Echoes of overregulation in new digital platforms law

Echoes of overregulation in new digital platforms law

Draft's attempt to supervise platforms by requiring reporting of information could create confusion, raise barriers to entry, and cause compliance difficulties

The draft royal decree on the supervision of digital platform services was approved in principle by the cabinet in October of 2021. The decree is a subordinate law of the Electronic Transactions Act.
The draft royal decree on the supervision of digital platform services was approved in principle by the cabinet in October of 2021. The decree is a subordinate law of the Electronic Transactions Act.

A draft royal decree meant to regulate digital platforms could become an impediment to them if it imposes overregulation or makes unnecessary demands, say legal experts.

Some conditions in the draft law are expected to be hit with legal challenges, said the lawyers.

The draft royal decree on the supervision of digital platform services subject to prior notification was approved in principle by the cabinet in October of 2021. The decree is a subordinate law of the Electronic Transactions Act.

The law passed the first phase consideration by the Council of State, and the revised version is now undergoing public hearings from March 10-25.

The feedback will be gathered for the second phase of further consideration by the Council of State.

LESS ATTRACTIVE

"The question in relation to the draft royal decree is whether the new requirements would align with Thai government policy on becoming a landscape to foster innovative and creative businesses," Dhiraphol Suwanprateep, partner and head of the technology, media and telecom industry group at law firm Baker & McKenzie, told the Bangkok Post.

Based on the current draft, it is possible there will be added barriers to entry for businesses, he said.

If new rules and regulations are not clearly defined for platform businesses, this may lead to confusion for companies, causing additional hurdles to reach compliance, said Mr Dhiraphol.

"If there is overregulation and unnecessary duties for new businesses, Thailand could become less attractive to innovative startups compared with other countries in the region," he said.

Mr Dhiraphol said the latest version of the draft aims to regulate platform businesses located outside of Thailand if they meet prescribed circumstances.

"This raises the issue of whether ETDA [the Electronic Transactions Development Agency] has the authority to regulate businesses that are located outside of Thailand, as this is beyond the reach of Thai authorities. How will this authority be exercised in practice if offshore platforms fail to comply with the requirements?" he said.

The draft royal decree focuses on notifying and reporting information on platforms to ETDA, which means additional obligations for platforms and could be beyond the intention of protecting customers, said Mr Dhiraphol.

INFORMATION DISCLOSURE

The draft royal decree requires platform businesses of a certain size, either based on revenue or the number of users, to provide information about their business to authorities annually, or within 30 days for certain information, he said.

The decree is believed to have been modelled on the EU's Platform-to-Business (P2B) Regulation and the Digital Services Act (DSA).

Both laws aim to regulate different types of business and have different intents, but the combination of both within the draft royal decree may cause "uncertainty" in interpreting which businesses are subject to the decree, said Mr Dhiraphol. Although the draft revised the definition of regulated platforms and added an exemption for certain types of services, it is still unclear on this subject, he said.

P2B and DSA promote transparency by requiring platform businesses to make clear information accessible to consumers, as opposed to a notification mechanism that is laid out in the draft royal decree, said Mr Dhiraphol.

The draft also requires platforms to disclose business information to ETDA, which could later be sent to other authorities and the public, including the value of transactions and gross revenue from platform services conducted in Thailand, as well as the percentage of revenue from platform services in Thailand in relation to its total revenue.

"This sort of information is considered confidential by businesses and the disclosure requirement may not serve the draft royal decree's intent of promoting fairness and transparency as well as protecting digital consumers," he said.

The decree also opens the door for information sharing between government authorities, said Mr Dhiraphol.

"The concern here is the loosely granted authority to share information, which should be more clearly defined to prevent overuse by officials," he said.

LEGAL OVERREACH

A legal expert in the information technology field who requested anonymity said the decree required the establishment of a joint committee of representatives from cross-sector state agencies to provide advice to those enforcing the law.

The decree is seen as overregulation because it reaches out to other agencies, the expert said.

The decree was formulated from the Electronic Transactions Act's Sections 32 and 33, and ETDA has no authority to set up such a panel, said the source.

"If this draft decree is forwarded to the legal department of the Office of the Council of State, it is likely to falter," the source said.

The source said the role of ETDA is to facilitate electronic transactions, not serve as a compulsive licence giver.

Such a joint committee, which would involve the Office of the Attorney General, would be viewed as a team investigating violations of the decree, said the source.

If the draft decree eventually passes as is, ETDA and the digital economy and society minister could possibly be sued for pushing a law that exceeds their power, the source said.

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