8 min read

Policy Contagion, A Case Study from India

Readers,

Two mini-rants to start, in reaction to recent big stories:

TikTok: I wrote out an entire article about how terrible the TikTok hearing was. Much of what I wrote has already been said. So, rather than sending the whole article, I’ll just note one bit that remains under-discussed.

TikTok, a platform mostly for things like dance videos and homemade cooking, is legitimately — and from my interactions with former execs sincerely — bending over backward to appease US regulators on the topic of Chinese influence.
Twitter, the primary information ecosystem for the Western media, is owned by a man whose financial fortunes are heavily intertwined with Chinese market access, is co-invested with the Saudi government, is firing the platform’s content moderators, and is thumbing its nose at regulators.

AI: I also thought about doing an AI article this week, but then I saw someone describe OpenAI’s plugins release as akin to the moment humans invented fire. We still have a ways to go before we can have a rational conversation (plus, I could hear my PRISM colleagues groaning at the thought of me mentioning ChatGPT again…).

A short note instead: The cause of the AI freakout seems to be that people think of AI as something that will happen to them. AI, and anything else, is only valuable to the extent it creates value for people. As with all things, that value might be poorly prioritized (like spending time on social media instead of going outside). It might have unintended consequences (like inequality or fueling populism). But it doesn’t just happen; people actively choose to consume it. Outcomes will be shaped by human choices: technologists and the consumers and businesses that use it.

Okay, now, onto the topic of this newsletter. Something you hear a lot in conversations but about which far less is written — contagion.

As ever, please reach out with feedback and questions. Maybe you’ll spark some ideas for the next issue.

– George (@coemannn)

THE BIG TAKE

How does policy contagion actually work? A case study from India

When discussing emerging risks with tech policy teams, there’s barely a single word you hear more than contagion. It's a scary term to describe a relatively banal concept: one country adopting another’s policy. Tech companies are constantly addressing new — often problematic — regulations; the last thing they want is to see them spread beyond Country-Zero.

But what really is contagion? And how does it work?

To start - What is contagion?

We see contagion happen all the time. There are different forms:

“Copy-paste”: One geography creates a new regulation and it’s effectively copied word for word in another geography. A perfect example of this is Spain’s extremely controversial Rider Law, which regulates the employment status of gig workers. Mexico City’s government effectively hit copy-paste and put the law into its own books — luckily for lawmakers, they didn’t even have to use Google Translate. Chile also used the Rider Law as inspiration for their own law — albeit with a few more tweaks so that it wouldn’t get caught by the plagiarism checker.
Policy export: The EU’s tech regulatory leadership has always had global influence (the “Brussels effect”). This is increasingly by design.
Highest common denominator: Countries use global rules and trade policy to influence others. If countries want to take the lead on regulating tech, they use binding legal agreements with their partners to set minimum standards. Brazil essentially copied the EU’s GDPR to pave the way for a trade deal (which we’re still waiting on). When the United States–Mexico–Canada Agreement (USMCA) was renegotiated in 2017, rules were put in place to prevent laws restricting digital trade and data transfers. Those rules effectively prevented Mexico from enacting legislation in 2020 that would have given regulators the ability to block social media platforms they did not like.
Idea sharing: Policymakers cooperate through international bodies, sharing ideas and best practices. The OECD’s competition regulatory forums are one example. US and EU regulators met just this week to discuss approaches.

Not all examples are as obvious as the ones above. So to understand contagion in more depth, let’s look at a more nuanced case. India, it turns out is an excellent case study. To know what’s happening on the tech policy front there, I turned to my friend Arpit Chaturvedi, CEO of Global Policy Insights.

I wanted to know three things:

How does contagion happen in practice? In India, it is built into the sausage-making process.
Who are the main sources of inspiration? The EU and US are key influences, but China is a growing inspiration.
What should we expect going forward? A more digitally sovereign India means less direct borrowing of ideas, and a future where India exports policy elsewhere.

How does contagion happen in practice?

India has a long history of developing policies by looking at other examples but tailoring and contextualizing them to fit Indian realities. That is how the Indian Constitution was written.

But how does it work? In India, contagion is built into the policymaking process through comparative studies of policies from abroad. This is often done by consultants who are also influenced by foreign ideas, and sometimes foreign experts are consulted directly. This creates three contagion avenues:

Every time - policy benchmarking studies: A typical part of the Indian policy process is to benchmark studies against other policies from abroad. This creates a built-in mechanism to borrow or be inspired by ideas considered a success elsewhere.
Most times - the consulting class: Benchmarking studies and policy analysis generally is done by consultants who are heavily influenced by ideas in Europe, the US, and elsewhere. In most cases, Indian policymakers are generalists and often bring in the Big 4 consulting firms that subcontract a lot of policymaking work to smaller think tanks or research groups that conduct surveys, studies, etc. The experts’ inputs are inspired by what’s happening elsewhere, and then those policies get pushed up the ladder, eventually making their way to the policymakers.
Sometimes - Foreign expert advisory: Another potential avenue is bringing in foreign experts. This is a less common way ideas are borrowed from abroad in India. Cass Sunstein and his Behavioral Intelligence Unit are the exceptions, not the rule.

