India should streamline its policies on Web 3.0 and participate in the global policy development so that it can become a significant player in the Web 3 economy
When the Indian economy was liberalised and opened up for global participation in the early 1990s, the Indian technology companies, primarily were offshore service providers to the developed economies. The rise of the Indian Information Technology Enabled Services (ITES) sector in the subsequent decade was also boosted by the Y2K opportunities. During this time period, the rise of the internet and internet-enabled technology or digital businesses globally were largely captured by the companies from the developed nations. So the genesis of the Web 1 and Web 2 phases of the internet businesses were largely western-led and even influenced by them. Some of these large global platforms have even influenced the global social and political narratives. India did not have the necessary economic or consumption heft in the initial years of the internet, to be able to participate in the policy development around internet governance and the internet possibilities.
When the internet was conceptualised, the Web 1 version as it is now seen, had very little opportunity for its users to interact. The web pages were static, essentially only readable without possibilities for interactivity, and was terribly slow, thanks to internet connectivity speeds available then.
With the emergence of Web 3, it simply is built on the concept of decentralisation of the nature of how the Internet is controlled or influenced, and to redirect equal power to the actual content creators.
Web 2, as it was coined in 1999 by Darcy DiNucci in her January 1999 article "Fragmented Future", essentially allowed for user participation and brought the idea of social media to the forefront. It allowed the users to participate as communities and to create user-generated content. It powered the users to use content including text, video, hosted services, web applications (apps, as we know them as). However we also saw the emergence of large internet platforms, owned by few corporations from the developed economies, primarily the US. These entities, in effect, ‘control’ the narratives across these platforms, be it what the world sees or reads, and at times even what and how the world consumes as digital commerce.
With the emergence of Web 3, it simply is built on the concept of decentralisation of the nature of how the Internet is controlled or influenced, and to redirect equal power to the actual content creators. Its basis is the blockchain philosophy (distributed ledger platforms). While this is getting popular in the Web 3 developer communities globally, the widespread commercial usage of blockchain is still on the rise. The blockchain standards and protocols are yet to be defined in order to hasten the commercial adoption of the same. Currently, the decentralisation method used also enables transactions based on blockchain technology. Though it is slower than the other digital methods; however, it offers higher data integrity, security aspect, and robustness of processes. Incidentally the ideology of cryptocurrencies which is unpopular with many of the global policymakers is one of the prime application possibilities of the Web 3. Web 3 is becoming popular amongst the Indian startup space, and it has been able to secure investments to the tune of over US $500 million in the past few months alone.
As with every technological development, until it becomes commercially popular, it is difficult to imagine how it could solve for human problems—be it at business level or society level. Therefore, the discussions around AI (Artificial Intelligence), ML (Machine Learning), NLP (Natural Language Processing), IoT (Internet of Things), AR (Augmented Reality)/VR (Virtual Reality) technologies, battery technology seem vague and ‘out of whack’ to many. With advancements in these areas, the interaction with machines could potentially become human-like. By when, and with what societal-disruptions is the multi-trillion-dollar debate!
Incidentally the ideology of cryptocurrencies which is unpopular with many of the global policymakers is one of the prime application possibilities of the Web 3.
The other not-yet-understood fast-shaping Web 3 space is the Metaverse. This concept of an ‘alternate digital universe’, that would exist alongside of our nature-made universe, is already catching up fast with celebrities and global consumer brands alike. Especially since this idea is palatable to the youngsters. Therein lies the issue of comprehension to the older humans, including the regulators and policymakers globally. On the other hand, the private investors and technology investors are pumping in large funding for these Web 3 ideas.
At least over the past decade, governments predominantly in the Americas and Europe, have had anti-trust problems with the Big Tech companies and platforms. Billions of dollars of such regulatory fines have been levied. For example, recently the European Union (EU) agreed to sign off on a new anti-trust regulation (“Digital Markets Act”) that would curb the market dominance on the internet economy. “The rules will apply to so-called “gatekeepers,” tech companies with a market capitalisation of at least 75 billion euros (US $83 billion) or annual revenues within the EU of at least 7.5 billion euros in the past three years. They must also have at least 45 million monthly users or 10,000 business users in the EU.” This could very well force the large technology giants like Google, Meta to change their business models; as well as showcase to the other governments in the rest of the world to undertake policy directives to bring such regulatory controls.
