Essay #11 in the Data and Pandemic Politics series on data justice and COVID-19

Editors’ Note: This post by Anisha Nadkarni looks at government decision-making power in relation to pandemic technologies, and how the role of government in determining what kind of power the private sector should possess in the public sphere is diminished by the pandemic emergency.

The editors would like to thank the Rule of Law Programme Asia, Konrad-Adenauer-Stiftung for their support in curating this essay.

Introduction

As part of a series analysing the applicability of Tamar Sharon’s ‘sector transitions/transgressions’ theory in the Asia-Pacific context, this article will offer a Malaysian perspective. With the dominance of private technology companies in increasingly varied sectors that form part of our society’s critical infrastructure (such as transport, healthcare, and banking to name a few), there is a need to pay attention to how the decision-making capacity of governments is shifting. In the broadest theoretical sense, these sector transitions may become transgressions if they pave the way for “a crowding out of essential spherical expertise, new dependencies on corporate actors for the delivery of essential, public goods, the shaping of (global) public policy by non-representative, private actors and ultimately, the accumulation of decision-making power across multiple spheres” .

The COVID-19 pandemic has wreaked havoc on Malaysia economically, societally and politically, with Malaysia having been ranked by Bloomberg’s COVID Resilience Ranking as having the worst outlook for successful reopening out of 53 countries. Whilst battling the pandemic Malaysia has simultaneously been undergoing a political crisis, with multiple changes in government and a build-up of public tension to unprecedented levels.

In such an environment, with the government unable to deal with the crisis on its own, it is unsurprising that the private sector—particularly established technology companies—have been heavily involved not just in filling gaps where the government lacks capacity, but often proactively taking on an advisory role in nationally strategic areas. This article will trace this phenomenon as a continuation of an already existing dynamic in Malaysia whereby the government has tended to lean on private tech companies for advice. This article will delve into some case studies to think through the sociopolitical ramifications of these developments.

When do sector transitions become problematic for society?

This is not an exhaustive checklist but aims to contribute some starting points for a framework that could be developed to help guide policymakers on what indicators to look out for. Some scenarios indicating that a sphere transition could cause societal harms are:

  1. When groups in society are systematically excluded from the purported services/ benefits being offered by the company
  2. When we become highly dependent on one company for essential services
  3. When companies are subject to less regulatory and public scrutiny in terms of quality and/or ethics upon entering a new sector where they are not an established player (this might be reinforced by point 2)
  4. When private companies acquire quasi-governmental power in their ability to influence and proactively drive policy and national strategy; and especially when this happens across multiple markets/domains of social life in which they are active
  5. When, due to point 4, the interests of the greater public are not being prioritized in policy decisions.

In practice, these potential scenarios are interrelated and tend to reinforce one another. We will illustrate these scenarios through case studies of what has been happening in the Malaysian landscape.

Case study 1

The inclusion of private tech companies in areas of national public interest and policy is not new in Malaysia. The pandemic merely accelerated this trend and strengthened the government’s dependency on these companies. For example, the Malaysian government has a long-standing relationship with Huawei in projects that span a wide range of societal spheres, which has strengthened the company’s role as an advisor on government policies.

In 2016, Huawei became an official partner to advise the state government of Sabah (in Borneo) on various strategic topics such as smart state planning and smart tourism, on top of providing its more ‘traditional’ offering of technical infrastructure such as data centers and high-speed broadband. In 2020, they partnered with Malaysia Digital Economy Corporation (MDEC - a branch of the government tasked with developing Malaysia’s digital economy) on the long-term goal of local digital talent development. In 2021, they partnered with the Ministry of Communications to position Malaysia as a regional center of cybersecurity and accelerate the country’s plans for national 5G rollout.

This is only a handful of examples of a commonplace phenomenon in Malaysia (and other Southeast Asian neighbors) whereby technology companies, especially those that are already well established, are not merely service providers to the government, but are given influential roles in national policy development.

In light of this history, it is not surprising that last year Huawei offered its AI COVID diagnostic solution for free to the Ministry of Health, to deploy in hospitals across Malaysia. The tool analyses CT scans to assess the probability of coronavirus in a patient’s lungs within a matter of seconds, enabling doctors to make faster diagnoses.

Malaysia’s government hospitals were desperately under-resourced, thus, the lack of governmental capacity paved the way for this sector transition. In this case the service provided by Huawei’s sector transition was clearly beneficial to the public and sorely needed by the government.

