Public enterprises are set up to improve public welfare, not returns for investors
A jury in Los Angeles has found major social media platforms (Meta’s Facebook and Instagram and Google’s You Tube in California legally liable for harm to a young user’s mental health. They were negligent in the design of their platforms and were responsible for creating addictive features (like infinite scroll, autoplay and algorithmic recommendations) that encouraged compulsive use. The court awarded $6 million in damages to the young plaintiff.
The companies intend to appeal. Their case is they are speech platforms. They say the justice system should go after the people misusing the platforms, not the owners of platforms. They imply that ‘platforms’ are public utilities that make it easy for people to do whatever they want— abuse each other, buy pornography, entertain themselves, spread fake news, etc. It’s up to the users to use the platforms responsibly.
Last month, the non-executive chairman of the board of HDFC Bank resigned. Because the values guiding the bank’s management were not aligned with his personal values, he said. He had misgivings about the bank mis-representing risks in the products it sold. HDFC Bank is the second most valuable corporation in the Indian stock market, following Reliance Enterprises. The bank’s stock price fell 8-9 percent in a single session following his resignation, and continued to decline, erasing about $16 billion in the bank’s stock value before stabilizing. The Chairman of SEBI, the stock market regulator, reacted sharply. He said the chairman’s ‘vague statements’ had harmed investor confidence. The implication was that the duty of the chairman and the board—even if they are ‘independent’ directors—is only to protect the interests of investors.
These cases highlight fundamental issues of public governance. What is the purpose of a public platform or utility? What principles should govern their management? Should utilities that serve the public be measured by how much wealth they produce for stock market investors or by the public welfare they create?
Public utilities are necessary for providing services equitably for the essential needs of all citizens for their healthy lives and secure livelihoods. These include clean water, nutritious food, shelter, physical security, health, energy (fuel, electricity), information, education, and essential financial services (banking, loans when required for livelihood purposes, and insurance). These are the fundamental rights of all citizens in any decent society. It is a state’s duty to ensure that all its citizens are provided these services irrespective of their capacity to pay.
An enterprise is set up for a Purpose. The primary purpose of any business enterprise in the private sector, whether it is unlisted or listed on the stock exchange, is to produce financial returns for its owners and investors. It has no obligation to provide its products and services to customers who cannot pay enough. Whereas the purpose of enterprises in the public sector is to provide services to all citizens, and especially those who cannot pay enough. Their purpose is to provide public welfare, not financial profits for the government as an investor. Therefore, the performance of financial institutions in the public and private sectors must not be compared by their performance in stock markets. Public enterprises are set up to improve public welfare, not returns for investors. By this measure, the State Bank of India and Life Insurance Corporation have contributed far more to society than HDFC Bank, for example.
Values provide principles for judging the methods institutions use. Efficiency, Ethics, and Equity are essential principles for boards and managers of all organizations in the public and private sectors. All organizations must use their resources efficiently. Their managers must be ethical too, and not award themselves high salaries, bonuses, and perks, on the specious grounds that they deserve these salaries because they are much smarter than their fellow citizens and believe they have earned their salaries by their out-sized contributions to society by increasing the wealth of investors in their enterprises. The business of a private enterprise may be only business. The business of a public enterprise is to increase public welfare.
The only equity that financial investors understand, and corporate boards must endorse, is equity of the stock market kind. They are not required to uphold equity of the societal kind. Independent directors are expected to stand up for the rights of small investors against the demands of promoters and majority owners. They are reminded that the purpose of the enterprise is to produce wealth for its shareholders. They must not bring their personal conscience into the board room and ask the board and management tough questions about societal equity.
Public sector enterprises must be efficient, no doubt. But privatizing a public enterprise to make it more efficient is throwing out the baby with the bath water. Privatization of economies has gone too far with the victory of US style capitalism over socialism, and the surge of financial globalization, since the 1990s. India has privatized its education and health sectors too much, too soon. China, Vietnam, and Nordic countries have stayed on their ‘socialist’ courses. They rank much higher than India on the human development scale.
China has let entrepreneurial spirits loose in business sectors. It has created world scale, and class, enterprises in many sectors, including ‘new tech’ sectors—renewable energy and AI. Nevertheless, the Chinese state has retained tight control of its financial sector, and the technology sector too, to an extent that ideologically liberal Western economists find intolerable. At the same time, Western governments are struggling to find solutions to regulate US technology enterprises and their wealthy owners who are destroying the social fabric and harming youth by addicting them to their enterprises’ services.
India must not go backwards to the pre-1991 era. Nor can it remain wedded to post 1991 neo-liberal economics. Even the US is searching for a new way. India must find its own independent way forward untied from ‘Washington’ economists and US technology firms.
Arun Maira
Author of Reimagining India’s Economy: The Road to a More Equitable Society
2ndApril 2026
(Published in The Tribune, 8th April 2026)
https://www.tribuneindia.com/news/comment/the-purpose-of-platforms-and-public-utilities/