ASSIGNMENT

ON

Regulation of Digital Platform

Submitted in partial fulfilment of the requirements for the

Award of the degree of

Master’s in Business Administration

In
Financial Management

(2019-2021)

FORE School of Management, Qutab Institutional Area,

New Delhi, Delhi 110016

Submitted by:

Aastha Narang (024001)

Kunika Valecha (024025)
Pulkit Dhanava (024036)
Question 1: What are Digital Platforms? Do we need to regulate them?

Answer 1:

Digital platforms are online businesses that facilitate commercial interactions between at least
two different groups—with one typically being suppliers and the other consumers.
Digital platforms offer consumers and businesses the ability to connect to financial and other
service providers through an online or mobile channel as an integrated part of their day-to-
day activities.
Based on current trends, digital platforms will become the preferred and dominant business
model for banks and financial institutions in the future.

Examples of Digital Platforms

● Google search engine: “advertising” business model.
● Social platforms: Facebook, Twitter, Instagram, LinkedIn – “advertising” business
model.
● Application stores: Apple/Google Play – “digital good” business model.
● Market places: Amazon, Flipkart shopping engines: “ecommerce” business mode
● Hospitality: Airbnb, Oyo rooms
● Transportation: Uber, Ola
Benefits of Digital Platforms
● Digital platforms contribute to significant reductions in transaction costs, including
distribution, search, contracting, and monitoring costs. For example, aggregation
platforms such as TripAdvisor and Expedia gather and combine travel information
from multiple sources into one platform, thereby reducing the cost of searching for
information and using the services of intermediary agents.
● Digital platforms make it easier for companies to find customers, monetize
underutilized assets, and reduce transaction costs.
● They have many pro-competitive effects, such as reducing barriers to entry and
making it easier for small, flexible suppliers to reach consumers.

Need for Regulation of Digital Platforms

In our opinion, there is a need to regulate the digital platforms. The government has a number
of justifications for interfering with digital platforms’ and consumers’ rights, including to
protect national security, public order, health, labor interests, antidiscrimination, morals, and
the rights of others

Freedom from improper influence-Digital platforms provide a powerful medium to express

opinions and to share information. In this way, platforms can contribute to pluralism and
diversity. The downside of this fundamentally positive characteristic is that there is also a risk
that the platform itself or others that have access to the data can use it improperly.

Political impact: Viral platforms on digital platforms spread like wildfire. There is no such
credibility of the sources and hence there is no certainty that the information being
disseminated is authentic. Such post with political agendas can impact a citizen’s decision
making. The impact of Social Media Digital platforms was well pronounced in the Lok Sabha
Elections of 2019. Spreading fake news, boasting about fake achievements, boasting of fake
achievements, hailing of fake agendas could not be monitored. Hence the “popular opinion”
became “public opinion”. The platform of social media should be considered like any other
form of media like print and television. The way print and other media abide by the rules, the
social media should too accept information backing a political agenda only after verification.
Market Distortion: e. E-commerce websites ruin business for offline retailers: E-commerce
entities distort the market by sourcing and selling goods on their own platforms. This violated
the policy that disallows foreign direct investment in business-to-consumer (B2C)
ecommerce. It allows 100% FDI in business-to-business (B2B) ecommerce. Eventually, the
offline retailers suffer a lot and hence there should be some kind of moderation to provide

Access to illegal content: With Internet penetration becoming more and more in the country,
the accessibility to information deemed to have harmful consequences has increased.
Information like building explosive material is available on many platforms online.
Regulations are needed to curb the access to such content.
Copyright infringement: The most important intellectual property rights i.e. copyright is
also the most difficult to protect from infringement. Piracy of movies and other creative
works has increased many folds due to digital platforms like torrent, etc. usage of others’
content and passing it as their own is common and hence there is a need for curbing such
activities via some kind of regulations.
Cyber Crimes: Digital platforms, especially social media, has led to the evolvement of new
kinds of crimes. Phishing, bullying, hacking etc. have become so common. Sometimes the
harm caused by cyber criminals can be psychological and physical as well. There is a need
for protecting one’s privacy on such platforms and hence proper rules and regulations are
needed to protect the privacy of users.
Data Security: Digital platforms have vast amounts of data can be collected and stored. This
can be private information concerning individuals or organizations. It can be very difficult to
keep this data safe. Just a single breach can mean vast amounts of private information going
into the hands of criminals, terrorists, foreign enemies, or other malign entities.
Crime and Terrorism: The internet is fertile territory for malevolent forces to operate,
thanks to its international nature, large scale, and the relative anonymity that users can enjoy.
Examples of this include: terrorists using social media to promote themselves and encourage
others; drug dealers using the dark web to trade; paedophiles using chat rooms and other
places to exchange photos, videos and other information; and authoritarian regimes
attempting to sway or distort elections in democratic countries
Question 2: Discuss ways of regulating the digital platform?

