Elon Musk-Donald Trump bromance could shape the future of digital data flows, including for India

The Biden administration had been creating policy space to regulate Big Tech. For instance, in 2023, US Trade Representative Katherine Tai abandoned long-standing US demands for digital trade rules prohibiting data localisation at the WTO. This aligned with India’s ambition to develop a $1 trillion internet economy by 2030, driven by a surge in online usage. However, Musk and other Silicon Valley companies, including Facebook, Mastercard, Visa, American Express, PayPal, Amazon, and Microsoft, are expected to receive government backing from the new administration in Washington in pushing India to lower its barriers on data flow.

During Trump’s first term, disagreements over data localisation were a major source of friction between India and the US. While India resisted altering its stance on data localisation under any plurilateral agreements at the WTO, it also tightened its norms, notably in April 2018, when the Reserve Bank of India (RBI) mandated that payment system providers such as Mastercard and Visa store payment data for Indian residents within India. Despite these efforts, India’s draft e-commerce policy, which includes strong localisation provisions, remains stalled, possibly under US pressure.

The Data Gold Rush

Regulations on cross-border data flows are among the most contentious topics at the WTO, especially with the rise of Artificial Intelligence (AI). Effective AI systems — seen as the cornerstone of the Fourth Industrial Revolution — require diverse datasets from multiple countries. This has sparked a fierce race for data among Silicon Valley firms, including Tesla.

Elon Musk’s negotiations with China to advance self-driving vehicles underscore the importance of cross-border data flows. In May, following extensive lobbying, Musk secured Chinese approval for cross-border data sharing, boosting Tesla’s stock. This data was crucial for developing Tesla’s self-driving technology. Notably, Musk visited China for this negotiation, skipping a planned meeting with Prime Minister Narendra Modi ahead of India’s general elections.

Abhijit Das, an international trade expert and former head of WTO Studies, said that China has altered its stance on data flows as it seeks to build a robust AI ecosystem. “If AI is developed solely using Chinese data, it will have limited utility. Therefore, China seeks access to data from other countries,” he explained.

China participates in the WTO’s Joint Statement Initiative (JSI) on E-Commerce, a plurilateral effort launched in 2019 to establish global rules for electronic commerce. The JSI tackles issues such as free cross-border data flows and restrictions on data localisation. Over 80 WTO members, including the US, the EU, China, and Japan, are participants.

Despite its historical focus on digital sovereignty, China joined the JSI to bolster its leadership in AI and e-commerce. However, India has opposed the JSI, choosing to remain outside the initiative and its rulemaking process. India’s domestic e-commerce policy, drafted in 2019, which emphasises data localisation, has yet to be finalised.

The Importance of Data Regulation for India

A 2018 UNCTAD report, ‘Power, Platforms, and Free Trade Delusion’, highlighted the importance of data for innovation. It noted that control over data creates “market power and barriers to entry for new players”.

This was echoed in a 2022–23 Standing Committee on Finance report, which criticised Big Tech’s anti-competitive practices. It noted Google Play’s dominance as the primary app source on Android devices, its mandatory use of its payment system for paid apps and in-app purchases, and its unfair promotion of Google Pay. The report stated, “Manipulation of features on a dominant platform may serve as a potent tool to divert traffic to new apps, undermining competition on the merits.”

UNCTAD also pointed to the benefits of data localisation, including encouraging foreign investment in domestic digital infrastructure, enabling enforcement of national laws, and safeguarding privacy and cyber sovereignty. Countries like Vietnam and the Philippines have implemented such measures to promote local capabilities and protect infant industries.

President-elect Donald Trump and lawmakers listen as Elon Musk explains the operations ahead of the launch of the sixth test flight of the SpaceX Starship rocket. (Photo: AP)

India’s Data Advantage

“There is significant data asymmetry between early commercially successful movers and others,” said Abhijit Das. Sharing government data equally between Indian and American Big Tech firms, he argued, would not reduce this disparity. However, exclusive sharing with Indian firms could help level the playing field, he said.

Das noted that India has a significant advantage due to its vast user base and data potential. “The success of any digital product depends on its user base — essentially the data it can leverage. India can replicate global digital products and, with its data advantage, become a powerful player in the digital sector. However, robust regulation is essential. While firms at the technological forefront may not require regulation, India cannot afford to neglect it,” he said.