Intergovernmental Group of Experts on E-commerce and the Digital Dconomy – second session – part 1

Event report

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

The meeting of the Intergovernmental Group of Experts (IGE) on e-commerce started with procedural issues, such as the election of officers and the adoption of the agenda for the meeting. This was followed by a discussion on development gains from domestic and cross-border e-commerce in developing countries, with introductory remarks by Ms Isabelle Durant (Deputy Secretary-General, UNCTAD) and Ms Shamika N. Sirimanne (Director, Division on Technology and Logistics, UNCTAD). From the open plenary discussions, it was concluded that three issues seem to be a priority: (1) Regulatory frameworks are an issue of general concern; (2) More work needs to be done in measuring e-commerce and collecting statistics; (C) There needs to be more support for readiness assessments for least developed countries (LDCs) and other developing countries.

The first informal substantive session of the meeting was dedicated to the role of digital platforms in e-commerce and development.

Mr Nick Srnicek (Lecturer in Digital Economy, Department of Digital Humanities, King’s College, London) explained how platforms are spreading in every aspect of the economy. He proposed a classification of different types of platforms. Some platforms are highly dependent on data with their revenue coming from advertising. To sustain their business model, they need to collect data from users, therefore privacy issues will always take the back seat for them. Other platforms are increasingly cloud platforms, such as Amazon and Cloudforce, and also industrial cloud platforms. Product platforms, such as Spotify and Zipcar, transform goods into services that can be used. Lean platforms, such as Uber and Airbnb, do not own resources (e.g. cars or real estate). They are not profitable but have been sustainable so far because venture capital is financing them.

According to Srnicek, the advertising-based revenue model is under scrutiny, especially after the Cambridge Analytica scandal. The lean platform model is not sustainable in the long run. A sign of that is that Uber is buying cars, and Airbnb is opening branded buildings. Srnicek called attention to the rising number of mergers and acquisitions. This new reality requires the updating of policies relating to competition, industrial, trade, and privacy, for example.

Mr Mark Graham (Professor of Internet Geography, Oxford Internet Institute, University of Oxford) focused on the conditions of digital work facilitated by platforms. New workers are mostly coming from low- and medium-income countries. On the one hand, almost all demand for digital work comes from a fairly small group of developed countries plus India. On the other hand, the supply is geographically diffuse. This work mostly consists of invisible digital labour that feeds the growing digital economy, ranging from micro-tasks, to fake-news generation, and more traditional tasks, such as translation services. The labour force faces poor working conditions. Many workers worldwide are aligning their working hours to be in sync with North America and Europe, sacrificing night sleep and family life. In addition, online workers spend an average of 18 hours a week in unpaid labour, looking for jobs.

Some strategies could be put in place to try to foster better and fairer work conditions in online platforms, based on regulation, co-operative strategies, and collective bargaining. Graham mentioned his involvement in the organisation of a fair work foundation, aimed at certifying platforms that meet certain key standards, such as fair wages.

The questions posed to the panel related to the instruments available for developing countries to curb monopolies of developed-country-based online platforms, the sustainability of the platform model, the responsibility of platforms in the context of cybersecurity, the current adequacy of intermediary liability, ways to protect the rights of workers, the role of the state and the private sector in supporting nascent national platforms, and the support for continuing e-commerce-related discussions in UNCTAD rather than in the World Trade Organization (WTO).

Srnicek called attention to the need for state investment, regional investment, and international investment in developing country start-up platforms, many of which are not profitable. He also highlighted the importance of having cybersecurity and data protection by design noting that data localisation is an important policy instrument to make some of the data stay within the country, generating revenue and benefits there. Countries have legitimate interests in preventing some online platform to enter their market in order to foster national start-ups.

The second informal substantive session of the meeting zoomed in on the e-commerce dimension of platforms. The subject under discussion was how to foster local platforms in developing countries for domestic and cross-border e-commerce?

The speakers covered different types of platforms focused on goods, services, and B2B. The importance of collaboration between industry associations, e-commerce platforms, and regulatory bodies was highlighted in the session.

Some issues emerged during the debate with the audience, such as ways to support entrepreneurs in developing countries, the disadvantages of introducing regulation that forbids the disclosure of the source code, the consequences of data localisation provisions, the importance of data protection and cybercrime, and the relation between data flows and data protection.

Mr Leonard Stiegeler (General Manager, Ringier Africa) mentioned the role of the private sector as investors in start-ups located in continents like Africa, which is a growing Internet market. There are companies using Africa as a base to provide services worldwide. Countries should also highlight the strengths of their business ecosystem to attract funds. UNCTAD can support governments in developing strategies to attract investors.

Mr François Martins (Manager for Government Relations and Public Policy, Mercado Libre) shared that his company benefited from both private and public financing from policies that support innovation in Argentina, noting that data protection is not a burden, it is key for businesses, because it impacts their reputation. Companies should protect their customers whether legal frameworks are in place or not. He called attention, however, to the business complexities related to data localisation, forcing companies to fractionate data in different territories. The solution, he emphasised, is not to keep data confined in a certain territory, but to ensure that states can collectively exercise their mission to protect the privacy of their citizens. With regard to competition, Martins was cautions of policies that protect domestic companies from foreign competitors. Rather, there is a need to put in place policies that will make national companies stronger, so they will be able to face competition.

Mr Brijesh Agrawal (Co-Founder and Director, IndiaMART) compared the success achieved by e-commerce sellers in urban in rural areas. When products in the rural area have a strong business proposition, unmatched in the city (e.g. a product characteristic of a certain region, with special qualities), they can compete. When rural products are similar to ones in the urban market, it becomes very hard for rural sellers to compete. He called attention to the need to strengthen domestic e-commerce before succeeding in international e-commerce

By Marilia Maciel