Policy framework for digital platform
Digital platform economy is emerging around the world, particularly in Nigeria. Companies such as Jumia, Konga, Amazon, Facebook, Google, Diamond Yello Account, Oga Taxi, Taxify and Uber are creating online structures that enable a wide range of human activities. This opens the way for fundamental changes in how we work, socialize, create value in the economy, and compete for resulting profits. But the disturbing questions on this innovative technology are; how are these platforms regularized? Do we have any policies in place to regulate digital platforms in Nigeria?
These are the questions that this article seeks to answer. But before we answer them, it is important to understand the meaning of digital platform. Looking at it from a very general perspective, that is the economic approach, online platforms mean two-sided markets, which include the digital infrastructure that permits interfaces and helps fulfill the interests of two groups of users; that is suppliers and customers. A contracted perspective limits online platforms to modern online marketplaces that allow for concluding, or facilitate the process of concluding contracts.
A key feature of platform is that it lets the supply side (the suppliers) to meet the demand side (the customers). This creates a triangular structure that is based on relations between – the platform and the supplier, the platform and the consumer, and the supplier and the customer.
Platforms are unquestionably the leading form of organising modern digital markets. It is clear how quickly the platforms have gained dominance around the world. The relations where the supply and the demand sides meet directly, usually on a web-site run by the supplier, are either irrelevant or are losing their relevance (the traditional markets, i.e. sales of goods, where more and more goods are being offered via multi-brand platforms such as Jiji, Konga, Jumia, Amazon, eBay, or Allegro.
The rise of the sharing economy and digital platforms such as Konga, Jumia, Jiji, Oga Taxi etc (in Nigeria) is increasingly leading to changes in how we interact, consume and transact business. Consequently, platform businesses can be found in a growing number of industries such as – social networking (Facebook, Whatsapp, WeChat, LinkedIn); internet retail (Konga, Jumia, Jiji, OLX); on-line human resource functions (Jobberman, Career24, To-do-list), urban transportation (Oga Taxi, Taxify, Uber), mobile payment (Quickteller, Quick Bank, Nairabox)
In recent times, the outreach and power of platforms have grown even more intensely with more and more users now connecting via smart mobile devices to all kinds of cloud-based applications and services. Digital platforms make it possible for consumers to share and evaluate products and services with one another. One of the benefits is that existing goods and services are better used.
The rise of platforms can result to tension, such as in the area of market structure and the relationship with existing providers of such goods and services in the ordinary market. In view of the economic potential of those developments, the government has a role in facilitating the innovation and exploring how to deal with associated risks.
It is very important to identify new technological developments early and to think about the possibilities for responding to those developments in regulatory policy and legislation. Although, there are legislations that already cover some aspects of digital platform (like – Copyrights Act, National Office for Technology Acquisition and Promotion Act, Companies and Allied Matters Act, Consumer Protection Act), but there is no specific legislation passed to regulate digital platform.
Although regulation may restrict opportunities for innovation on digital platform, there is, therefore, need to find a good balance in regulation between giving space and safeguarding the public interests and values such as quality, safety and security. Also, by making too many or excessively restrictive rules, social risks may be limited, but so will opportunities for innovation on digital platform. In preparing regulations in this regard, it is important that the right questions be answered, like: Why are rules needed? Which rules can help to prevent incidents in the future? Which rules can make a positive contribution, taking all of the consequences into consideration?
There is no doubt that legislative intervention is needed in this area of innovation to reduce social risk. There are three subjects that would be relatively easy to introduce, and would definitely offer added value to the current legislative environment: clarification of the platforms’ status, clarification of the users’ status, and regulating reputational systems.
Clarification of the platforms’ status could improve the transparency of the platform economy and increase users’ understanding when it comes to the position of the platform. It also involves introducing the platform’s liability. This also involves the registration of the platform company and the authorization to operate in Nigeria.
Clarification of the users’ status is important in any legislation regulating digital platform and should approach all platform users in an equal way, and ensuring that platform owners inquire about the status of suppliers (whether a consumer contract will be created if a private person enters into a contract with the supplier). In addition, if a doubt arises as to the non-professional status of the supplier, the platform should be obliged to undertake the appropriate actions to clarify it.
Rules on reputational systems – Reputational systems are a tool that helps to effectively combat the lack of balance between the parties to consumer contracts that stem from the informational imbalances between the parties. In addition, they operate as a market corrective measure that, based on market transparency, can eliminate badly-performing parties from the market. A properly functioning reputational system can contribute to easing the regulatory environment, based on self-corrective market actions.
To conclude this article, there is need to draw our mind to the incident that led to the ban of Uber sometime in September 2017, in London, for lack of license by the Transport for London (TfL). If digital platform is not regulated the same incident may happen to platforms in Nigeria.