Here’s what Sundar Pichai had to say to the Indian government

• Sundar Pichai, the CEO of Google, wrote a letter to the government of India to highlight the importance of data sharing.
• In his opinion, the free flow of data would help the Indian digital economy grow as well as assist the startups.
• It’s a tall order at a time when most nations are implementing protectionist data policies

What seems to be a response to the draft bill on the Data Protection Law, the CEO of Google wrote a letter to the Indian government emphasizing the importance of the free flow of data across borders.

Sundar Pichai added that the free flow of data is a win-win situation for all stakeholders since it will help global tech companies assist the domestic digital economy as well as Indian startups grow. His letter indicated that the Google India team would follow up with the government to discuss some of these issues in order to reach a consensus.

At a time when most countries around the world are employing protectionist policies across the board, digitally and economically, this is a big ask of Pichai. It’s important to look at the pros and cons of being liberal with user data.

Data protectionism

One of the main concerns of data protectionism is that excessivr regulation can create data islands. Basically, the digital economy would get divided into pockets and there would be an uneven distribution of benefits such as global supply chains or access to information.

In fact, experts speculate that there actually three data realms that are being created. Namely the US, the EU and China.

With India, the concern is specifically that the Personal Data Protection Bill will hamper the growth of the digital payments sector that’s currently booming at 30% per year. As per the Global Commission of Internet Governance, the restrictions on data in the EU costs them 0.5% of their GDP.

Even China, home to startups like Alibaba and Tencent, may face a loss of 1.8-3.4% in its GDP if it localises its data any further according to the US Chamber of Commerce.

In addition to the loss of productivity to the economy, there is also a cost. As the amount of data that can potentially be shared increases, as it inevitably will, the cost of blocking or protecting it will increase alongside. The cost will not only be borne by the government, in terms of surveillance, but also by the companies who will continually have to add new data centers in each country.

Data localisation measures also lead to a decrease in efficiency as data chains will be divided into smaller fragments.

Sachin Bansal, the co-founder of Flipkart, stated that the data protection laws in India need to be in line with the requirements of the local economy instead of mimicking what the west has implemented.

That being said, the Indian Finance Ministry has proposed to adopt a ‘mirroring’ approach. Essentially multinational companies would still be allowed to aggregate global data provided that a copy data that specifically pertains to Indian citizens, is stored locally as well.

Experts argue that, ideally, that the developed economies should lead the conversation on a global scale rather than leave the field open to China, but the stark absence of leadership didn’t leave much of a choice.

Putting the free flow of data in the context of laissez faire, the digital economy would definitely benefit from the complete absence of government intervention. But, it would come at a cost. As it is with the concept of free trade in economics, business could engage in risky behaviours that could lead to bigger problems down the road.