The governments have had mix of rightful concerns, as well as worries that emerge from fear of ‘losing political control’. The issues of a safe society that plague the policymakers include intrusiveness of emerging digital technologies that could test the sovereignty of the State, consumer data misuse, privacy issues, spreading of false narratives and any bias in the algorithms that could influence unfair means. Policymakers usually have the same set of worries: Will their control over the entities reduce? Will the entities cause any national security or systemic risks? Will it reduce consumer protection capabilities? We have seen from history that every disruptive technology has brought in positives for societal application and economic activity growth as well as negatives along. In this digital era, the policymakers do not have the luxury of time for status quoism in forming policies around emerging technologies.
The issues of a safe society that plague the policymakers include intrusiveness of emerging digital technologies that could test the sovereignty of the State, consumer data misuse, privacy issues, spreading of false narratives and any bias in the algorithms that could influence unfair means.
Theoretically, with Web 3 ideology of decentralisation, the policymakers should be happier that these Big Tech platforms can be disintermediated and might have reduced influence on the outcomes. These firms won’t be able to censor/control/contradict what’s developed by the end users, as the rights of the content formation, curation and access would rest with the actual content creators. But there again, the policymakers might be irked by the fact that they would have umpteen individuals and multiple units of small cohorts of content creators to deal with for the actual narratives! It surely would make regulating the internet space difficult, and would need out-of-the-box thinking for ensuring rules-based society on the Web.
It is precisely the right opportunity for the governments globally, and especially the Indian policymakers to make a diverse list of technologies that they want to adopt in their policy decisions formally. India has shown gumption in using technology for the past many years, as a path-breaking innovator—be it in E-governance or inclusive low cost high innovation-led access to financial markets, etc. This is the opportunity for India to also decide if it wants to be at the head of the global table in setting how the standards, protocols, policy thinking around Web3 should be formulated for the global society to follow.
But here lies the need for speed in polity decision and policy thinking. Unlike Indian crypto policy debate, which has swung wider more than a pendulum, and taken long time without any outcome (yet). We are still worried about other Web 3 usage like NFT or crypto tokens. For example, any conversation around NFTs brings about concerns over how licensing would work in a global marketplace and related tax ability issues, IP issues, and its recognition in local place where the investor lives, issues around treating these as financial assets and relates securities laws, concerns around money laundering, gambling laws and in case of geo-political economic sanctions, how to treat these assets. With Metaverse, the concerns also revolve around governance structures of these entities and how their IP would be governed. Also the usually adopted EULA (End User License Agreement) will create concerns as to which national jurisdiction those are enforceable! And more importantly, the privacy concerns still continue to haunt this sector, and the policymakers equally.
Already Indian Web 3 entrepreneurs have started moving to Dubai and Singapore which offer better regulatory space to setup and scale such ventures.
A NASSCOM Industry report on Cryptotech has estimated that over 8 lakh new jobs could be created by the year 2030 in the Indian Web 3 industry. Industry analysts worry that this may be impaired by the lack of regulatory clarity, and in the absence of proactive policy formation around Web 3. Already Indian Web 3 entrepreneurs have started moving to Dubai and Singapore which offer better regulatory space to setup and scale such ventures. While these numbers might seem tiny now, it should not avalanche into large interests (talent and capital) moving along or the local industry segment becoming mere back-end talent providers (like ITES).
If we can establish what we want as a nation from technology, and participate in the global policy conversations, India can be a significant leader in the Web 3 economy. We have the brain power, talent, but now need to bring our policy capabilities to the fore. After all, as part of the Indian trust-based policy impetus, Web 3 policies would be an acid test. For we can now shape Web 3 as our strategic economic moat for the 21st century digital economy.
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