Yet, whilst regulators should not hamper innovation, we do need to be cognizant that solutions developed by technology companies—which are not necessarily domain experts—may not be held to the same high standards as established healthcare players. This is why the question of whether we have an appropriate legal and regulatory framework in place is important. An AI system would likely fall under the remit of Malaysia’s Medical Device Act 2012. Yet legal scholars have argued that this Act is inadequate for regulating AI because it does not account for the adaptive nature of AI. In health diagnostics especially, an AI system should learn and adapt based on new data once it is deployed in the real world. This makes it distinct from the traditional medical devices for which the Act was formulated, and thus does not allow for an appropriate assessment of its possible risks. In summary, Malaysia does not yet have a legal framework fit for regulating AI in healthcare - so there is unlikely to be meaningful regulatory scrutiny of tech companies entering this market. Some of the significant risks in rolling out technical solutions at scale without appropriate regulatory oversight are that accuracy (has an appropriate amount of standardised testing been done to ensure the solution is accurate?) and accountability (who is accountable if the solution turns out to be giving erroneous advice?)—which are crucial in healthcare—may be compromised.

Case study 2

In July 2021, Google partnered with the Ministry of Education in an agreement for the company to train 5,000 teachers in government schools across the country to become ‘Google-certified educators’. This programme trains teachers to fully integrate Google products into their classrooms, with the goals of increasing efficiency, saving time, and making lessons more interactive.

This is operating in a context of an education system that has long been plagued by teacher shortages even pre-pandemic, where EdTech was barely understood let alone used in the public school system, and where a large proportion of the country’s population still lacks access to appropriate devices and a stable enough Internet connection to enable remote learning (even while Malaysian schools were closed for in-person lessons for prolonged periods over the past two years). In these conditions, Google may be able to provide (at least part of) the solution faster than the government possibly could by itself.

So, considering the lack of valid public sector alternatives in Malaysia, these services play a valid role. Again, this will lead to increasing dependence on private companies to render services that we should be able to expect from our government.

Besides that is the question of who owns the public interest data generated by virtue of this technology being outsourced. Google (or any other technology company in this space), by providing the ecosystem and infrastructure, will accumulate a trove of data about students’ learning capacities and behaviors. Not only is there the possibility that this data could be monetized in the future, but it also continually strengthens their position as advisors in education policy. Based on historical trends it is likely, and understandable, that the government will look to them for this.

Given this very foreseeable path, we should, both as a country and a region, start thinking critically about the level of involvement of technology companies in domains of societal interest, whilst acknowledging that the insights these companies can provide to the government based on their proprietary data is undoubtedly valuable in policymaking.

Case study 3

For some time now, Malaysia has maintained that financial services are one of the top five nationally-prioritized sectors for developing AI and big data analytics (BDA) use cases. In line with this, in 2016 Bank Negara Malaysia, the central bank, launched a regulatory sandbox for companies to be able to develop fintech with reduced regulatory restrictions. This was a trend across ASEAN - Singapore, Indonesia, Thailand and Brunei, amongst others in the region, also created regulatory sandboxes for fintech around the same time. In terms of the policy goal, in Malaysia there has been no explicit discernment between financial institutions experimenting versus tech companies experimenting - the aim is to boost innovation within financial services as a whole and encourage greater deployment of AI and BDA in finance and insurance use cases. In fact, the National 4IR Policy published in July this year explicitly stated its vision for the private sector to find “more opportunities for… cross-sectoral technology applications” particularly within these priority sectors.

In summary, both national and regional government policies have been encouraging local tech companies to innovate and cross-fertilize in this area since well before the pandemic. When it comes to AI and BDA, tech companies with existing market dominance in another area involving payment transactions would have the obvious advantage, since they already have massive proprietary datasets. This policy is achieving its goal of ‘cross-sectoral technology applications’, as evidenced by Grab, which started life as a ride-hailing company and is now a major player in e-wallets, and experimenting with other financial services like loans, digital banking, insurance and robo-investing.

When we consider this entire trajectory, it is unsurprising that Grab crossed over into financial services - the pandemic simply provided an opportunity to accelerate this agenda, but it would be inaccurate to say this occurred mainly as a result of the pandemic’s emergency context. It is a shift that has been openly facilitated and supported by the government, in terms of policy, messaging and incentivization.

Aside from the top-down facilitation of this crossover, sector transition for a company as successful as Grab in the Malaysian market is also generally well-received by the public if it means that services are delivered in a more all-inclusive and seamless way. Compared to the global average, Malaysians have been found to be far more trusting and receptive1 to their personal data being collected by private companies if it provides them with better products, services and access to information. In fact, two kinds of service providers stand out in terms of the exceptionally high levels of trust the Malaysian public places in them when it comes to using citizens’ data: financial services (60%) and healthcare (57%) - both of which have been a primary target of transitions by tech companies. The high trust in financial service providers may seem surprising, since this sector is one of the most ‘high risk’ when it comes to use of big data analytics and AI2. However, it indicates low awareness of the risks amongst the Malaysian public, which is a factor of lack of transparency among the sectors. The public acceptance facilitates an environment where sector transition from technology to financial services is expected and indeed welcomed by citizens, reinforcing the point that this is not an exception arising from the pandemic.

