Digital Platform Policy Highlights - Digest 44
Q4 2024 Policy changes: External regulations and rising public pressure have pushed major platforms to roll out new policies aimed at keeping users engaged, safe, and satisfied.
This post is part seven of a series highlighting how platforms are responding to external regulations in Q4 2024 through policy updates and product adjustments aimed at enhancing compliance and user trust.
TL; DR→ Here are policy changes to address external regulation:
Philippines levying tax on foreign-base digital service providers
Ireland Rolls Out Online Safety Code Targeting Harmful Content on Social Platforms
TikTok and its Efforts to Separate EU User Data
Regulators in the EU have compelled TikTok to build of dedicated data centers in Europe and establish protocols to restrict data access to address concerns about user privacy and data sovereignty. How does this development affect the traditional platform network effects dynamics? Given that EU residents may now see a different set of recommendations, TikTok EU potentially becomes a different product from TikTok US. Will the same theories around same-side network effects still apply under these circumstances? (link)
India's Restrictions on WhatsApp Data Sharing
In November 2024, India's Competition Commission imposed a $25.4 million fine on Meta and ordered WhatsApp to cease sharing user data with other Meta-owned applications for advertising purposes for five years. This decision followed a 2021 investigation into WhatsApp's privacy policy, which allowed data sharing with Facebook, leading to widespread backlash. The Commission specified that such data sharing should not be a prerequisite for users to access WhatsApp services in India. We are now witnessing regulations which challenge the foundational economics of free platforms and multi-platform acquisition strategies to create synergistic values. (link)
Vietnam's Proposed Data Protection Law
Vietnam’s draft data localization law, aimed at tightening data protection rules and limiting overseas data transfers, is going to affect international (mainly US) tech firms’ operations in the country. By requiring prior authorization for the transfer of "core data" and "important data" overseas, Vietnam is now requiring international tech giants to potentially choose between market access and operational efficiency. I see this move as aligning with other governments’ use of non-monetary “tariffs” to force international digital platforms to invest in local infrastructure and workforce. (link)
Philippines levying tax on international digital service providers
The Philippines’ 12% value-added tax (VAT) on digital services offered by foreign tech giants such as Amazon, Netflix, Disney, and Google continues the aforementioned saga of governments using regulations to balance platform economics and domestic economic interests. The law’s slated purpose is to level the playing field between foreign digital platforms and domestic businesses and to use the collected revenue to fund creative industry projects. It is almost shocking how the existing system could not tax international giants due to requirements for “physical presence” and the inability to determine the “place of performance” until late 2024. (link)
Malaysia Requires Social Media Platforms to Obtain Licenses
Malaysia’s mandatory annual licensing requirement (starting 2025) switches regulatory compliance from reactive enforcement to proactive revenue generation. The new policy, along with its slated intentions to combat cybercrimes, online fraud, and protect children, also establishes clear jurisdictional authority over international tech giants’ operations. Some of the rules appear particularly stringent: social media platforms must comply with local laws, including religious content pre-approval and contributions to the Universal Service Provision Fund. Predictably, this switch to a “negotiated privilege” model has prompted protests from tech giants like Google, X, and Apple, along with criticism from Asia Internet Coalition. (link)
Ireland Rolls Out Online Safety Code Targeting Harmful Content on Social Platforms
The new Online Safety Code leverages Ireland’s status as the regional headquarters of multiple social media platforms (Facebook, Instagram, LinkedIn, Pinterest, TikTok, Tumblr, Udemy, X, YouTube, you name it). The implementation cleverly works within EU legislative constraints by essentially enhancing the notice and takedown mechanisms (through user reports and prompt removal by platforms) without imposing direct monitoring obligations. This regulation will likely spur platform changes in the near future, similar to how California’s privacy regulations become national standards as companies don’t want to maintain separate operational frameworks. (read my working paper here). (link)
Research help from Simran Joshi, Anantesh Mohapatra, Nicole Wu, Aarav Gupta, and John Mai (Thanks a ton, folks!)
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