

In 2018, the European Union enacted its General Data Protection Regulation (GDPR) policies, with significant ramifications on a global scale. Directly aimed at the citizens of the 28-country union, these consumers now have more control than ever over how their personal data should be stored, collected, and used by businesses.

In a time where data is the ultimate currency, the move set a new global standard in its prioritisation of the rights of the consumer, catalysing international lawmakers to revise their data privacy legislation to allow local businesses to engage with a base of 500 million consumers. Championed by major players in the tech industry, including Apple CEO Tim Cook who argued that its implementation is a “step in the right direction”, GDPR is a necessity today, and its influence has permeated policymakers and economies worldwide.

Despite this development in privacy compliance regulations, it merits consideration that priorities and preferences greatly differ for consumers, tech conglomerates, and legislators alike. The rise of internet connectivity signified the democratisation of the access and dissemination of knowledge to the general public. Once limited to the upper echelons of research and defense in the Western world, the process of exchanging data and knowledge now entered the home, offering what we would later deem to be instantaneousness that no encyclopedia could possibly offer.

From pagers to laptops and smartphones, the increased ease and accessibility afforded to us by gadgets has led to a dependence on such technologies. Convenience, it appears, has been granted with a mismatch in equilibriums: society seldom enjoys progress for free. Recent occurrences such as the Cambridge Analytica-Facebook scandal reveal this foremost––as consumers, we have freely provided our data for entertainment or for rewards, without fully grasping the implications of doing so.

While the regulatory narrative in the West has been clear in its prioritisation of the everyday consumer, the current regulatory landscape in the East still remains largely diverse and in some cases, underdeveloped. In Singapore, for one, the rallying cry of innovation continues to take precedence. Spearheaded by the government itself, digitalisation has long been a national priority in Singapore with the launch of the Smart Nation initiative in November 2014. Aimed at empowering citizens of all ages and backgrounds, the initiative encourages the improvement of digital literacy standards while instilling a mindset that encourages progressive thinking and an openness to adopting new technologies.

However, despite its commitment towards digital transformation and the Smart Nation initiative, such efforts have not been without scrutiny. The enactment of the country’s Personal Data Protection Act in 2012 saw critics arguing that the regulations favoured enterprises far more than the rights of citizens to adequate data protections. Though not perfect, the Act is certainly a start, as Singapore is only one of three countries in the ASEAN region to have robust data privacy regulations and a data protection authority in place.

As a result of its standing in the region, Hong Kong’s Privacy Commissioner for Personal Data announced that it would be partnering with Singapore’s Personal Data Protection Commission to develop “bilateral platforms” to advance greater personal data protection standards, establishing best practises across the two jurisdictions and joint research projects.

In contrast, the rest of the regional landscape remains fraught with the same regulatory inequality. The Philippines is certainly making strides to join wider conversations surrounding data protection as it looks to co-lead the ASEAN Data Protection and Privacy Forum with Singapore. Similarly, the country introduced the Data Privacy Act in 2012 which aims to uphold the fundamental right to privacy without curtailing innovation. While in emerging economies such as Cambodia, a digital transformation may be underway, regulatory clarity remains insufficient. Tech startups in the country report that it is difficult to find updated, concrete resources that provide clear, unambiguous guidance in order to best navigate existing policies.

Within a diverse region experiencing the benefits of emerging technologies at largely varying rates and to largely varying degrees, regulatory inconsistencies are inevitable. However, whether developing or developed, one prominent trend remains: the goal of striking a balance between protectionist and progressive.

Without competition, where is the competitive edge?

With today’s transformative technologies challenging the existing world order, the need for enterprises to remain agile matters more than ever. Today, valuable knowledge springs forth from a variety of sources––as the International Monetary Fund’s World Economic Outlook (WEO) report argues, countries transition from being “recipients of global knowledge flows… toward becoming important sources”. With higher rates in technological skills and aptitude, it would appear that competition should be stiffer than ever.