In a continuation of its diversification into new sectors, Grab is also entering education. In a joint project with Microsoft, it aims to provide basic digital skills training to 10,000 drivers and deliverers in Malaysia by the end of 2021. Clearly such courses are beneficial to recipients in the immediate term, to improve their prospects of finding work, especially for those who are older and more likely to become alienated from the digital economy due to poor digital literacy.

Yet, Malaysia’s job market has a larger, more deeply-rooted problem to which, arguably, gig economy companies are contributing: an estimated quarter of all jobs in Malaysia are now gig jobs, meaning a significant proportion of the population lacks the basic security net of insurance and pensions. This has accelerated as a result of the pandemic: more people have involuntarily had to turn to gig-work due to the prolonged economic shutdowns in Malaysia, and the lack of government aid to businesses that resulted in lay-offs. So whilst digital skills training undoubtedly helps citizens in the short-term, a much more sustainable economic solution would be for successful companies to help make a higher proportion of better jobs available, and prioritise social safety nets, so that people do not have to rely on zero-hours contracts to make ends meet. This is not necessarily the first interest of gig economy companies, whose business models rely on the availability of a large pool of people prepared to work on insecure terms for low pay. These are facts about the gig economy (one sector in which the company is active) which may be overshadowed by its initiatives in another sector, i.e. providing educational programs to gig workers.

This illustrates how private technology companies with vested business interests are able to gain influencing power across multiple domains, even though they do not necessarily represent the public interest. It is this dependency on private companies for help in multiple sectors, including those which have a clear public-interest component, that should be scrutinized in the Malaysian and ASEAN policymaking context.

At the same time, on the government side, a re-assessment of the repercussions of the gig economy in terms of its (lack of) protection for workers is sorely needed. The gig economy has been positioned as an important new source of economic growth and its development is being encouraged by national policy (the 12th Malaysia Plan 2021). There have been some acknowledgements within the government of the urgent need (in light of the pandemic) to re-prioritise social safety nets and people’s wellbeing. However, a more holistic approach that incorporates and addresses the gig economy’s role in this is imperative to ensure sustainable recovery - lest we risk falling into a similar trap as the crash of 1997, whereby Asian economies grew fast without prioritising social protection infrastructures, resulting in a huge proportion of people without safety nets when the system crashed.

Conclusions

  • Tech companies transitioning into other sectors is normalized in Malaysia - it is not a factor of the pandemic.
  • Malaysia’s governments have historically had a tendency to lean heavily on private tech companies not only to provide vital infrastructure but also strategic advice on future policy directions in areas far beyond technology.
  • Often the sector transitions occur in areas where the government lacks capacity and there is no public sector alternative - so it is inevitable that the private sector would step in.
  • Sector transition, which can be beneficial to the public by providing services that are welcomed, may turn into transgression when companies gain the power to influence policy and shape national priorities across multiple domains which have a clear public interest component. As a result, policymaking may not be done in a way that reflects broader societal interests but prioritizes shorter-term solutions that ultimately serve private commercial interests.
  • On the government side, we discussed some steps that could be taken to mitigate the potential harms of sector transgressions. These include:
    • developing the government’s own capacity to develop technologies in-house
    • making government procurement of private contracts more open and transparent to ensure fairness
    • re-evaluating the positioning of the gig economy in national policy with more attention paid to addressing the lack of social safety nets for workers
    • building legal and regulatory frameworks that are appropriate for new technical solutions being deployed at scale to address the COVID pandemic.

These are all long-term steps which are necessary groundwork to ensure a sustainable future for Malaysia’s people.

1 An Ipsos survey across 26 countries found that on average 36% of people would trust organisations with their personal information; yet Malaysian respondents appeared to be more trusting than average, at 48%.

2 This is confirmed by, for example, the fact that the European Commission has recently deemed that various AI use cases within financial services are classified ‘high risk’ in its proposed AI Act.

Anisha Nadkarni works as a data analyst in the innovation and digitalisation department of a multinational corporation. She is also a Tech Policy Research Fellow at the Social & Economic Research Initiative (SERI), a Malaysian think-tank dedicated to evidence-based policies that address issues of inequality, particularly at the intersection of technology and society.


Suggested citation: Nadkarni, A. (2021, November 20). The Crutch of Big Tech: Thinking critically about sphere transitions in Malaysia and their implications for national policy. Data and Pandemic Politics, 11. https://doi.org/10.26116/datajustice-covid-19.011