KEY ISSUES FOR DIGITAL TRANSFORMATION IN THE G20

Digitalisation is changing the world faster than many laws have evolved, resulting in some poor fits
between laws and digitalised economies and societies. To capitalise fully on the advantages of digitalisation
while managing the challenges it can bring, countries should develop mechanisms to periodically review
their legal frameworks and, where appropriate, update them to ensure that they are well-suited to the
increasingly digitalised world. Designing and implementing a whole-of-government approach to
digitalisation is crucial in this regard.
One important legal area that is being affected by digitalisation is competition. The effects are mixed, with
much more competition in most markets but a tendency towards winner-take-all outcomes in others.
Competition policy may need to undergo some adjustments in the digitalised context, such as a shift
towards looking at data as the most vital competitive asset in some markets, different approaches to
market definition and market power, and a greater focus on international co-operation and co-ordination
among competition authorities. The G20 may wish to develop tools for assessing the particular
complexities of competition in the digital era.
Online platforms create new markets and opportunities, but also raise a range of economic and social
challenges. In this context, labour, consumer protection, tax, and privacy laws are highly relevant.
Governments should consider updating laws to address factors that unnecessarily make working through
online platforms less attractive, the lack of clarity in certain regulations, tax issues that emerge with the
proliferation of small revenues earned via platforms, and consumer and privacy protection of online
market participants. More broadly, G20 economies could undertake analysis of the opportunities and
challenges raised by online platforms and how different policies may help address them.
Legal frameworks tend to evolve more slowly than digitalisation does. This divergence has led to the situation
today, in which 20th century laws commonly guide 21st century, digitalised economies and societies. Because
of that, concerns have arisen that businesses and consumers are losing opportunities and are facing
inadequate protections and greater uncertainty. Accordingly, legal frameworks need to be reviewed and,
where appropriate, updated to ensure that they are well-suited to the increasingly digitalised world.
While many legal areas are relevant to digitalisation, a particularly important one for digital innovation and
growth is competition. Digitalisation promotes greater competition in a large variety of product and service
markets, both domestically and internationally. Digitalisation has eroded geographic market boundaries by
facilitating the entry and growth of Internet-based suppliers and retailers (e.g. Amazon, Rakuten, Alibaba) that
do not need to have a physical presence in all markets where they sell, which has in turn has helped expand
GVCs. Digitalisation has also enabled new types of products and services that compete with existing ones (e.g.
services that stream television content over the Internet versus cable and satellite TV providers, online-only
publications versus traditional print media, etc). In some cases, these new products and services have greatly
reduced prices (e.g. financial and brokerage services) and improved services (e.g. movie rentals). Occasionally,
digitalisation has helped to make possible new products and services that disrupt well-established markets
(e.g. film cameras replaced by digital cameras, digital cameras supplanted by smartphones, compact discs
superseded by digital downloads and streaming).