Who are the main sources of inspiration?

Regarding tech policy contagion, the main source of policy ideas is the EU, followed by the US. However, policies from China and some surprising other countries also make their way to India.

EU influence is rife, especially in privacy:

India's Personal Data Protection Bill (2019) was heavily influenced by the GDPR, but there’s a sprinkling of influence from China, too.
The landmark Puttaswamy vs Union of India (2017) judgment, which is often cited in Indian digital policymaking discourse, declared that the “right to privacy” is a fundamental right protected by the Indian Constitution. The ruling has a dedicated section studying EU, UK, and US privacy protections to construct its own rationale. The 2018 Justice B.N. Srikrishna Committee report was ordered by the government to inform India’s data protection framework. It drew heavily on ideas from the EU, including definitions of personal data and the rights of subjects. The report also recommended appointing requiring data protection officers and implementing safeguards for cross-border data transfers. These are all similar to the GDPR.
In 2017, the European Commission fined Google €2.42 billion for antitrust violations related to its search engine practices. In 2018, the Competition Commission of India fined Google $20 million and in 2022 $161m for abusing its dominant position in the online search and advertising market. In fact, Google alleged that the Competition Commission of India simply 'copied' the EU’s order.

Other tech policy areas see influence from the US. For example, areas like e-Commerce policy, intellectual property, and e-contracts issues have all seen Indian judgments in court disputes citing judgments/cases from the US.

There’s also influence from where you wouldn’t expect it:

China: The Indian Telecom Bill (2022) seeks to regulate OTT platforms, similarly to Chinese regulations. Similarly, the Personal Data Protection Bill (2019) includes data localization rules that promote "cyberspace sovereignty", much like China’s Cybersecurity Law (2017). Also, the recently proposed Indian Telecommunication (2022) and the Digital Personal Data Protection (2022) Bills look to require know-your-customer rules for social media platforms and give the government significant capacities to access personal data. Both seem to draw more inspiration from the Dragonbear than the EU or US.
(Unexpectedly) Estonia: India doesn’t only rely on other big countries, however. For its data localization rules, the new Digital Personal Data Protection Bill (2022) does away with strict data localization requirements (i.e., it moves away from the China model). Instead, he indicates that the government will publish a list of countries or territories outside India to which a Data Fiduciary may transfer personal data. Many experts expect India to follow Estonia’s “data embassies” experiment.

What should we expect going forward?

As India becomes more digitally sovereign, expect less importing of policy ideas and more exporting. We’re already seeing India doing less of the copy-paste approach of borrowing regulation, with a greater focus on remixing what’s out there for its own purposes.

It’s not yet clear what this India-specific approach means. Policies are all over the map. Some are pro-big tech. Some are pro-free market. Some are pro-citizen. All are pro-government.

Ultimately, India’s drive for self-sufficiency and the appeal of Chinese tech governance in the eyes of the government make it likely that India becomes a model of state intervention in the tech sector. India's approach will ultimately be very attractive to other emerging markets whose governments are seeking greater digital sovereignty, a path away from US — and Chinese — tech hegemony and a framework that they can argue is based on democratic principles.

Put another way, while India’s policies are often inspired by the rest of the world, it is set to become a source of inspiration itself. For this reason, how it tweaks EU, US, and Chinese tech rules will be highly influential for the rest of the world.

Put together? Contagion risk isn’t going away; it’s getting worse.

Ultimately, India demonstrates some important trends about policy contagion, which are important to remember when considering the global context.

Contagion is increasingly institutionalized: Idea-sharing and policy benchmarking require influence from other countries. Driving policy outcomes becomes reliant on defining policy successes and failures.
China’s influence happens without China: The Sino-Indian relationship could barely be worse. But even without China directly influencing Indian policies, ideas are still being borrowed.
Digital sovereignty is self-reinforcing: Favoring digital sovereignty generally requires breaking international norms, which directly implies less borrowing of policies – that is, unless you’re borrowing from countries like China that already fit this bill. In that way, these policies become self-reinforcing.

HMM, INTERESTING

My top charts of the week

Thailand and Indonesia really like China

The results are a bit surprising. Also did not expect the Koreans to be top.

A chart showing countries views on China. South Korea, Japan, and Taiwan are the most skeptical. Pakistan, Bangladesh, and Thailand are the most optimistic. — Feelings toward China in the Indo-Pacific (% of respondents)

Source: Central European Institute of Asian Studies

No one in Egypt trusts the government

Let’s assume there might be some errors; but still, Egyptians are at the bottom of every category. Overall, these survey results are quite stark.

Chart showing the results of a poll in which respondents, organized by country, have trust in government, parliament, political parties, and the press.

This is absolutely shocking

This is from an amazing article on US life expectancy. Hard to process all the ways this is shocking

A chart showing that young Americans' life expectencies are heavily impacted by poor health outcomes at younger ages.