Data transfers via Broadband Form The Crux of Cloud Computing

In an exclusive conversation with Dataquest, Venkatesh Krishnamoorthy, Country Manager India, BSA | The Software Alliance, talks about privacy law, the importance of adoption of cloud-friendly policies, and how IT readiness and better broadband deployment policies support the cloud adoption in India. Excerpts:

Q. Can you please share your views on India's ongoing efforts for the adoption of adequate privacy laws.

It is clear that the Indian Government considers privacy laws to be a priority, given the recent Supreme Court ruling on the ‘right to privacy’ and the release of the draft Personal Data Protection Bill by the Committee of Experts formed by the Ministry of Electronics and Information Technology (MeitY).

The Bill is a step in the right direction in data protection and privacy laws. Nonetheless, there are still glaring concerns in the Bill that will hamper India’s efforts in becoming a leader in the global digital economy. To ensure the laws implemented are unrestrictive and propel Prime Minister Modi’s ‘Digital India’ vision, it will be helpful for the Indian government to look at other regimes around the world including models like APEC Cross-Border Privacy Rules or Japan’s Personal Information Protection Act (PIPA) or Singapore’s Personal Data Protection Act, so that they can learn the success and failures to adopt the best global practices.

Q. Despite the importance, emerging markets continue to lag in the adoption of cloud-friendly policies. Please share your views. Also, what should governments keep in mind to adopt cloud-friendly policies?

In order for countries to realize the full benefits of cloud computing, they need to have proper policies in place that (1) ensure privacy, (2) promote security, (3) battle cybercrime, (4) protect intellectual property, (5) ensure data flow and adherence to international standards, (6) promote free trade, and (7) establish the necessary IT infrastructure.

The recently launched BSA Global Cloud Computing Scorecard 2018 examines the legal and regulatory framework of 24 countries around the world, policies of different countries and readiness for cloud computing. It identified that some countries continued to update and refine their data protection regimes – while ensuring cross-border data transfers. While other countries lacked advanced privacy and security policies, thus setting leading countries apart from lagging markets. For example, Canada’s comprehensive legal regime avoids onerous registration requirements enabled it to score the highest in the privacy category. Turkey is also making headway with its recently adopted Law on Personal Data Protection in 2016 (in addition to signing the Convention on Cybercrime, which came into force in Turkey in 2015). These developments help to create a positive environment for building consumer trust in cloud services. Several countries, however, still have not adopted adequate privacy laws. Brazil and Thailand do not have comprehensive laws, and the laws in China, India, Indonesia, and Vietnam remain very limited.

The lack of adoption of cloud-friendly policies hinders the growth of emerging markets as regulations impose significant barriers for cloud service providers, including requirements for providers to register their services with a central authority and rules that force some providers to establish local data centers and hire local staff.

Q. According to you how localisation policies can hinder cloud computing adoption?

The software we rely upon depends on the rapid and seamless movement of data across borders. Cross-border data flows are important for all types of data, from personal to non-personal. Cloud computing services and data analytics dramatically improve the efficiency and competitiveness of businesses large and small and help make the world a safer place.

Some countries that have adopted or proposed prescriptive data localization regimes that require cloud providers to restrict the free flow of data or build costly — and unnecessary — servers to provide services in a specific market can clearly see decelerated adoption of cloud computing. Russia’s laws on both privacy and cybercrime, which do not follow recognized international standards is one such example. Today, Russia requires data operators to store the personal data of Russian citizens on servers based in Russia. This data localization requirement has a significant negative impact on the digital economy. The implications are clearly seen when comparing cloud adoption in 2012 versus 2017. According to the research firm IDC, in 2012, Russia’s cloud computing market had grown more than 417 percent to nearly USD 60 million and was projected to continue to grow by more than 50% in the years ahead. However, by 2017, the growth in the Russian cloud market slowed down to 9.9% — far behind the global growth of 19%.

Therefore, data moving across borders is critical for the growth of services like cloud computing and other emerging technologies that sustain global commerce, improve health and safety, promote social good, and enable the technologies of the future and any policies that hinder cross-border data flows, impedes economic growth.

Q. How can IT readiness and better broadband deployment policies support the cloud adoption in India?

Data transfers via broadband form the crux of cloud computing, without robust, ubiquitous, and affordable broadband access, the adoption of the cloud computing will suffer, and its benefits will go unrealised. Cloud computing democratizes the use of advanced technologies. It allows anyone — a start-up, an individual, the government, or a small/medium business — to access technology previously available only to large organizations. Multiple industries and organizations are increasingly dependent on cloud computing services to significantly decrease operational and infrastructure costs, increase productivity, create jobs, improve lives, access the latest solutions and experience scalability; mobility; flexibility and efficiency. Cloud computing also affects governments around the globe which also use data-driven innovations to better serve their citizens and grow their economies.

