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Adopt a self-regulation model for the technology industries: analysis


Government interventionism, for a long time the default regulatory approach, is falling out of favor in India. A chapter of the 2019-20 Economic Survey recognizes that the country is still “among the chained economies of the world”, and examines the distorting impact of government intervention in domestic markets. For example, he cites experiences of government regulation in agricultural markets to suggest that interventionism may not be the default approach to public policies. Government intervention can also undermine the creation of wealth: the new mantra of governance echoed in the Economic Survey. This thinking is especially applicable to regulatory discussions about emerging technologies.

Consider the brief history of the unregulated video game industry, which introduced new technologies to vulnerable young people. In 1993, senators from the United States (USA) held hearings to address social concerns about violence in video games. Mortal Kombat, a popular video game, had introduced technology to “improve realism,” allowing graphic representations of violence. Senators criticized the lack of industry disclosure and non-standard industry ratings. They also presented a bill for the qualification of video games. Large companies such as Electronic Arts, Nintendo and Sega formed the Interactive Digital Software Association (IDSA), which subsequently established an Entertainment Software Classification Board (ESRB), a self-regulatory organization. As a result, there was no need for the Video Game Qualification Law.

Today, ESRB is well known to parents and children alike. A 2019 survey on parental awareness and the use of these qualifications in the US UU. He found that 87% of parents who bought physical copies of the games knew the ESRB qualifications. Seventy-seven percent said they regularly checked the ratings before buying a new game. This reinforced the 2013 finding of the US Federal Trade Commission. UU. (FTC) that the ESRB had the highest app ratings in the store of all entertainment industries, which included movies, home videos and music. Most video game publishers present new releases to ESRB, and major retailers rarely sell games that are not certified by the organization. The European industry, inspired by these developments, created its own self-regulation body.

India’s entertainment sector today is at a crossroads just like the US gaming industry. UU. In the mid-90s. Technological growth is driving the evolution of several segments of the audiovisual industry. It is also responsible for the emergence of new segments, such as electronic sports and online games. Culturally, this expansion of the media brings new challenges and concerns focused on the interests of children. These range from exposure to age-inappropriate content on entertainment platforms, to economic exploitation through in-app purchases.

In this context, what is an appropriate regulatory approach? Excessive regulatory restrictions stifle creative expression. This is seen regularly in the case of film censorship in India. Interventionism also jeopardizes emerging industries that are growing at double digits and exhibit unlimited investment and employment potential. The online gaming industry involves more than a quarter of a billion Indian players. It is expected to reach one billion dollars in revenue this year. Similarly, the online video entertainment market serves the entire base of about half a billion broadband users. This local industry will soon be among the top 10 markets worldwide in terms of total revenue.

Self-regulation is useful because it fosters responsibility without dictates that hinder the growth of new industries. The key is to allow technology industries, which demonstrate the will to contain social damage, to govern themselves transparently. This approach, where governments and industry act cooperatively, has been effective in the past, especially in the example of the previous ESRB. These services are online and direct to the consumer and can interact with the people who use them. This puts them in a good position for greater guardianship. They also have the ability to act on comments that can improve content and quality recommendations.

The work of Nobel laureate Richard Thaler on the “push theory”, where positive reinforcement and suggestions are used to influence individual and group decision making, is ready for implementation in this ecosystem. It is between a laissez-faire approach and a prescriptive path to influence decisions. Standards can push consumers to make informed decisions. At a time when local digital entertainment companies compete in world markets, self-regulation can also encourage the industry to adopt the best practices that are followed worldwide. This can guarantee competitiveness in a fierce international business environment, where high standards can become barriers if the industry struggles to keep up.

India’s ambitions for an economy of more than 5 billion dollars will require the will to eliminate the post-colonial impulses of a nanny state and enter into an era of collaborative regulation. The government has shown an inclination to recognize the role of technology-driven companies to achieve this goal. Now you must express this recognition in the form of regulatory tolerance and rely on the industry’s ability to maximize consumer welfare.

Vivan Sharan and Akshat Agarwal are experts in technology policies at Koan Advisory Group, New Delhi

The opinions expressed are personal.

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