The Digital Economy and Competition Law in Asia

The enforcement of competition law’s exploitative-abuse clause on digital platforms by competition agencies is aimed at abuse in two-sided markets intermediated by digital platforms: first, platform abuse of their trading-counterparts (suppliers); second, abuse of consumers (users). Abuse of suppliers needs to be identified mostly on procedural fairness; as long as contractual terms are negotiated transparently between platforms and their trading-counterparts, competition agencies are urged to refrain from intervening in substance of trading terms. Digital platforms which abuse consumers, exclusively concerns consumer data. In countries equipped with strong data protection rules, there exists no rationale for competition agencies to assume the role of data-protection agency. Yet, in those countries, where data protection rules and data protection agencies are lacking or weak, competition agencies might assume the role of data protection agency, as an interim measure.

The Japan Fair Trade Commission (JFTC) has shown an increasing interest in the digital economy. Since the JFTC’s Chairman, Kazuyuki Sugimoto, spoke about this topic in the New Year’s address in 2016, the JFTC publicized several studies on the digital economy. One important issue raised in some of the reports was the central role unfair trade practices could play to force the players in the platform economy to abide with the principles of the Japanese Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (AMA). This conclusion runs parallel to the enforcement actions of the JFTC. In the only cease-and-desist order of the JFTC, a platform was ordered to comply with the AMA through an unfair trade practice. Various decisions to close an investigation on a suspected violation of the AMA, such as against Amazon, Airbnb, or Rakuten, also document the importance of the unfair trade practices as a tool to bring these firms in compliance with the AMA. The evolution to revert to unfair trade practices could be seen as positive. We argue that unfair trade practices allow the JFTC to balance two opposite views in the literature on the platform economy. On the one hand, there is a call for early market intervention to prevent a single platform from growing excessively. On the other hand, there is an argument against intervention because incumbent platforms are innovators and, if not careful, can be challenged on their existence. Unfair trade practices allow for both early intervention and meticulous intervention. Early intervention can be realized because market power is not an important criterion, if at all one, in the conceptualization of an unfair trade practice offence. Meticulous intervention can be guaranteed because unfair trade practices focus on the conduct of an online platform. Unfair trade practices do, in other words, not aim to tackle the ‘bigness’ of the online platforms and so trigger a change in the competitive structure of the market.

This chapter argues that the data-driven economy needs to figure out how to apply both competition and personal data protection laws. The implementation has to aim at preventing the situation where a group of people disproportionately gains at the expense of another group of people, whose data have been processed by the former. Without proper enforcement of competition and personal data protection laws, we argue that the feedback loop of having more data, better performance and greater talents will eventually worsen the problem of inequality. Thailand serves as a good case study of how the problem exists, while the implementation of both laws is still in retard. We propose that the line separating between personal and public interests has to be drawn and the effective enforcement of competition and personal data protection laws is at the heart of it.

The Indonesian government has long been struggling with transportation. It has been conceded that Indonesia is lagging behind its neighbor ASEAN member states in providing modern mass transportation. Nevertheless, the demand for affordable, available and safe transportation is huge in a country with more than 250 million people. In response to this demand, drivers of motorcycles have gradually stepped up efforts to fill the gap. Being small and flexible, motorcycles proved to be the ultimate mode of transportation compared to cars, buses, or taxis. Motorcycle drivers started to provide, in an informal way, transport to the public. Often these drivers were unemployed people owning a motorcycle that was largely unused during daytime. As this kind of opportunity offered a source of income, this kind of offering transport became a reliable business opportunity for unemployed people. Informally offering transport to consumers is commonly referred to as Ojek. Ojek, however, is being challenged. Smartphone technology made it possible to start organizing the transportation provided by Ojek online. The advantage of moving Ojek online: increased consumer choice, security, tariff clarity, etc. One of the forerunners in this field is Go-Jek. As Go-Jek gradually increased its services, to include for example courier, food order, house cleaning and even massage services, the ability to attract consumers to the ride hailing app improved. The fast growing expansion of Go-Jek and the entry of companies offering similar online services has impacted Ojek, the conventional motorcycle transportation. The demand for their business declined. Moreover, the conventional taxi services also felt the negative impact of the ride hailing apps. Both identified ride hailing apps as a menace that can destroy the well-established practice of Ojek and the business of conventional taxi companies. This chapter details the friction, caused by disruptive innovation in the telecommunication sector, between Ojek and the drivers using ride hailing apps. This friction has several dimensions. Socially, the Ojek face economic hardship and even unemployment. This is partly due to Internet illiteracy, but also the lack of financial means to afford smartphones needed to make the shift from Ojek to an online one. Policy wise, the government has taken an ambiguous stance towards Ojek. While holding that Ojek does not fit within the category of public transport, the government has taken steps to regulate the use of ride hailing apps used by the conventional taxi business and so discriminate against the motorcycles offering transport. Businesswise, the companies offering ride hailing apps are able to cross-finance between different services and therefore offer promotions on their transportation services that are exclusionary towards Ojek and conventional taxi companies.

The debate around algorithmic collusion has gained substantial momentum leading to divergent views amongst economists. While some have expressed serious concerns over the menace of algorithmic collusion and its adverse impact on the competition, others have disregarded it as an unlikely threat. The common scepticism that emanates in any discourse concerning the regulation of the unique forms of algorithmic collusion is the inadequacy of the anti-trust legal framework to effectively tackle issues of detection, investigation and evidence-collection that is incumbent in the process of proving such collusion. Much of these apprehensions are attributable to the inconsistencies in the Indian jurisprudence concerning the elements of ‘hub-and-spoke’, ‘tacit collusion’ and the acceptable ‘plus factors’ required to establish the same. Further, the restrictive approach adopted by the anti-trust authorities in pronouncing judicial decisions impede the scope of the Competition Act, 2002 to address the algorithm problem in its present form. The paper reconnoitres the rise of algorithmic collusion and expounds on how algorithms in disguise of maintaining competitive balance can destroy competition. It further expounds how traditional notions of tacit collusion and hub-and-spoke should be reconstrued in the context of digital markets to bring algorithmic collusion within the sweep of Section 3 of The Indian Competition Act. It further offers an array of reforms and recommendations to adapt the Competition Law and to better equip the Antitrust Authorities to suit the changing needs of the digital market.