Trust is the key element that AI regulation must not fall short of

There have been all kinds of noises—some supportive, many disapproving—after the electronics and information technology minister Rajeev Chandrasekhar recently asserted that India will definitely regulate AI: “Our approach towards AI regulation, or indeed any regulation, is that we will regulate it through the prism of user harm."

Around the same time, the Telecom Regulatory Authority of India (TRAI) released a report recommending the setting up of an ‘independent regulator’ for AI: “The Authority recommends that for ensuring development of responsible Artificial Intelligence (AI) in India, there is an urgent need to adopt a regulatory framework by the Government that should be applicable across sectors. The regulatory framework should ensure that specific AI use cases are regulated on a risk-based framework where high risk use cases that directly impact humans are regulated through legally binding obligations."

The need to regulate AI has become all the more compelling after evidence emerged that the emerging technology industry lacks the capacity to self-regulate, especially when some of its members push the envelope excessively or indulge in customer-gouging. Two recent cases provide ample support. The first was some crypto intermediaries and fintech companies employing unscrupulous customer origination and on-boarding practices during covid lockdowns. The second piece of evidence came from e-gaming companies which have flouted communication standards and lobbied for exemption from rules under specious excuses. In both cases, industry bodies or self-regulatory organizations failed to rein in errant members, thereby forcing external regulatory action.

It has been felt that, instead of external interference, free play should have been allowed so that markets could determine the optimal outcome. This flawed understanding seems to stem from a misinformed view of markets, systems and the true meaning of innovation. A mistaken grasp of how emerging technology intersects with ‘free’ markets feeds the misconception that regulation throws sand in the wheels of market dynamics; sadly, it fails to recognize that markets without regulation tend to be even more distorted. The landscape would have been very different if industry, acting on the universally accepted notion that regulatory frameworks tend to lag emergent technology dynamics, had offered to cooperate with regulatory agencies in developing new frameworks. By trying to subvert the regulatory system, the industry handed over the initiative to the authorities.

This has its own adverse consequences and raises the question of an ‘appropriate’ regulatory framework. India’s recent tech regulatory approach raises questions about the country’s capacity to frame a flexible, even-handed and just structure. Four examples stand out.

One, the ministry of electronics and information technology (MeitY) did not cover itself with glory by helping the e-gaming industry differentiate itself from gambling or betting; these players were granted a fancy new definition, ‘online real money gaming intermediaries,’ apparently designed to shield them; that succour was short-lived after the Goods and Services Tax Council imposed a 28% levy. But the end of this story has not been written yet: the e-gaming industry, as part of its ongoing intense lobbying efforts, has submitted a petition to the government and influential investors in these e-gaming companies have written directly to the Prime Minister. Even MeitY is likely to seek a review of the GST Council decision. As elections draw close, it is anybody’s guess how the policy contours will shape up.

The second instance is information and broadcasting minister Anurag Thakur’s recent statement in Parliament that MeitY has empanelled four influencer marketing agencies to disseminate news of government schemes through the online influencer channel. This attempted outreach programme is clearly designed with approaching elections in mind, but it also underscores the inescapable contradiction of the government endorsing a delinquent segment which different regulators have been trying hard to discipline.

The third example relates to the government’s proposed fact-checking unit, which has managed to cast a long shadow of doubt on the claim that AI regulation will protect users from harm. The proposed unit has been challenged in the Bombay high court, but its timing has raised multiple questions over freedom of speech and the government’s role as a neutral player. Finally, the proposed personal data protection bill invests the government with untrammelled powers in data collection, processing and retention beyond what might be considered necessary, trampling once again freedom of speech and individual rights.

Given its ambitions and tech capacity, India should have taken the lead globally in drafting cutting-edge legislation for AI; instead, we hear continuing grandiloquence about a glorious, albeit quixotic, economic future.

Rajrishi Singhal is a policy consultant and a senior journalist. His Twitter handle is @rajrishisingha.