However, recent litigation activity indicates otherwise, in the face of antitrust and competition laws around the world. Most recently, some of the world’s largest companies––Apple, Facebook, Google, and Amazon––now face scrutiny from the United States Federal Trade Commission and the Justice Department, for stifling competition at the expense of a fair market for consumers. With one of the oldest modern competition laws, the United States’ approach to competition law has seen widespread influence around the world, though as spurred on by market-specific insights, local labour, and a sensitivity towards cultural nuances, global economies have sought varied approaches.

Japan is directly addressing the existing monopoly proliferated by tech conglomerates instead as they dominate industries such as e-commerce, social media, search, and digital payments. The government announced plans to set up a new watchdog to monitor monopolistic practises and to ensure adequate data privacy protections for users and consumers. Underscored by the country’s Antimonopoly Act, enacted in 1947 to combat the influence of zaibatsu, the country’s leading conglomerates, Japan’s approach towards the tech monopoly focuses more so on their treatment and ownership of valuable consumer data.

Within both a global and digitised landscape, the process of implementing adequate competition laws that address technological capabilities remains a challenge. The rise of global companies, in turn, inevitably involves multiple competition enforcement authorities that need to work in tandem in order to set a uniform standard for business to take place seamlessly from market to market. As evidenced by last year’s merger of US-based ride-hailing company Uber and Singapore-based Grab, the region recently confronted the issue of a tech monopoly on its shores, gesturing towards the growing power of cross-border mergers and acquisitions in the tech sector.

However, a different narrative is unfolding in the realm of financial services. The Bank for International Settlements (BIS) cited in a recent report that the entrance of BigTech firms, be it China’s Ant Financial or the payments services of ride-hailing firms Go-Jek and Grab, does inject a healthy dose of competition. With data being the driving engine of their services, these firms benefit from a greater “information advantage in credit assessments” when compared to their counterparts, enabling them to focus on populations commonly underserved by traditional financial service providers.

Indeed, as the Monetary Authority of Singapore (MAS) races head-to-head with Hong Kong in its potential consideration of virtual banking licences, we may see BigTech firms in Singapore beginning to offer more financial services. With the support of Japan’s Credit Saison Co Ltd., Grab already offers loans in the Southeast Asian market, and is said to be exploring a Singapore virtual banking licence.

By delivering on the promises of greater inclusion or even accelerating the pace of digital transformation on a national level, these BigTech firms certainly pose great benefits to emerging markets. However, competition notwithstanding, these companies could potentially add fuel to the fires of systemic risk in the financial sector, should inadequate cybersecurity or data protection measures be in place. As the developments continue, there is undoubtedly a need for an overhaul in financial regulatory frameworks that better address the emergence of fintech solutions aimed at everyday consumers.

Though the fintech firms and regulators in Southeast Asia have largely cooperated with one another for the most part, it is only with time and time again that the broader, delicate relationship between regulations and commerce have influenced one another. Hanging by a fine thread, this bond determines their successes as much as their conception and potential failure. With the rise of technological innovations that broach the frontiers of a truly borderless world, determined more so by communications and transactions settled over the internet rather than trade laws drawn up by political bodies, it is clear that legislators need to be agile and adaptable to the changes to come.

As corporations engage with markets outside of their own, legislators and industry leaders need to work together to ensure that the benefits of innovation do not come at the cost of fairness, choice, and privacy. Through global engagement, legislators can observe tried-and-tested best practises in the hopes of setting a global standard for companies and consumers to thrive in a borderless world.

Max Kantelia is Co-Founder at Zilliqa, a blockchain platform built for secure, scalable applications across a variety of industries. He has over 25 years’ experience setting up technology product and services companies in Europe, the US and Asia for the financial services industry. Max is also CEO and Co-Founder at Anquan Capital, the company that launched Zilliqa.

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