Thus, the availability of the right infrastructure and policies becomes critical. The onus is on policymakers to provide a legal and regulatory framework that will promote innovation, provide incentives to build the infrastructure to support cloud computing, and promote confidence that using cloud computing will bring the anticipated benefits without sacrificing expectations of privacy, security, and safety. This will accelerate cloud adoption and allow India to enjoy the economic benefits of the cloud while emerging as a key player in the digital economy.  

Q. How deviations from widely adopted regimes and international agreements can hold back key markets like India, in becoming a global digital economy?

In today’s inter-connected world, data-driven innovation enabled by cloud computing plays a critical role in powering the global economy. Businesses of all sizes across sectors are progressively leveraging data by utilizing software and cloud computing services to increase productivity, create jobs, and improve lives. Consequently, the smooth flow of data around the world and seamless interoperable applications are necessary to leverage the benefits of cloud-computing services and the digital economy.

As cloud services operate across national boundaries, and their success depends on access to regional and global markets, restrictive policies that create actual or potential trade barriers will inhibit or slow the evolution of cloud computing.

For India to become a global digital economy, the Government should work with the industry to develop standards and minimize conflicting legal obligations on cloud providers. Incorporating internationally accepted standards, certification, and testing are critical as they already embrace global learnings and successes. This helps improve the security environment for cloud computing and catalyses the positive effects of cutting-edge technologies, generating societal benefits and economic growth. At the same time, it is also important to promote global harmonization of e-commerce rules, tariffs, and relevant trade rules as they hinder new technology products used to access cloud services.

Q. Please elaborate on the reasons behind India’s drop in the rankings to the 20th rank out of 24 countries, compared to its ranking of 18th in 2016?

The 2018 BSA Global Cloud Computing Scorecard, ranks the cloud computing readiness of 24 countries that account for 80% of the world’s IT markets. This year, India ranked 20th out of 24 leading IT economies. The 2018 Scorecard identifies seven policy areas to determine cloud computing readiness, by regularly tracking changes in the international policy landscape, ranking countries’ preparedness for the adoption and growth of cloud computing services and ranking the countries by examining the legal and regulatory framework.

Since 2016, the Scorecard has included additional parameters to rank countries, moreover, there were other countries that performed better than India on certain parameters. Thus, in the 2018 ranking, while there was scope for India to improve its rankings, it was ranked 20th because of its lack of comprehensive data privacy rules and inadequate broadband deployment. However, these areas are now a source of optimism and opportunity, as the Government has moved to addressing them with the upcoming Data Protection Bill.

Q. According to you, what is the importance of sound data policies for inclusive growth?

Data is the key to growth in all sectors of the economy, but each piece of data has little inherent value. It is only when used as an input to other value-added services, such as Artificial Intelligence (AI), that it contributes to the projected USD 15 trillion addition to global GDP by 2030.

Taking an example of emerging technologies like AI, which augments human intelligence, helps people make better-informed decisions by identifying relationships, patterns, and trends in data that would be imperceptible to humans. AI systems are trained by ingesting data from systems across the world. The benefits of AI are therefore dependent on the quantity and quality of data that is available for training. As a result, government policies have a significant influence on the development of these emerging technologies. Here are some of the key factors to consider while drafting sound data policies and shocases why they are important for inclusive growth:

• Ensure Data Can Move Freely Across Borders

Data is integral throughout the AI life cycle. From the development of predictive models to the deployment and use of AI systems. AI systems use data sets that often originates from dispersed geographical sources. Hence, it is imperative that data can move freely across borders. Rules that limit cross-border transfers will limit insights and other benefits of AI systems that sustain global commerce, improve health and safety, promote social good, and enable the technologies of the future.

• Access to Government Data and Public-Sector Information

Governments have access to a multitude of data that they collect and generate, at both the local and national level. Some of this non-sensitive government-generated data can be harnessed in the development of AI systems, and sound data policies will enable this to be freely available to the public as a resource to improve services and lower prices.

• Facilitate Value-Added Data Services

Policies implemented by governments should boost the development of AI services and facilitate the business-to-business exchange of data. This can be accomplished by:

• Ensuring companies can enter enforceable contracts that create data sharing arrangements;
• Avoiding the creation of new rights in business data that could add unnecessary transaction costs; and
• Allowing companies to freely perform data analytics, including text and data mining, on any content to which they have lawful access

• Maintain Predictable Competition Policies

AI is a burgeoning field with multiple small and medium sized AI providers in fierce competition, as a result pushing the creation of new services. Policymakers should create competition frameworks that are flexible enough to address technological innovations. Creating and structuring data sets are resource intensive, thus AI-specific competition rules such as compulsory licensing of data sets, or regulatory prohibitions on maintaining the exclusive benefits of that investment will deter the investment and impede the development of AI.