Case of Infosys versus WHY China is suppressing local technology companies
The glitches found in the Indian income tax portal and the controversy surrounding Infosys for the same have been in news recently. There has been also an argument/narrative that was tried to make the EPISODE AS an anti-industry stand of the Modi government. The company has got a time till 15th Sept to fix it [1] [2].
While the problem with the Income-tax portal was genuine and also Infosys has to also deliver the portal under time pressure the whole episode was blown out of proportion. The industry was miffed because the CEO of Infosys was summoned by the government. However from a customer perspective and that too for such an important project all the customers have the right to call the head of a company. One another reason why the event gathered storm was an article in Panchajanya that criticized Infosys and linked it to the ‘tukde tukde gang and Naxalites. [3]. The magazine accused ‘Infosys’ of funding leftists and other anti-govt organizations and individuals which is something the company must think of seriously which was defended by media like Indian express and news laundry . [4]
However, Panchajanya was unable to provide any evidence for the same. We are unable to verify the charges independently but can only say that government today has to be alert from all directions for any eventuality. The charges may sound far-fetched but then one has to think that instead of a company an individual or a group could play such mischievous if its true. Therefore the possibility cannot be ruled out and instead of being feeling Harassed the company Infosys must cooperate and coordinate with the government.
We also have to look into the recent crackdown of Chinese tech companies by the Xi government. Though both the stories are different yet we have to club them together and leave the reader with some food for thought.
However, the Chinese crackdown over its tech companies is very different and needs to be understood from the right perspective [5]. China owes its present global power to its stupendous technology growth led by many of its successful tech companies. If the US-based FAANG companies are known the WORLD over, China also got Baidu, Alibaba, Huawei, ZTE, Didi, VIVO, Xiaomi, MG motors, Bytedance (TikTok fame) Tencent, and many others. In the absence of Facebook Inc. or Twitter Inc., WeChat and Sina Corp.’s Weibo flourished as social networks.
The Real Issue:
It will be too simplistic a view to considering the crackdown in simple terms and as a measure of regulatory issues and corrupt practices that most of the companies the world over employ. the actual reason that China has done the crackdown is purely strategic and to save the Xi-led communist regime from any public revolt and uprising. Strategic because some of these companies are collecting huge data of the Chinese citizens and anyone can utilize such data for anti-national activities. Alibaba, Tencent and Ant had a combined market capitalization of nearly $2 trillion in 2020 — easily surpassing state-owned behemoths like Industrial & Commercial Bank of China Ltd. as the country’s most valuable companies.
With such wealth concentrated in certain companies with huge data what all can be done is no one’s guess. It’s a simple suicidal call for any government especially one which is authoritarian. It is also interesting to see that one of the sectors that has been targeted is the education sector. The Chinese education sector was minting money as hordes of students wanted to go to the US for higher and other studies. But the issue here was these coaching classes had an unbridled access to students’ data and were able to provide them with learning material of their own which was largely unsupervised by any government control or supervision.
The Cyberspace Administration of China, the internet watchdog, cited data and national security as its prime reason for investigating Didi and now mandates a data security review for all companies seeking overseas listings. More broadly, Xi’s administration blames widening social disparities on the online boom, particularly in the pandemic era, and is moving to address discontent among the populace that could threaten its authority.
Background:
In late July China ordered more than two dozen tech companies to carry out internal inspections and address issues such as data security. Earlier, Ant, which was about to go public before being stopped by regulators in November 2020, agreed to turn itself into a financial holding company, making it subject to capital requirements similar to those for banks. Regulators levied a record $2.8 billion fine against Alibaba for alleged monopolistic conduct and ordered it to change its business practices. Didi had to remove its main app and dozens of others from smartphone stores as it faces the prospect of unprecedented penalties. Tencent, operator of the WeChat super-app, has been ordered to give up exclusive music streaming rights while Meituan and Pinduoduo Inc. have also fallen foul of regulators. The tutoring sector, where companies such as TAL Education Group garnered multibillion-dollar valuations, saw its future redefined in one sweeping order that banned them from making profits and raising capital and also limited what they can teach. The speed of change has been dizzying with rules to curb monopolistic practices drafted and finalized in just three months.
References:
[1] https://www.timesnownews.com/business-economy/companies/article/persistent-glitches-in-the-new-income-tax-portal-becomes-a-thorn-in-infosys-neck/809548[2] https://www.moneycontrol.com/news/business/i-t-portal-glitch-what-went-wrong-with-infosys-new-e-filing-portal-7398561.html[3] https://www.hindustantimes.com/india-news/rsslinked-weekly-attacks-infosys-over-it-portal-glitches-wonders-if-anti-national-forces-at-work-101630762936029.html[4] https://www.newslaundry.com/2021/09/07/software-glitch-isnt-a-conspiracy-business-papers-respond-to-panchajanya-attack-on-infosys[4] https://www.washingtonpost.com/business/why-china-is-cracking-down-on-its-technology-giants-quicktake/2021/08/02/9d2e8392-f347-11eb-a636-18cac59a98dc_story.html
Dr. Asheesh Shah
