What is the economic and social impact of online platforms?

Event report

[Read more session reports from the UNCTAD E-Commerce Week 2018]

A panel of digital commerce experts examined the social and economic implication of the platform economy at this year’s 2018 United Nations Conference on Trade and Development (UNCTAD) E-commerce Week. The moderator, Mr Jakob Kucharczyk (Vice President for Competition and EU Regulatory Policy, Computer & Communications Industry Association (CCIA)) first gave the floor to Ms Teresa Moreira (Head, Competition and Consumer Policies Branch, UNCTAD).

Moreira began by defining the ‘platform economy’ as a marketplace involving service providers, users, and intermediaries. These three parties interact for the exchange of goods or services, defining new business models on the way to lowering market transaction costs. It is unclear whether existing consumer protection legislation is effective for platforms, she noted, before adding that platforms often create new business models with monopolistic tendencies. Paramount to an effective platform sector is comprehensive regulation.

Ms Hanne Melin (Director, Global Public Policy, eBay, Inc.) took the floor stating that her goal was to show how the platform economy could target the UN sustainable development goal #10 (SDG #10), centred on income inequality. Melin noted that during the American financial crisis, new business creation was stagnant, but 75% of American states saw growth in eBay-based businesses. From this data, she asserted that the platform economy is a means of ‘internationalising’ small businesses, giving them access to markets that they never could have reached before. Furthermore, Melin noted that as the industrial sector collapsed in Mexico, eBay-affiliated businesses saw an 8% lift to their revenue numbers. It follows, according to Melin, that platforms offer a means of ‘insulating’ a business from local economic conditions.

Melin concluded by stating that platforms, such as eBay, turn small businesses into ‘global, independent, remote, small businesses.’ In turn, platforms reduce inter- and intra-national income disparities by way of the small and medium sized enterprises (SMEs) sector, helping to address SDG #10. Mr Dylan Piatti (Chairman of the Board, E-commerce Forum Africa, and Senior Chief of Staff, Deloitte Africa), acknowledged Melin’s praise. He noted that protectionist policy tends to stifle import and export competitiveness. An ethical e-commerce strategy must not lose sight of international implications and must transform all aspects of a company’s operating strategy, he added. 

Kucharczyk asked which types of policy are most appropriate to regulate the platform space. Ms Moreira stressed the need for an international outlook when devising regulatory policy, and Mr Saifullah Khan (Managing Partner, S.U. Khan Associates Corporate & Legal Consultants) emphasised the need for more female entrepreneurs in the space. Piatti also cited public-private partnerships as critical to transforming the private sector into an engaged stakeholder of the conversation.

Melin joined the conversation once more, calling on countries to abolish ‘De Minimis,’ or low-value taxes in the name of stimulating consumer confidence. She asserted that SMEs selling internationally bear the disadvantage of being ‘small and remote’, and applying tariffs to their exports simply magnifies those disadvantages. Where the platform economy reduces transaction costs, excessive De Minimis taxes counteract these reductions without material benefit to the importing country, she continued. 

The session finished as the panellists agreed that the objective of platform regulation should be to protect consumer data privacy while minimising collateral damage to each market’s function.

By Frank Kosarek