E-Commerce and the Digital Economy

Whether ‘data localisation’ and ‘national champion’ approach would lead to an inclusive digital economy?

Propagation of the digital economy is believed to be accelerating economic inequality within and across countries, with those who control the digital ecosystem cornering most gains. One of the emerging responses to this situation is the creation of ‘national champions’ by adhering to the ‘data localisation’ policy. This can lead to balkanisation of the internet due to restrictions in the cross-border data flow. While the liberal regulatory approach seems to be failing in yielding just economic outcomes, the protectionist approach could damage cross-border e-trade, innovation, and competitiveness. This session discussed the impacts of leveraging ‘data localisation’ policies to create globally competitive national champions. It particularly explored the implications on domestic market competition and consumers, as well as on cross-border e-commerce ecosystems.

Discussions unpacked the data localisation mandates which are being increasingly adopted across the globe in the name of protection of security, privacy and boosting national economic champions in the digital businesses. However, during the session concerns were raised that the ‘one size fit for all’ approach might not be the most suitable regulatory mechanism, particularly for developing and undeveloped countries. The panellist stressed that policy makers need to look at the specificities at sectoral levels as well as at the regional levels.

The panellists raised concerns related to data localisation on trade, economy and sustainable development as it might have a negative impact on competitiveness, innovation and e-trade. Data localisation mandates might make smaller firms to operate cross-border difficult as it will increase the cost of data storage, compliance burden and differentiation of personal data and non-personal data. Along with this, storage of data within national boundaries might not be beneficials, particularly for the developing countries, as it requires technology that can be instrumental in extracting the values from the data.

The session also emphasised that the objective of the policies such as data localisation need to be critically evaluated, as to how much of it is aligned with the stated aims of enhancing security, privacy and boosting domestic digital economy. It is important to support and enable domestic digital players but what can be the alternative means of supporting them with minimum unforeseen consequence. Further, it was discussed that policy makers need to pay attention to create regional champions with particular specialties that big tech firms might not have as it will help in investing resources where the maximum potential lies.

On the panel were Mr. Pradeep Singh Mehta, Secretary General of CUTS International; Mr. Bernardo Calzadilla Sarmiento, Managing Director of UNIDO; Ms. Lorrayne Porciuncula, Executive Director of Datasphere Initiative; Ms. Alison Gillwald, Executive Director of Research ICT Africa/University of Cape Town; Sra. Marilia Maciel, Head of Digital Commerce and Internet Policy, Diplo Foundation; The session was moderated by Mr. Rashid Kaukab, Executive Director of CUTS International.

Reporting by Asheef Iqubbal