Digital Markets and Ecosystems in India
Most Indians engage with digital markets influenced by vast digital ecosystems. These ecosystems, composed of infrastructure, data, software, and consumer services, are systematically curated by dominant entities, not organically developed.
Characteristics of Digital Ecosystems
- Dominant orchestrators control foundational layers like operating systems and app stores.
- These firms use exclusionary strategies such as:
- Bundling core services with adjacent ones.
- Controlling access to critical data flows.
- Limiting interoperability to lock in users.
Such dynamics create markets that are neither neutral nor contestable.
Role of the State and Digital Public Infrastructure (DPI)
India aims to reshape digital markets through Digital Public Infrastructure (DPI), establishing foundational public rails enabling service providers to innovate independently.
- The RBI's commitment to keeping UPI a zero-cost service highlights the state's dedication to accessible digital infrastructure.
- DPIs serve as market-shaping institutions, fostering inclusivity and innovation.
Challenges and Risks Associated with DPIs
Despite their benefits, DPIs can present challenges like potential re-monopolisation and centralisation, necessitating effective design and governance.
- Risks include:
- Dominant players capturing data layers, creating choke points.
- Gatekeeping shifting from platforms to service layers.
- Many DPI systems are developed through Public-Private Partnerships (PPPs), where private control can undermine accountability.
Safeguards and Governance
Institutional safeguards are necessary to mitigate risks, including:
- Ensuring competitive neutrality and auditable openness.
- Implementing purpose-limited data use policies.
- Adopting participatory governance models.
The state's role as a market shaper and commons steward is crucial for fostering an environment conducive to innovation while maintaining public purpose alignment.
