Who's the Boss?

Regulators and Platforms

I have developed an interest in the transformative power of digital and sustainability over last two years as an academic and researcher. This year for the internship program at IBS Hyderabad, we are focusing on SDGs 3, 8 and 9.

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DTW

During the Week, Reserve Bank of India directed Paytm Payments Bank Ltd (PPBL) to stop further deposits or credit transactions or top ups in any customer accounts. This drastic action effectively destroying PPBL as a business entity follows an earlier directive in March 2023 asking Paytm Payments Bank Ltd (PPBL) to stop onboarding of new customers with immediate effect and undergo a comprehensive System Audit of its IT system. As per RBI, “the Comprehensive System Audit report and subsequent compliance validation report of the external auditors revealed persistent non-compliances and continued material supervisory concerns in the bank, warranting further supervisory action” hence the KILL switch before further damage is done.

At the US senate hearing, we saw some drama by both tech platforms and regulators/legislators where CEOs from major social media companies, including Meta and TikTok, faced scrutiny over concerns about the impact of their platforms on young users. The issues at the forefront included exposure to sexual predators, addictive features, mental health challenges like suicide and eating disorders, and the perpetuation of unrealistic beauty standards. Lawmakers emphasized the inadequacy of current measures to protect young users and sought accountability from the CEOs. The hearing reflects a growing consensus among regulators and parents that social media companies must take more responsibility for the well-being of their younger audience. It raises the question of whether regulators should act as "bosses" in holding these platforms accountable for the potential harm they pose to young users.

In an decade old instance of regulator over-reach, Lavabit, a pioneering tech firm, opted to suspend operations rather than comply with a U.S. government order demanding information access. Silent Circle, an encrypted services provider, mirrored Lavabit by discontinuing its encrypted email offerings. Citing the inability to ensure customer email confidentiality under government orders, Silent Circle permanently erased encryption keys, preventing access to stored or transmitted emails. This highlights a growing trend among tech companies to prioritize user privacy and security, even if it means ceasing operations in the face of regulatory demands.

We could understand the tense and terse relationship between platforms and regulators through HIT and MISS frameworks dealing with platforms’ action and regulators’ reaction.

HIT Framework: Navigating Platform-Regulator Challenges

H - Hostile Engagement: When platforms adopt a confrontational stance, engaging in adversarial interactions with regulators, it can lead to prolonged disputes. Hostility may escalate tensions and hinder the establishment of cooperative solutions.

I - Intransigence to Compliance: A lack of willingness to comply with regulatory directives can create roadblocks. Intransigence often results in legal battles and may damage the reputation of the platform, impacting both user trust and regulatory relationships.

T - Transparency Deficit: Failure to maintain transparency regarding business practices and data usage can raise concerns among regulators. A deficit in transparent communication might be interpreted as an attempt to conceal potentially unfavorable activities.

This HIT framework underscores the challenges that arise when platforms adopt a hostile or non-compliant stance, emphasizing the importance of constructive engagement and transparency in navigating regulatory landscapes.

MISS Framework: Nurturing Symbiotic Platform-Regulator Relationships

M - Mutual Cooperation: Platforms that prioritize mutual cooperation with regulators contribute to a healthier ecosystem. Collaboration fosters understanding, allowing regulations to evolve with industry dynamics.

I - Information Sharing: Transparent sharing of information aids regulators in understanding platform operations. It builds trust and facilitates the creation of regulations that balance innovation with user protection.

S - Sustainable Practices: Commitment to sustainable practices ensures platforms align with long-term regulatory goals. This approach minimizes conflicts, as platforms actively engage in responsible business conduct.

S - Social Impact Embrace: Platforms that embrace social impact considerations align with societal expectations. Regulators appreciate platforms contributing positively to the communities they operate in.

The MISS framework highlights the importance of symbiotic relationships between platforms and regulators, emphasizing cooperation, information sharing, sustainable practices, and a commitment to social impact. Such collaborations can foster innovation while ensuring regulatory compliance and societal well-being.

OTW

Over the Weekend, it was full house of Meetings, Mentoring and Mela.

Archana and her team organised their annual SUNBEAM KIDS’ Mela and welcomed family and friends of their students. It was day full of energy and fun. Some of them being adults but child at heart also had fun and relived their childhood.

It was also weekend fun for the KC100 training program and Dharma was in Hyderabad to meet his mentees. As usual, it was simple yet informative with lots of usable hacks for running in particular and health in general.

Finally, it was great fun to catch up with Prof Harsh Bhargava after a long break with Nupur and Sanjay at the Secunderabad Club. If you are interested in Social Impact space, you should definitely check out his work on Social Impact projects led by BITS Alumni. Thanks Prof Bhargava for your inspirational work with students and faculty colleagues. Signed personal copy of BITS of Social Impact is truly a blessing.

Thanks Commodore Harsh Bhargava for you service to the nation and academic community

Overall, a very satisfying weekend. Looking forward to catching up with you soon.

I Love You.

Shailendra