- 12/12/2017
- Category: Commentaries
The wild outburst of the Internet in the late 1990s exhibits how most democratic governments worldwide embraced the arrival of the new era of technology and information as tech start-ups are proliferating massively and developed quickly into tech giants. Subsequently, these tech firms have been dominating global business with little to no restriction from the government. However, recent trends demonstrate how governments across the globe have established efforts to tie up tech companies, from giants such as Google and Facebook to small-scale local start-ups. Experts often referred this phenomenon as ‘techlash’, in which governments are attempting to swing back the pendulum of power back to their sides by creating regulations that constrain business activities of these firms. Observation on recent discourse among national governments confirms that Indonesia is not an exception in this portent.
Reflecting the current trends, there are at least three main practices in which the Indonesian government is attempting to put constraints towards tech companies.
The first one is the practice of restricting tech companies in the name of competition law. Commenced prominently by the Antitrust Law in the United States, competition law was quickly espoused by governments in other countries and successively penetrated into other spheres of industries, including digital businesses. In this regard, regulators started to perceive tech firms as a threat to small and local businesses. Shifting to the national context, Communications and Informatics Minister, Rudiantara, recently revealed through an official that the ministry is discussing the notion to block global hospitality marketplace Airbnb from the Indonesian Hotels and Restaurants Association (PHRI).[i] The official held that a proper regulation on such business model is necessary in order to prevent unfair business competition. Previously, there have been movements and demonstrations across the country that urged the government to regulate app-based public transportation such as Go-Jek and Uber. The arrival of ride-hailing applications has knocked the business of conventional taxis severely as a large portion of their market has turned their head to the technology-based transportation services.
Secondly, governments worldwide have also demonstrated shifted stance regarding taxation for digital firms.[ii] Subsequently, Indonesian Finance Minister, Bambang Brodjonegoro, took a similar path by announcing that all internet-based services will be forced to pay local taxes to acquire its “permanent establishment” status. One of the companies affected by this new regulation is Google. According to Directorate General of Taxation calculations, Google owes US$400 million in tax debts, including fines for its five years of operation within the country, which dispute has been resolved in June this year.[iii] It is expected that other technology giants like Facebook and Twitter with its massive user bases in Indonesia could be targeted next. This measure is consistent with some other countries’ new policies that rule tech firms under tax obligation.[iv]
The third form is related to the government’s consideration of the social media revolution and its detrimental effect on the effort of global counterterrorism. This is derived from the belief that social media provides extremist militant groups with a low-cost and highly accessible podium to spread its wings. Hence, each tech firm is held accountable for stopping perilous ideologies to reach out to social media users. Consequently, these platforms have the important responsibility in breaking the communication chain between terrorist actors. In this regards, the Indonesian government has put pressure on two social media platforms—Facebook and YouTube—to increase their defense mechanism towards extremist contents spreading through their platforms.[v] Indonesia isn’t the only country attempting to fight digital terrorism through social media. Previously, the United Kingdom and Australia have pushed for access to chat records, saying that encrypted messaging has hindered investigations into serious crimes.[vi]
In today’s digital era, information grasps the role as the most important drives of development, the same way steam machine did in the early industrialization era in the 18th century. In response to such challenge, there are two major points that Indonesian authorities need to take into consideration. Primarily, the government need to be careful when putting regulations in place as not to limit the technological advancement that is currently in its peak period. This point is particularly pertinent to tech start-ups with their potential in providing solutions to existing problems. Secondly, it is easy to see that there is little point in attempting to hamper the rapid expansion of giant tech firms. Instead, Indonesia should make the best out of the situation, reiterating the need of domestic workforce to adapt to the needs of the increasingly globalized world. It is indeed a high time for Indonesian government to rebalance power relations with tech companies. Nevertheless, a comprehensive evaluation is indispensable for Indonesian government in order for it to come up with objective policies and other necessary measures that will benefit the economy without sacrificing the progressive nature of technology.
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References :
[i] The Jakarta Post. (2017). Ministers plan talks on request to block Airbnb. [online] The Jakarta Post. Available at: http://www.thejakartapost.com/news/2017/11/24/ministers-plan-talks-on-request-to-block-airbnb.html [Accessed 25 Nov. 2017].
[ii] Beddoes, Z. (2017). The pendulum of power swings back towards the state. [online] The World in 2018. Available at: http://www.theworldin.com/edition/2018/article/14387/pendulum-power-swings-back-towards-state [Accessed 27 Nov. 2017].
[iii] Setiaji, H. and Danubrata, E. (2017). Indonesia has reached tax deal with Google for 2016, finance minister says. [online] Reuters. Available at: https://www.reuters.com/article/us-indonesia-google/indonesia-has-reached-tax-deal-with-google-for-2016-finance-minister-says-idUSKBN1940EM [Accessed 27 Nov. 2017].
[iv] Amaro, S. and Tso, K. (2017). US tech firms like Apple and Amazon are posing a ‘huge’ tax challenge for France. [online] CNBC. Available at: https://www.cnbc.com/2017/10/06/apple-amazon-tech-firms-are-a-tax-challenge-for-france.html [Accessed 27 Nov. 2017].
[v] Lucas, L. (2017). Google to tighten Indonesia YouTube monitoring. [online] Financial Times. Available at: https://www.ft.com/content/55f0f2b6-78f4-11e7-a3e8-60495fe6ca71 [Accessed 27 Nov. 2017].
[vi] Ng, Y. (2017). Indonesia blocks Telegram, fearing terror groups using it to pass encrypted messages. [online] Mashable. Available at: http://mashable.com/2017/07/17/telegram-blocked-indonesia/#0rhaqIHRZOqO [Accessed 26 Nov. 2017].
