BY NANDAN NILEKANI, Co-Founder & Chairman of Infosys Technologies Limited, and TANUJ BHOJWANI, Co-Author of “The Art of Bitfulness”
Technology companies have maintained the perception of heady innovation and life-changing convenience. Despite this, they are now being criticized for their lack of leadership in solving societal problems, and in some cases, blamed for making these problems worse.
Yes, these companies still make many exciting, engaging, products. But the public is starting to see the costs that these products can impose on our wellbeing, on social harmony and our climate. There is also an increased threat perceived to livelihoods — both from losing jobs to automation and losing the stability of a regular income to the uncertainty of the gig economy.
The consequences have been especially striking in developed countries such as the U.S., where trust in the technology sector has dropped by 24 percentage points over a decade, to a low of 54 percent, according to the 2022 Edelman Trust Barometer Special Report: Trust in Technology. Yet a different story is unfolding in parts of the developing world, where technology companies are more trusted now than they’ve been in the recent past. Indeed, in 2022, the technology sector remains the #1 most trusted sector in all 9 of the developing countries that ranked it as #1 back in 2016, whereas the sector has lost that status in 9 out of 11 developed countries that ranked it as #1 back in 2016.
For an industry that prides itself on being “scalable” across geographies, this huge difference in public perceptions is perhaps surprising, until you see how even software cannot escape social context. My own experience serves as a good example of this difference.
In 2009, I was asked by the Government of India to help with an ambitious project to tackle the lack of accountability to the public around the billions of dollars set aside by the government each year for welfare schemes, arising from the lack of any verified register of India’s eligible residents. On paper, the welfare money was getting to its intended beneficiaries, but in practice, we never could really know if the person who collected a benefit was real or, more likely, a figment of some enterprising middleman’s imagination. A former Indian prime minister, Rajiv Gandhi, once publicly stated that for every Rupee the government spent, less than 15 paise would reach the intended beneficiary.
So India started Aadhaar, a digital ID system that enrolled a billion people in just five and a half years. With this digital technology, around 400 million people who the state could hitherto not see were brought under the protection of its welfare programs.
The word Aadhaar means “foundation” in a variety of Indian languages. It was envisioned always as a platform on which many other solutions could be built. Today, 98 percent of India’s adult population has an Aadhaar number, and that forms the basis of the Direct Benefits Transfer program. More than $300 billion has been transferred directly into the bank accounts of beneficiaries, reducing “leakages” and corruption. The proof of identity provided by Aadhaar has also been used to open bank accounts, issue SIM cards, strengthen the tax base and in many ways, formalize and digitize the Indian economy.
The approach the Indian government took — of building a digital infrastructure that could be plugged in to multiple use cases — has become a new model for solving hard development problems with technology. Indian bureaucrats in collaboration with the private sector have worked to spread this approach from ID to payments, and now to health and even ecommerce. This infrastructure is open and freely accessible by all. We call these kinds of technologies Digital Public Infrastructure.
In developed economies, the technology industry usually offers efficiency or convenience. Typically, it enables you to do the things you already were able to do faster, better or cheaper. Yet often this efficiency comes from automation and replacing labor. Even when a service is internet native and does not eliminate jobs, often these technologies are designed to capture data and consumer attention and sell ads. In countries such as the U.S. the per capita spending of the advertising sector is north of $800. It is this advertising money that funds the creation of tech giants who are able to offer their services ostensibly for free.
In most developing economies, technology, and hence the technology sector, plays a very different role than it does in the developed world. One reason is that advertising dollars from developing nations are usually only a fraction of their developed economy equivalents. For instance, across all of Meta’s products, India has the highest user base in the world. Whether WhatsApp, Instagram or Facebook, a significant number of users are from India. Yet, out of Meta’s $118 billion revenue last year, India contributed only $2 billion. The logic of advertising and data that underpins the technology sector in developed economies does not hold as much water in developing economies.
That helps explain why a growing number of these countries are embracing the strategy of building Digital Public Infrastructure, combining digital ID systems and payment networks that allow users to transact online with much ease. Typically, governments or philanthropies are the main investors in building out this digital public infrastructure, creating platforms on which the technology sector can build genuinely useful applications at an affordable cost.
In developing nations, digital technology allows vast swathes of the population to do things they never really could before. People really do see their lives change – technology is trusted not just because it is making living more convenient, but because it is empowering people with entirely new opportunities and access to a world they never knew. That doesn’t mean that citizens of developing countries are Panglossian about technology. According to the Edelman Trust Barometer, they worry more about their data privacy (78 percent vs. 69 percent, on average) and about fake news being used as a weapon (78 percent vs. 68 percent) than their developed nation counterparts.
A report by the Bank of International Settlements in 2019 said that what India achieved in seven years in terms of expanding financial inclusion would have taken 47 years through traditional means of growth. In the pandemic, countries with digital infrastructure were able to make relief payments directly into the bank accounts of those affected quickly and efficiently, without losses or leakages. Many developed countries, including the U.S., had to struggle with a check in the mail, which people then had to venture out in the pandemic to cash.
The Digital Public Infrastructure model of technology also addresses another key challenge of trust in the technology sector. According to Edelman’s Trust in Technology report, 56 percent of respondents globally feel that government regulators “do not have adequate understanding of emerging technologies to regulate them effectively.” When you build Digital Infrastructure, you can also embed in it safeguards for privacy, security and interoperability. This infrastructure can prevent the creation of walled gardens and monopolies and encourage competition from the little guy. Regulators can enact policies directly in the technology, without having to rely on often what amount to slap-on- the-wrist fines to try to enforce them. With DPI, the threat of revoking access to the infrastructure can be a powerful tool for regulators to enforce policies promoting equality.
In terms of bang for buck, building digital infrastructure is probably the most effective intervention that developing or developed countries can make. No wonder governments around the world are increasingly asking for their own DPI solutions in digital identity and payments similar to India. The tech industry should embrace this cause. Indeed, there are one or two recent encouraging signs that some leading companies may be starting to do so, though not yet anywhere near fast enough. For instance, when the U.S. Federal Reserve decided to build a fast payments system, the FEDNOW, due to be launched in 2023, Google wrote an open letter to the FED recommending emulating India’s Unified Payments Interface (a key part of the country’s DPI).
Peter Thiel, a leading Silicon Valley investor, famously said that “competition is for losers.” He and many others argue that to capture value in technology nothing beats building a monopoly on a platform. Yet as Edelman’s trust data shows clearly, this approach is no longer something that consumers find trustworthy. Instead, if the tech sector chose to promote digital public infrastructure, it could help strengthen trust in technology across the world.
This is not some “woke” call for industrial altruism, but rather an argument for enlightened self-interest to ensure the long-term health of the sector. Technology companies are losing trust in the developed world precisely because they are no longer solving real, pressing problems for their users and communities. By committing to the DPI approach, tech companies can empower their user instead of ensnaring them in walled gardens. As the experience of the developing world shows, this is a proven way for the technology sector to rebuild trust with the people.