KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

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trust. The trust challenges include not only digital manifestations of risks consumers face offline (such as deceptive commercial practices), but also Internet-specific risks, such as online identity theft and cross-border Internet fraud. And it can be difficult for consumers used to “brick and mortar” shopping to develop the types of geographical, temporal, tactile and social cues for online transactions that they use to navigate transactions and develop trust in the offline environment. According to a 2014 consumer survey, the top two concerns reported by EU Internet shoppers are the misuse of personal data and security of online payments (European Commission, 2015a). In a 2015 US Census Bureau survey, 45% of online households reported that privacy and security concerns stopped them from conducting financial transactions, buying goods or services, posting on social networks, or expressing opinions on controversial or political issues via the Internet (US NTIA, 2016). The untapped potential of e-commerce is particularly evident in the cross-border context. Only limited data is available, but what there is shows variability among countries. Some reports suggest that more than one-half of e-commerce transactions involving consumers in India and Singapore were cross-border, with cross-border transactions likewise the majority in Colombia, Paraguay and Venezuela. By contrast, in Canada only 20% of online sales value was attributed to customers outside the country in 2013 (UNCTAD, 2015). European numbers are even smaller. Although nearly one out of two EU consumers has shopped online domestically, only 16% have purchased from a seller in another EU country. The situation may be even more difficult when European consumers look outside, with on 38% reporting that the feel confident shopping outside the European Union, as compared with a 60% rate for domestic purchases online (European Commission, 2015c). One element affecting consumer trust in a global context is the growing range of unsafe products that are available via e-commerce. A key challenge is the share of unsafe products bought online from overseas, with goods banned in one country due to safety concerns being accessible to buyers from another country without knowledge of the ban. Although consumers now have greater tools to help monitor such conduct in markets, the role of well-equipped consumer authorities remains essential to enhance consumer trust in the digital marketplace. Another important issue involves the varying levels of protection across payment mechanisms. Payment protection may vary from country to country, depending on the payment methods used. In most countries, consumers making a payment with a credit/debit card benefit from the protections attached to such cards. But redress is often unavailable when consumers use pre-paid cards or are being charged on their mobile phone bill. Minimum levels of consumer protection for mobile and online payments are needed, regardless of the payment mechanism used. Indeed, the opportunities inherent in e-commerce are tempered by the reality that in many parts of the world consumers benefit from fewer regulatory safeguards and good business practices. One study of global consumer protection laws described the coverage of such laws online as “patchy” (UNCTAD, 2015) and the disparity poses particular challenges in the cross-border context. This reality was reflected in the efforts to strengthen consumer protection work in UNCTAD (see below) as well as at a regional level, for example in the ASEAN context. Raising the level of protection can help enhance consumer trust and capacity to participate in domestic and cross-border trade in a safe and informed manner, helping reduce differences between the well-informed and the less-well-informed, the protected and the unprotected, and, ultimately, the haves and the have-nots. Welltailored consumer protections are essential to build the trust needed to further develop these markets to the benefit of consumers and businesses alike. Digital platforms play a key role in facilitating and structuring the daily activities and interactions of individuals, and therefore lie at the heart of the digital ecosystem. Consumers use digital platforms such as Netflix and
YouTube to watch media content; Uber and Citymapper to plan and book transport; Facebook and Twitter to dialogue and socialise; Alibaba, eBay, Flipkart and Snapdeal to shop, Airbnb and Booking.com to arrange accommodation, and Google and Baidu to retrieve information. This increased societal reliance on platforms has attracted the attention of regulators and policy makers interested in examining the extent and nature of the power exercised by digital platforms and what policies are needed to safeguard the interests of consumers. The term “platform” has been defined in a multitude of different ways. A report commissioned by the Dutch government usefully classified platforms into four broad categories rather than provide a definitive definition of this term. According to this report, platforms can be divided into: (i) resellers and distributors; (i) marketplaces; (iii) social networks; and (iv) platform of platforms. Within these categories, the report suggests that these platforms differ with regard to their features, including their underlying revenue model; whether they give rise to network effects; and their data and content usage (TNO, 2015). For the purposes of this chapter, platforms are considered to have two key characteristics. First, platforms are two- (or multi-) sided. Platforms are intermediaries: they connect two or more distinct groups, for instance buyers and sellers, or content providers and individuals. Sometimes this involves the provision of different products to the different groups (e.g. search services for consumers and advertising for firms). This two-sided nature has the potential to lead to direct network effects, where increased use or involvement by one group leads to benefits for other members of that same group. For example, all telephone users benefit from increases in the number of telephone users. Two-sided platforms may also benefit from indirect network effects, where more use by one group leads to benefits for a complementary and distinct group (e.g. more users of a search engine will lead to benefits for advertisers). The other key element is the digital character, which has been essential to the ability of platforms to achieve rapid scale and impact. The primary benefit of platforms for consumers is that they spur competition among providers of goods, content and services. They do this by correcting and reducing market failures, such as transaction costs and information asymmetries. They also encourage broader market participation from a consumer and provider perspective. This competition, in turn, can lead to direct consumer benefits by pushing down consumer prices, enhancing quality and innovation and increasing choice. Peer platforms are an emerging area with special challenges related to trust. Peer-to-peer transactions have