Translartion. Region: Russians Fedetion –
Source: State University Higher School of Economics – State University Higher School of Economics –
Over the past decade, the world has seen an explosive development of the platform economy, the scale of which can be compared to the industrial revolution. However, not a single country has yet been able to develop a harmonious practice for regulating this phenomenon. As a result of the study, HSE experts concluded that a unified legislative framework is needed that will ensure both the protection of consumer and state rights and the development of platforms.
HSE Academic Director Yaroslav Kuzminov, Vice-Rector, Professor of the Faculty of Law Alexey Koshel and Lecturer Department of Policy and Management Faculty of Social Sciences Ekaterina Kruchinskaya proposed a conceptualization of types of regulation of digital platforms based on a qualitative analysis of domestic and foreign experience. Scientific article “Regulation of digital platforms as Bona fides: from economic efficiency to the norm” published in the journal “Issues of State and Municipal Management”.
Currently, economic institutions of all countries are undergoing a major transformation, and at its center are digital platforms, the authors of the article note. Online trade has near-zero transaction costs compared to traditional trade due to instant access to product information and the ability to quickly make a purchase.
E-commerce has been growing exponentially since 2010. In 2013, the global B2C e-commerce market reached $1.2 trillion, and the B2B market reached $13 trillion. In 2017, the total value of platform companies with a market capitalization of over $100 million exceeded $7 trillion, which is about 20% of global GDP. And this trend will continue, according to expert estimates, until 2029.
Three countries have a well-developed market of national digital platforms: the United States, China, and Russia. The total contribution to the economy of four ecosystem companies in the United States that operate on digital platforms is about 20% of the share capital of publicly traded companies. The added value of the main sectors of the digital economy is at least 8% of China’s GDP. In Russia, according to expert estimates, the total contribution of digitalization to GDP growth from 2024 to 2030 may amount to 2.7 p.p. to 6.7 p.p. The largest players in the platform market are also the European Union, the Republic of Korea, and India. These countries do not have their own global digital platforms; international ones operate successfully on their territory.
At the same time, in each country, the development of digital platforms occurs along its own trajectory, not only due to their adaptation to economic conditions, but also largely due to the legislation in force in this area.
“The need to set regulatory frameworks for the activities of digital platforms is due to the fact that the main component of the effective functioning of the market, along with low transaction costs, is the definition of the boundaries of property rights. If such boundaries are not defined, there is a fairly high risk of platform opportunism, as well as lost benefits for the state in the form of lost tax revenues – a classic case of lost benefits according to Pigou. This leads to Pareto non-optimality: the gain of platforms does not always compensate for the losses of other market participants, which is a failure for the state in the medium and long term,” the article notes.
The authors are convinced that clear and transparent rules established by law are necessary for the market to function effectively. At the same time, the degree of government intervention should not be excessive, so as not to harm the development of the industry. Regulation of digital platforms should create conditions under which all market participants — platforms, users and other stakeholders — would be interested in cooperation, and not just in satisfying their own interests. To date, this condition has not been achieved.
Around the world, the legal regulation of digital platforms is still the subject of debate that has been going on for more than a decade.
“Unlike the traditional economic model, the digital environment with its virtual, multi-level and opaque nature creates information asymmetry, complicating the protection of consumer rights. In this regard, the level of protection of personal data and consumer rights becomes a factor in the sustainability of both the digital and traditional economies, and in some cases, a factor in national security,” the article says.
Scientists have identified two opposing paths in the development of digital economy regulation. The first is strict regulation of personal data protection and antitrust regulation with moderate regulation of platform employment. The second is strict regulation of quality control and personal data protection with moderate self-regulation of digital platforms. Both do not sufficiently take into account the interconnectedness of different spheres.
In general, the legislation on digital platforms is poorly balanced. There is still no example of a single framework law in this area that would define the rules of the game for digital platforms in a number of key supporting provisions. The legislator most often reacts to an industry precedent by making targeted changes to individual regulations. Such regulatory practices, based on norms that are not coordinated within the jurisdiction, increase the risk of conflicts and lead to instability in the development of the platform economy and its inefficiency.
According to the authors, given the scale of development of the platform economy and its widespread penetration into various industries, the need to adopt a framework law is obvious. Industry regulation is necessary as a secondary mechanism complementing the basic law.
It is important that regulatory measures are proportionate and do not create unjustified barriers to market entry or the development of existing platforms.
“To achieve regulatory balance, a shift from reactive to proactive legislation is needed, based on the principles of fundamental integrity, but with a demonstration of flexibility and adaptability,” the authors of the article conclude.
Please note: This information is raw content directly from the source of the information. It is exactly what the source states and does not reflect the position of MIL-OSI or its clients.