APPLYING FOREIGN

OWNERSHIP
RESTRICTIONS ON
MASS MEDIA TO
THE INTERNET: A
TOOL FOR
ECONOMIC AND
POLITICAL
SUPPRESSION
By Arvin Kristopher Razon
Member, Philippine Bar
Lecturer and Associate
LLM (Melb)
 OUTLINE

ZERO FOREIGN REGULATORY THE INTERNET

CONTROL POLICY INTERPRETATION AS MASS MEDIUM

ECONOMIC SOCIOPOLITICAL
IMPACT IMPACT
Under the Philippine
Constitution, mass media is a
nationalised activity.
Mass media is defined by the Department of
Justice as 'any medium of communication
designed to reach the masses and that tends
to set the standards, ideals, and aims of the
masses.' The DOJ did not consider the
Internet as mass media.

The rationale is a product of post-

colonial and post-dictatorship thought
that seeks to free Filipinos from foreign
influence, recognising the role of mass
media in national life.
SECURITIES AND
EXCHANGE COMMISSION
(SEC) ON THE INTERNET
Mass media is based on the standard of
'dissemination of information'.
SEC-OGC Opinion No 12-16: a voucher platform
with the purpose of increasing sales of a particular
product or service is mass media.
SEC-OGC Opinion No. 14-06: the operation of a
digital platform for third-party websites to
monetise their online inventory is mass media.
SEC-OGC Opinion No. 16-17: the lease of
advertising spaces either as fixed or movable
structures is considered mass media.
SECURITIES AND
EXCHANGE COMMISSION
(SEC) ON NEWS
OUTLETS ON THE
ONLINE NEWS OUTLETS
In its decision dated 11 January 2018, the SEC held
that Rappler is mass media based on (a) a
definition found in s 4(f) of the the Tobacco
Regulation Act of 2003, and (b) the application of
the constitutional justification for the zero foreign
control on mass media.
SECURITIES AND
EXCHANGE COMMISSION
(SEC) ON NEWS
OUTLETS ON ONLINE
PLATFORMS
In SEC Opinion No. 17-03, the SEC characterised an
online platform, the Sony Entertainment Network,
which sells content and video games to registered
users, as 'doing business' that requires registration
with the SEC.

Applying the SEC opinions on Internet, it would be

considered mass media that requires 100%
nationality.
 NET EFFECT:
Internet platforms are legally unable to operate in the Philippines because they are
considered as engaged in mass media activities, which require zero foreign control.

This is erroneous on two levels:

1. Internet platforms are not mass media, so the foreign ownership

restrictions must not be applied to them.

2. The foreign ownership restrictions must be reassessed, because of

its negative consequences.
IS THE INTERNET A
MASS MEDIUM?
No, the Internet refers to interconnecting
computers linked by the Internet protocol
suite.
Refers to intermediated communication, Features a bottom-up, decentralised and
and was considered as within library interactive approach, facilitating
science/management information science networking (interchangeability)
Mass media channels are framed under Power dynamics differ from traditional
the traditional source-message receiver media (message not controlled by source)
model. Functionally equivalent but different in
Used for interaction, shopping, creating design.
content, streaming, programming, etc. Displacement does not make Internet
mass medium.
 ECONOMIC
IMPACT

TRANSFER OF
INWARD FLOW WAGE AND
OF CAPITAL KNOWLEDGE LIVING
INVESTMENT (SPILLOVER OF CONDITIONS
PRODUCTIVITY
KNOWLEDGE)
 Maintaining the foreign ownership
limitation on mass media only favours a
few oligarchic interests, who use
protectionism as a tool to prevent
competition and retain their dominant
position and political influence.

A liberal foreign investment regime

means more competition in the market,
requiring players to increase the quality
of their programming and to become
more efficient.
 SOCIOPOLITICAL
IMPACT

OLIGARCHIC SUPPRESSION PLURALITY OF

INTERESTS IN OF OWNERS
MASS MEDIA CONSTITUTION MEANS
AND POLITICAL AL RIGHT TO DIVERSITY OF
ALLIANCES FREEDOM OF VIEWS
SPEECH
 SOCIOPOLITICAL
IMPACT

REGULATIONS
LACK OF EVIDENCE (CONTENT
MARKET
REGARDING FORCES WILL QUOTAS,
DEAL WITH SUBSIDIES)
FOREIGN CAN ADDRESS
'FOREIGN
INFLUENCE INFLUENCE' 'FOREIGN
(NATURE OF CONCERNS INFLUENCE'
INTERNET) CONCERNS
 DOES THE RECENTLY ISSUED
FOREIGN INVESTMENT NEGATIVE
LIST ADDRESS THIS CONCERN?
'No foreign equity is allowed for mass
media, except . . . Internet business.'

No.
(a) This does not change the characterisation of
the Internet as mass media.
(b) An executive order cannot make an
exception to the Constitution.
(c) Internet businesses refer to Internet access
providers.