There is a global standoff going on about who stores your data.
At the close of June’s G20 summit in Japan, a number of developing
countries refused to sign
an international declaration on data flows – the so-called Osaka Track.
Part of the reason why countries such as India, Indonesia and South
Africa boycotted the declaration was because they had no opportunity to
put their own interests about data into the document.
With 50 other signatories, the declaration still stands as a
statement of future intent to negotiate further, but the boycott
represents an ongoing struggle by some countries to assert their claim
over the data generated by their own citizens.
Back in the dark ages of 2016, data was touted as the new oil. Although the metaphor was quickly debunked
it’s still a helpful way to understand the global digital economy. Now,
as international negotiations over data flows intensify, the oil
comparison helps explain the economics of what’s called “data
localisation” – the bid to keep citizens’ data within their own country.
Just as oil-producing nations pushed for oil refineries to add value
to crude oil, so governments today want the world’s Big Tech companies
to build data centres on their own soil. The cloud that powers much of
the world’s tech industry is grounded in vast data centres located
mainly around northern Europe and the US coasts. Yet, at the same time,
US Big Tech companies are increasingly turning to markets in the global
south for expansion as enormous numbers of young tech savvy populations
come online.
Accusations of ‘digital imperalism’
Take, for example, the case of Facebook. While India is the country
with the biggest amount of Facebook users, when you look at the location of Facebook’s 15 data centres, ten are in North America, four in Europe and one in Asia – in Singapore. Countries with the most Facebook users in 2019.We Are Social, DataReportal, Hootsuite, Facebook via Statista
This disconnect between new sources of data and the location of data centres has led to accusations from countries such as India of “data colonisation” and “digital colonialism”.
The economic argument for countries in the global south to host more
data centres is that it would boost digital industrialisation by
creating competitive advantages for local cloud companies, and develop
links to other parts of the local IT sector.
Many countries
have flirted with regulations on what sort of data should be stored
locally. Some cover only certain sectors such as health data in
Australia. Others, such as South Korea, require the consent of the
person associated with the data for it to be transmitted overseas.
France continues to pursue its own data centre infrastructure, dubbed
“le cloud souverain”, despite the closure of some of the businesses initially behind the idea.
The most comprehensive laws are in China and Russia, which mandate
localisation across multiple sectors for many kinds of personal data.
Countries such as India and Indonesia with their massive and growing
online populations arguably have the most to gain economically from such
regulations as they currently receive the least data infrastructure
investment from the tech giants relative to the number of users.
The economics aren’t clear cut
Supporters of data localisation cite developing countries’ structural
dependency on foreign-owned digital infrastructure and an unfair share
of the industry’s economic benefits. They dream of using data
localisation to force tech companies into becoming permanent entities on
home soil to eventually increase the amount of taxes they can impose on
them.
Detractors point to the high business costs of local servers, not
just for the tech giants, but also for the very digital start ups that
governments say they want to encourage. They say localisation
regulations interfere with global innovation, are difficult to enforce,
and ignore the technical requirements of data centres: proximity to the
internet’s “backbone” of fibre optic cables, a stable supply of
electricity, and low temperature air or water for cooling the giant
servers. Data: how much is it worth?Robsonphoto/Shutterstock
Attempts to measure the economic impact of localisation are extremely partisan. The most cited study from 2014 uses an opaque methodology and was produced by the European Centre for International Political Economy, a free trade think-tank based in Brussels, some of whose funding comes from unknown multinational businesses. Not surprisingly, it finds gross losses for countries considering localisation. Yet, a 2018 study
commissioned by Facebook found that its data centre spending in the US
had created tens of thousands of jobs, supported renewable energy
investments and contributed US$5.8 billion to US GDP in just six years.
Like the equivalent arguments for and against free trade, taking a
dogmatic position for or against the issue masks other complexities on
the ground. The economic costs and benefits depend on the type of data
stored, whether it’s a duplicate or the only copy, the level of
government support for wider infrastructure subsidies, to name just a
few factors.
India has been the most vocal supporter for localisation, promoting its own regulation as “a template for the developing world”,
but it’s in a strong position to do so given the country’s relatively
advanced digital industrialisation and technical manpower. Other
emerging economies with large online populations, such as Indonesia,
have vacillated on their localisation regulations under pressure from
the US government which has threatened to pull preferential trade terms for other goods and services if they went ahead with restrictive regulations.
What governments do with the data
While the international economics of personal data may follow some of
the same general dynamics as oil production, data is fundamentally
different from oil because it does a double duty – providing not just
monetary value to businesses, but also surveillance opportunities for
governments. Some civil society activists I’ve met as part of my
research in India and Indonesia told me they were sceptical of their own
governments’ narratives about data colonialism, worrying instead about
the increased access to sensitive personal information that localisation
gives to governments.
It’s not just large corporations and states that have roles to play
in this bid for “data sovereignty”. Tech developers may yet find ways to
support the rights of individuals to control their own personal data
with platforms such as databox, which gives each of us something akin to our own personal servers. These technologies are still in development, but projects
are springing up – mostly around Europe – that not only give people
greater control over their personal data, but aim to produce social
value rather than profit. Such experiments may yet find a place in the
developing world alongside what states and large corporations are doing.
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