Platforms & Social Networks: the Growing Challenge of Local Constraints.

Updated: Jul 29, 2021

couple sitting on a bench using smartphones in Beijing China
Going local globally - credit: Photo by Gigi on Unsplash

There was a time, long before the covid 19 pandemic, when the global nature of social networks and platforms was taken for granted. The explosion and the meteoric growth of GAFA, the creation of new economic models encouraged by UBER and similar companies, the permanent emergence of new digital players in all possible and imaginable fields, whose immanent character throughout the entire planet was made possible by the extension and diversification of the modes of access to the Internet, could give the feeling, erroneous, that for these actors, the territorial borders associated with the fiscal, legal and local social constraints were only of simple adjustment variables. This erroneous perception was reinforced by the fact that most of the societies which were able, in all fields, to initiate this revolution, were overwhelmingly American. The strength of the economy and finance of the United States on a global level, have even raised fears of a form of accelerated, cultural, legal and normative standardization, a fear that remains for the main trading partners and strategic allies of the United States. Washington. The entrepreneurial counterpart to this was a form of ubiquity, seeming to make platform and social media business models immune to any form of local adaptation. Indeed, at the beginning of the process at least, the States did not have the hindsight or the legal, fiscal, financial and technological tools necessary to cope with the scale and suddenness of the phenomenon.

This pattern has been undermined by the emergence of new national and regional standards and regulations. These have been associated with the rise of competition, mainly Chinese, reflecting the geostrategic issues of each of the two super powers. Other regions, less well placed in global tech value chains, such as the European Union, have embarked on the implementation of restrictive regulations, such as the famous GDPR, which still serves as sources of inspiration for data management, from California to United Arab Emirates. In addition to the relatively universal form of GDPR-type regulations, we must also rely on local requirements for compliance with the way platforms and social networks operate. The latter are facing, and this is a trend that is set to increase, the enactment of a growing body of local, cultural, legal, fiscal and administrative standards that are increasingly complex and dependent on the modes of governance of States. . Companies like UBER, which, due to the tangible nature of their business, have had to adapt their operating methods to local taxi regulations and face strong political and corporate pressures, have acquired a great deal of experience. For others, and in particular e-commerce or content platforms, the regulatory landscape is becoming increasingly complex.

In Turkey for example, law 5651 known as of the social networks ”, Sosyal Medya Yasası, was published in the official journal on July 31, 2020 entered into force on October 31 of the same year. Specifically, the law makes it mandatory that foreign platforms and social networks, whose user base exceeds one million, are required to appoint a local representative, who must have the Turkish nationality. The latter will be responsible for ensuring that the platform complies with all local laws governing their use and content. The United Arab Emirates also regulates very precisely online commerce, relying in particular on the need to obtain a license etrade approved by the TRA (the telecoms regulatory authority) or to add, since 2017, to Abu Dhabi, an e-Commerce license (e-Tajer) to activities already underway. In China, another example, as reported by the British monthly, the Economist, the professional network LinkedIn applies restrictions on the content posted by users in order to stay in compliance with local legislation. Certain profiles deemed to be in conflict with the latter are therefore blocked. According to the magazine, the difficulties of interpreting regulations and their applicability push the platform to take the risk of self-censorship in order to anticipate or avoid any complex litigation with local authorities. This is not about listing all regional and local regulations that apply inconsistently in various legal and legal systems around the world, or even discussing their relevance. But entrepreneurs and project managers in the sector must have this growing fragmentation in mind.

The fact is that platforms wishing to internationalize will have to invest heavily in strategic and legal intelligence, while ensuring the ability to manage the implementation of compliance operations within the target markets. Like in Turkey, this may require to integrate costs linked to a local establishment, which were not necessarily part of the initial business model. Social media and e-commerce platforms will have to provision the associated legal, HR and insurance costs on a local basis as well. Unless they reach Unicorn status with strong stock market valuation and fundraising, many platforms will not be born global, and will have an interest in thinking about their international growth without haste but with caution and parsimony. This is certainly part of a form of normalization process for these companies, as players in the non-digital economy have always been used to these types of constraints.


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