Answer 2:
The regulation of Digital Platforms should be based on these broad principles:

● Parity: the same level of protection must be provided online as offline

● Accountability: processes must be in place to ensure individuals and organisations are
held to account for their actions and policies
● Transparency: powerful businesses and organisations operating in the digital world
must be open to scrutiny
● Openness: the internet must remain open to innovation and competition
● Privacy: to protect the privacy of individuals
● Ethical design: services must act in the interests of users and society
● Recognition of childhood: to protect the most vulnerable users of the internet
● Respect for human rights and equality: to safeguard the freedoms of expression and
information online
● Education and awareness-raising: to enable people to navigate the digital world safely
● Democratic accountability, proportionality and evidence-based approach

Measures to regulate digital platforms: -

● Embrace comprehensive sector-specific regulation by empowering a single regulator
to oversee digital platforms, rather than using multiple agencies to apply a mix of
competition policy, content moderation policy, consumer protection and public safety.
Only by recognising the unique nature of digital platforms can governments ensure
comprehensive and appropriate policy across the board.

● Provide guidance to the sector regulator based on enduring values of promoting

competitive markets, protecting consumers, encouraging free expression and news
production while protecting vulnerable members of society from harassment, and
utilising the capacities of the sector to protect public safety.

● It should be made mandatory for users to specify the nature of their creative commons
before uploading the content. Content marked as copyrighted (without share alike),
should not be available for downloads and copy pasting must be disabled. This would
secure artists’ works to a great extent.

● No E-commerce website should be allowed to save the financial data of its users.
Card details, account numbers too should not be saved by any website. Mandatory
redirection to new page (that does not save any cookies) should be done by websites
at the time of payment.
Co-regulation & Soft Law

Co-regulation has been a feature of regulatory theory for some time, and is premised upon the
notion that regulators can set the general rules and laws, and industry can oversee the
operational dimensions of their application, subject to oversight from the government
regulators and the parliament. It typically requires the existence of a third party between
government and the regulated firms to set and enforce rules and standards, and can be
advantageous when there is both a public interest in regulation but a need for government to
have some distance from the process, whether due to costs of regulation or the need for
proximity in order to have ready access to relevant information.

The concept of soft law is originally derived from international law, and refers to the use of
quasilegal processes, typically applied at an industry level, to enforce appropriate corporate
behaviour, including rules, norms, guidelines, codes of practice, recommendations and codes
of conduct.

The effective application of soft law requires:

1. An institutional framework to be in place that creates a compulsion to cooperate among

regulated entities
2. Clearly identifiable entities that are subject to the regulatory processes
3. An apparatus to address non-compliance and to ensure that sanctions are enforced when
rules are broken
4. Clear channels of communication of the rules, breaches, responses and evidence of
compliance or redress.

For soft law to have teeth, it requires the oversight of independent public agencies that are
nonetheless trusted by the parties who are subject to such provisions. It also needs clear
backing by state regulation and civil and criminal law (‘hard law’) if required.

The potential of ‘soft law’ is that it recognises the difficulties of simply existing laws and
regulations designed for publishers or broadcasters to Google or Facebook, as they do not
identify with these traditional media industry models. It would enable digital platform
companies to have a role in shaping the regulatory requirements they are subject to. It is also
conceivable in principle that provisions could be developed by relevant government agencies
working with the relevant digital platform industry stakeholders
 References: -

https://www.weforum.org/agenda/2019/05/digital-platforms-act-regulation-ebook/

https://onlinelibrary.wiley.com/doi/full/10.1002/poi3.177

http://reports.weforum.org/delivering-digital-infrastructure/how-regulatory-policy-can-keep-
up/?doing_wp_cron=1566649893.8291580677032470703125

https://indianexpress.com/article/opinion/columns/digital-india-versus-real-india- 5543804/

//economictimes.indiatimes.com/articleshow/67258251.cms?utm_source=contentofinterest&utm_
medium=text&utm_campaign=cppst

https://techcrunch.com/2019/03/11/online-platforms-need-a-super-regulator-and-public-interest-
tests-for-mergers-says-uk-parliament-report/