Self-regulatory regimes are key in digital businesses - Hindustan Times

Self-regulatory regimes are key in digital businesses

Feb 05, 2022 06:36 PM IST

As digital technologies evolve, self-regulation forms a flexible response to this dynamic sector and supports the decentralised network architecture of the industry

As emerging technologies drive new business and service models, we’re witnessing rapid advances in certain sectors of the Indian economy. The rapid development of the Online Curated Content (OCC) sector, for instance, is one of the most talked about growth spurts in the recent past, and it’s still underway.

OCC platforms and self-regulatory bodies show that they can effectively address complaints. This system can serve as a model for the future of regulation, lightening the burden on the legal-regulatory system and encouraging the growth of the OCC sector. (Shutterstock) PREMIUM
OCC platforms and self-regulatory bodies show that they can effectively address complaints. This system can serve as a model for the future of regulation, lightening the burden on the legal-regulatory system and encouraging the growth of the OCC sector. (Shutterstock)

With unprecedented growth, there are inevitable shifts in the regulatory landscape, along with the expectation that governments must rapidly create, modify, and enforce regulations. However, when confronted with something new, especially one that is rapidly evolving, a regulator’s role is not easy. Framing policies that can grasp the nuances of an industry thriving in the tech-driven economy as well as ensure fair markets and ethical standards to protect citizens —while working within legacy frameworks — is a delicate balance. In addition, sectors such as digital entertainment, which have a wide variety of players, including global ones, face the complications of multiple jurisdictions.

After Independence, India chose to adopt a mixed economy, where the State also engaged in economic activities on a large scale, particularly in certain sectors. Private business was subjected to State control in a number of ways; licence and quota raj, and statutory provisions empowered the State to exercise public control over private business.

All this changed when India ushered in liberalisation and globalisation. With desired freedoms given to the private sector, State controls vanished and were replaced with a regulatory regime, creating independent and autonomous sectoral regulators in areas such as telecommunications, power and insurance, among others. General regulators such as the Securities and Exchange Board of India (SEBI) and Competition Commission of India (CCI) were also introduced by passing specific statutes.

Regulatory enforcements are ultimately funded by taxpayer money and if credible alternatives can show impact, it is desirable that they are given sufficient chances to do so. In previous years, regulations were crafted at a slow pace, which remained in place and unchanged for years. This gave rise to the concept of self-regulatory mechanisms in certain sectors for which these were more suited.

Over time, it became a more accepted norm, especially where a particular activity, economic or otherwise, was technology-driven. The setting up of a self-regulatory regime by the news broadcasters is a prime example, which is given imprimatur by the government as well.

As new business models and services emerge due to digital-era technologies, government agencies are challenged with creating or modifying unique regulations, enforcing them, and communicating them to the public in a timely manner. Clearly, the regulatory approach adopted in previous years is not well-suited to support the rapid rate of development in today’s environment. The policy cycle in India often takes years and, therefore, to address the challenges posed by fast-paced technological advancements, self-regulation can be a welcome solution.

Not only does it reduce the burden on courts and regulatory authorities by providing an alternative for grievance redressal, but it also offers businesses an opportunity to build trust in the public eye by showing their commitment to the laws of the land. In order to work, this requires a fair, transparent and efficient mechanism to be established that the consumer and creator can both rely on.

Self-regulation is often more prompt, flexible, and effective than government regulation since the judgment, experience and expertise of an industry is of great benefit, especially in digital tech industries where the government has difficulty drawing lines due to the dynamic nature of the sector.

Understandably, the issue of content regulation on the digital platform is a complex one, exacerbated by the inherently transnational nature of the platform and the diversity of cultural norms in a particular area. This peculiar feature led policymakers to come out with the novel idea of creating a self-regulatory mechanism with legal backing as well.

Therefore, the Information Technology (IT) rules, brought into effect in 2021, lay out a three-tier grievance redressal mechanism to offer “choice” and “voice” to the consumer.

It begins with offering the consumer a direct procedure that they can follow to officially lodge their objection with an OCC platform. Thereafter, if not satisfied by a response at level I, the consumer has the option to escalate the complaint to an independent level II self-regulatory body. The direct line of communication offered to consumers, transparency in how reviewing bodies are constituted and several other measures are good steps towards ensuring consumer education and empowerment.

The OCC sector has tremendous impact and influence, and self-regulatory bodies are not taking this task lightly. A well-functioning system of self-regulation is possible with the participation of all stakeholders involved and benefits each of them as well.

First, consumers do not have to await their day in court to process their complaints through what could be an expensive and time-consuming system. Second, creators also have a chance to hear and address grievances before they are escalated further directly from their audiences and demonstrate their adherence to the rules. Third, regulators are saved from the additional burden of creating new policies for a rapidly evolving sector and can focus on enforcement as well as understanding the long-term regulatory requirements of society.

We are poised to see how well this mechanism can work, but the fundamentals are in place. All players involved, from the public to regulators to OCC providers, have a duty to give this system a fair shot and participate in it to see how well it can support appropriate checks and balances. The minister of information and broadcasting recently put out data, mentioning that 95% of the complaints received are being resolved at level I itself. This is a positive indicator that the system is working and should be allowed time to demonstrate its efficacy in action.

OCC platforms and self-regulatory bodies show that they can effectively address complaints and can raise the level of confidence in the public eye as well. This system can serve as a model for the future of regulation, especially for newer and emerging industries, both lightening the burden on the legal-regulatory system as well as encouraging the growth of the OCC sector in India.

At the same time, it holds them accountable through a transparent and time-bound process. Self-regulation also allows creators to take note of and factor in local sensitivities and adapt in an agile way.

As the OCC industry gears up to take responsibility for the content it hosts, prioritises informed consumer choices, and prepares for the next waves of growth buoyed by its actively growing consumer bases, the role of self-regulatory bodies in protecting and educating operators as well as users about best practices is key. In turn, a well-functioning system of self-regulation can foster promising growth and contribute to the economy while empowering consumers.

While some sectors have already adopted the self-regulation model, many other sectors can watch and learn from their examples as the existing regulatory approach may not continue to work for new tech-driven sectors. If the volume and pace of digital transformation continue to scale, the gap between technological advancements and the existing regulatory mechanisms intended to regulate them will only grow wider.

Self-regulation not only supports the open and decentralised network architecture of the digital industry to ensure economic growth, but it also forms a flexible response to the dynamic and ongoing evolution of the sector and emerging technologies.

AK Sikri is a former judge of the Supreme Court and chairman, Digital Publisher Content Grievances Council 

The views expressed are personal

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