Public data, private capture: the case of India
By Sadhana Sanjay
In 2016 the Indian government launched the Unified Payments Interface (UPI), a digital public infrastructure (DPI) for payments.
In theory, the public ownership and operation of DPIs makes them an alternative to private digital infrastructures controlled by Big Tech companies. Yet today two players – Google Pay and PhonePe (owned by Walmart) – control over 80 per cent of the market for access to the UPI via their phone payment apps.
How did we find ourselves confronting the same problem of Big Tech’s monopolistic control with respect to a market built on public infrastructure, which was designed with the intention of enabling precisely the opposite outcome?
“DPI” is an umbrella term for systems that enable secure and seamless digital interactions between people, businesses and governments, including for payments, digital identity, data exchanges and other purposes. India’s UPI is a seemingly staggering success: it accounts for 83 percent of India’s total digital payment volume, dwarfing credit cards and other methods.
By all technical standards, the UPI is truly an open infrastructure: it’s built on open-source architecture and standard application planning interfaces, which makes interoperability with other payment systems across banks and apps a key to its design.
The use of UPI data is also strictly regulated. For example, corporations and private players which build on UPI are forbidden from charging rents on users’ transaction data. In 2021, the governing body of UPI issued a guideline capping the market share of players at 30 percent (by preventing user registrations and not processing UPI transactions). This suggests that regulators were already aware of the need to prevent monopolistic distortion of the payments ecosystem: indeed, both Whatsapp and Google have been investigated by the Competition Commission of India, though only nominal fines were issued as a result.
Big Tech moves in
However, such measures have not stopped Big Tech firms from dominating access to the UPI ecosystem in India and in many ways this is not surprising. Armed with all the first mover advantages of a digital behemoth, Google sought prior approval for integrating its pre-existing payments app with a range of banks before its competitors could get a foot in the door.
With cash to burn, multinational tech corporations quickly won users over through promotional schemes. The data advantage they wield has also allowed them to expand seamlessly into adjacent markets, such as lending and credit, creating formidable entry barriers for new entrants in these markets as well.
The deadline to comply with the cap on market share was extended by two years to the end of 2026. It is worth noting that the earlier deadline was 2024, which means that regulators are effectively allowing the monopoly to persist for fear of slowing down the “growth” of the UPI ecosystem These extensions make it far from certain that the limit on market share will actually be enforced.
This phenomenon is not unique to the case of UPI, but can be seen across different DPIs in India, such as agriculture: the government has signed Memoranda of Understanding with Microsoft and Amazon for creating “an innovation ecosystem around digital agriculture” which will likely give these corporations first rights over the data of farmers and agrarian communities. Tellingly, what it is missing here is the word “public” before innovation.
It is not an issue with US Big Tech companies alone. Leading figures from the Indian private sector have also come under scrutiny for their close ties to the government, and privileged access to digital governance initiatives, which risks reducing governance to a technical exercise.
Guidelines and good design aren't enough
What is clear is that the advantages that Big Tech and large corporations possess have not been neutralised despite fledgling attempts to govern their conduct. Neither non-binding and perfunctory “guidelines” nor good technical design have proved effective so far. We therefore see that even when an infrastructure is technically public, its affordances may privilege a narrow set of well-positioned actors who snuff out the competition.
It is not merely the failure to exercise robust democratic control over these entities that is at issue. Also implicated are the structural political and economic conditions that cause a reticence to govern. In trade negotiations, digital trade provisions shrink the policy space of countries to regulate digital markets and players, creating a chilling effect on strong digital governance.
Another problem is that Big Tech corporations routinely shift profits across jurisdictions to minimise their tax liability, which means they profit from DPIs in India but do not pay tax on this profit, eroding the national revenue base and the possibility of investing in alternatives. India has recognised the problem of taxing digital profits and adopted a tax on the digital advertising revenues of foreign companies in 2016, but announced its withdrawal earlier this year.
Given that DPIs are digital public infrastructures, they must centre the public interest and the creation of public value. Instead, what we observe is the flight of innovation value, generated on the rails of public infrastructure, into monopolistic corporate enclosures.
In the data economy, data’s value is predicated more on its potential for future intelligence rather than its immediate use. It is precisely this intelligence value that is monopolized by firms, while citizens and consumers serve up the raw data necessary to create it.
In the absence of strong political will to steer the trajectories of digital innovation for the common good, and to enact robust and enforceable democratic governance, the gains of public digital innovation will continue to accrue to the private sector instead of the public.
Protecting public value in DPIs
It is essential to reclaim the public nature of DPIs. As a first step, we need to view them not as neutral technical artefacts, but as sites of generating public value and asserting public control – the two key components of ethical public digital innovation. Reimagining digital infrastructure as truly public means moving beyond measuring success through metrics of access and volume and engaging citizens as meaningful rights-holders in the digital ecosystem.
Participatory consultations with civil society and the public throughout the design, development and deployment of a DPI, along with transparency around the involvement of private actors, are critical to ensuring public control over public infrastructure.
Concession agreements governing public-private partnerships in India must establish fiduciary duties on the private provider to uphold the public interest through strict limitations on their conduct. We also need to enable stewardship of the digital commons through alternative institutional frameworks (such as trusts and cooperatives) that stimulate local digital economies to thrive in a decentralised, fair and inclusive marketplace.
There needs to be structural action with respect to fiscal frameworks, trade and competition law on market power beyond the governance of DPIs. Crucially, data governance frameworks need to move beyond privacy and security concerns, towards socialising data dividends for the common good through interventionist governance. Access to data should be tempered through conditional and social licensing frameworks as well as fair use doctrines, rather than seeing it as a free-for-all resource.
Guided by these principles, DPIs can contribute to the creation of just and equitable digital futures. Recentering the public value in the way we imagine DPIs is therefore both a political project and a democratic imperative for the digital age.
Sadhana Sanjay leads research and policy engagement on digital governance at IT for Change, where she works on issues of competition law, labour and worker rights, algorithmic management, the political economy of data, just taxation and digital trade.