long played a role in commerce, but online platforms enable them on a much greater scale. Early examples include platforms for the sale of goods (e.g. online auction sites). Newer models include the rental of shortterm accommodation and transport or mobility services. Using real-time geo-locational data accessed through mobile apps, mobility services rent private cars, rides and parking spaces. Other areas being transformed by these platforms involve small jobs, meal services and financial services. These business models are often described as the “sharing” economy or “collaborative consumption”, but those terms do not well capture the commercial exchange dimension that is commonplace in these markets. These business models open up economic opportunities for the individuals supplying the goods or services (“peer providers”) and for the platforms making the connections (“peer platforms”). Consumers can encounter issues of trust in their use of peer platforms in many different contexts: trust into the reliability and qualifications of the peer provider; trust in the asset or service; and trust in the guarantees and safeguards offered by the peer platform. Peer platform markets provide an excellent lens to explore the operation of trust in online consumer markets. The challenges of building trust in ”traditional” B2C e-commerce is exacerbated in peer platforms, where the supplier of goods and services (peer provider) is a non-professional who has not made a significant investment
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KEY ISSUES FOR DIGITAL TRANSFORMATI
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Key Issues for Digital Transformati
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Figures Figure 1. Fixed broadband s
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As the cost of data collection, sto
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Open, voluntary standards, grounded
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Digitalisation is changing the worl
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It is useful to start with a brief
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In the past, there has also been un
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Having established a positive relat
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However, despite the rapid spread o
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160 % 140 120 100 80 60 40 20 0 Not
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% 100 90 80 70 60 50 40 30 20 10 0
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show that large firms have much gre
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% 2011-14 2006-09 60 EUIPO USPTO 50
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component may include repatriated i
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computers will rather increase). At
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The risk related to cybercrime and
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% 100 Gap 1st and 3rd quartiles Ave
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Research has shown that the availab
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5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Not
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Recent research points to a set of
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knowledge sharing by upholding the
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skilled labour. Thus, trapping reso
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wireless access, the two technologi
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network infrastructure sometimes ha
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separation of infrastructure and se
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other network on the Internet (CIDR
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Certain policies promote good use o
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Francisco Project”, for example,
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Encourage the deployment of more fi
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In telecommunications, both fixed a
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sufficiently compelling for operato
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However, data provides additional c
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deductions on investments in seed a
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early-stage investment can affect i
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The development of standards and st
Page 75 and 76: A positive example of co-operation
Page 77 and 78: As actors navigate the IoT space, t
Page 79 and 80: The private-sector-led standards pa
Page 81 and 82: Co-operation among standardisation
Page 83 and 84: Fixed-line communications, wireless
Page 85 and 86: the ICT sector tends to outpace reg
Page 87 and 88: Digitalisation is associated with f
Page 89 and 90: end user (European Commission, 2016
Page 91 and 92: The Internet model of traffic excha
Page 93 and 94: G20 economies could develop strateg
Page 95 and 96: technologies, and in particular the
Page 97 and 98: in the United States where criminal
Page 99 and 100: about digital security risk and how
Page 101 and 102: conduct of cybercrimes and digital
Page 103 and 104: The G8 Deauville Declaration outlin
Page 105 and 106: To ensure that everyone can engage
Page 107 and 108: ICT specialists have been among the
Page 109 and 110: Initiatives to promote consumer edu
Page 111 and 112: All Welding Processing Handling Dis
Page 113 and 114: economies and societies need to per
Page 115 and 116: The development of strategies that
Page 117 and 118: The use of digital technologies is
Page 119 and 120: These adoption gaps between large f
Page 121 and 122: Figure 44 (Panel B) illustrates a s
Page 123 and 124: Frontier firms Laggards Frontier fi
Page 125: Despite the steady increase busines
Page 129 and 130: Platforms are often criticised for
Page 131 and 132: The potential and pitfalls of digit
Page 133 and 134: Cross-border commerce has long gene
Page 135 and 136: Digitalisation is changing the worl
Page 137 and 138: Digital technologies have a huge re
Page 139 and 140: One approach is to accept the fact
Page 141 and 142: and income opportunities. Becoming
Page 143 and 144: South Korea has opened numerous “
Page 146 and 147: The ongoing digitalisation of our e
Page 148 and 149: Developing tools for assessing the
Page 150 and 151: data across borders, transportation
Page 152 and 153: BCG (2012), ”The Internet Economy
Page 154 and 155: Deloitte (2015), “Connected Healt
Page 156 and 157: Karachalios, K. and K. McCabe (2016
Page 158 and 159: OECD (2016m), “The Internet of Th
Page 160 and 161: OECD (2012d), Connected Minds: Tech
Page 162 and 163: The Economist Intelligence Unit (20
Page 164 and 165: 1. Chapter 2 discusses policies for
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KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

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