Virtual School of IG
Internet Governance and Economic Issues
Desiree Miloshevic Evans
Senior Advisor, Public Policy and International Affairs
25. 1. 2021
How do the Internet and Economy interact?
Digital Economy Business models / Who pays for the Internet?
Digital Economy Business Competition /Anti-Trust - examples of IG governance as
regulation of digital ecosystems
Technology Development and Positive Net Value – RFC 5218
The New Economic context of Internet Governance
IG Multistakeholder model & important economic negotiations –Digital Trade
Overview of Internet Governance Documents mapping Economic issues
At the most basic level, economics attempts to explain how and why
we make the purchasing choices we do. Four key economic concepts—
scarcity, supply and demand, costs and benefits, and incentives—can
help explain many decisions that humans make. Nov 2, 2020
Talking about the effects of the
Internet on society. ..
In some cases making
regulations and practices…
“Dev + App of shared principles,
norms, rules, decision-making
procedures that shape the evolution
and use of the Internet” …
…better practices, and standards
….. and the .lack of those!
Technology development and economy RFC 5218
Thaler and Aboba argue: early adoption outweighs the adoption costs
The Internet and Economics
(a) internet is the basis of much of our economy, as most activity needs the
internet in some fashion, if not directly then at least indirectly.
(b) economics drives much of what happens in the internet, e.g., globalisation,
consumers search of the globally cheapest producer of goods, etc
Basic types of business models
(c) some basic types of business models in the internet, e.g.
selling or brokering something,
ad-based business models,
user-provided content (fb wikipedia etc), and so on.
Competition models in the internet
(d) competition models in the internet, e.g., with global audiences and reach,
typically we get to "winner takes it all" type outcomes. monopolies and the
ability of governments to regulate global (not national) businesses
Antitrust laws also referred to as competition laws, are statutes developed by the U.S.
government to protect consumers from predatory business practices. They ensure
that fair competition exists in an open-market economy. These laws have evolved
along with the market, vigilantly guarding against would-be monopolies and
disruptions to the productive ebb and flow of competition.
Antitrust laws are applied to a wide range of questionable business activities, including
but not limited to market allocation, bid rigging, price fixing, and monopolies.
If these laws didn't exist, consumers would not benefit from different options or
competition in the marketplace. Furthermore, consumers would be forced to pay
higher prices and would have access to a limited supply of products and services.
What do these names have in common
Rockefeller Morgan Carnegie
Microsoft Antitrust 1998-2001
Microsoft was accused of trying to create a monopoly that led to the
collapse of Netscape
The company was sued by the Department of Justice in 1998.
The judge ruled that Microsoft violated parts of the Sherman Antitrust Act
which brought about the company breaking up into two entities.
The decision was overturned following the appeal filed by Microsoft
In the United States, the federal government and states have launched
landmark antitrust lawsuits against Google (GOOGL) and Facebook (FB),
directly challenging the dominance of Silicon Valley's top names. The Federal
Trade Commission wants to force Facebook to sell Instagram and WhatsApp,
“Antitrust cases take too long to resolve. DSA/DMA could be good remedies
for Anti-trust behaviour” (Quote: Clifford Chance, Brussels)
Digital Services Act released by the European Parliament “Enforcement and
cooperation between Member States: E-Commerce”
EU and Antitrust
The New Economic Context of IG
The New Economic Context of Internet
A lesson learned from financial sector is that lack of multi-stakeholder
environment for input and dialogue as a transparency mechanism was
the missing link that can improve market self-regulation and evaluation
IG economic trends within institutions?
CCAOI : ” The United Nations Conference on Trade and Development (UNCTAD), the
International Trade Centre (ITC) and the World Trade Organisation (WTO)
launched the SDG Trade Monitor to track and provide data on global trade’s
contribution to the UN sustainable development goals (SDGs).
The Middle East announced their Ten Digital Economy Guidelines for a successful
digital economy. The organisations which embraced these guidelines are the
Union of Arab Banks (UAB), the Union of Arab Chambers (UAC), International
Network for SMEs (INSME), and the Global Coalition for Efficient Logistics (GCEL).”
Digital Trade 2021
There are three big issues on the table:
Digital trade Digital taxation Sustainable development
In 1998 the World Trade Organisation (WTO) agreed on a so-called “eCommerce Moratorium,”
which allowed a free flow of data across borders. The moratorium helped to make
internationally traded digital services an engine of economic growth. Today, digital trade is a
key element of the global economy. For years there is a debate in the WTO to transit the
moratorium into a legal instrument. On the other hand, some governments want to terminate
the moratorium to get a free hand for digital services duties to bolster national budgets. In
2019, Japan — as Chair of the G20 — proposed a “Data Free Flow with Trust” (DFFT) initiative.
The DFFT should have been discussed at the WTO Ministerial Conference in Summer 2020. But
Corona changed the timetable and the conference is now scheduled for Summer 2021.
Digital Trade 2021
A similar motivation — to get new income sources — is behind the
controversy around digital taxation. In recent years, some countries did
introduce national digital taxes and risked tax wars, mainly with the US.
Already in 2015, the OECD started negotiations on a new global tax regime
where taxes are not collected where a corporation is headquartered, but
where it does business. The G20/OECD BEPS Group, which includes 137
countries, now finalizes its proposal with a so-called “Two Pillar Approach.”
Digital Trade 2021
Pillar One would establish new rules on where tax should be paid, that is, to ensure
that digital intensive multinational enterprises (as Amazon and Facebook or Alibaba
and Tencent) pay taxes where they conduct sustained and significant business.
Pillar Two introduces a minimum tax to avoid the search for “tax heavens.” The US
under Trump did leave the negotiations in June 2020. The EU made clear that if there
is no global agreement until mid-2021, they will introduce a “European Digital Tax.” A
warning came from OECD General Secretary Angel Gurria: “Failure would risk tax wars
turning into trade wars at a time when the global economy is already suffering
enormously.” At stake are around $200 billion in taxes annually — a big challenge.
The work programme will involve the relevant WorldTrade Organization
("WTO") bodies, take into account the economic, financial, and
development needs of developing countries, and recognize that work is
also being undertaken in other international fora. The General Council
should produce a report on the progress of the work programme and any
recommendations for action to be submitted at our third session. Without
prejudice to the outcome of the work programme or the rights and
obligations of Members under the WTO Agreements, _________
we also declare that Members will continue their current practice of not
imposing customs duties on electronic transmissions. When reporting to
our third session, the General Council will review this declaration, the
extension of which will be decided by consensus, taking into account the
progress of the work programme. _________
Other IG Documents
World Trade Organization - On Global Electronic Commerce
WSIS Tunis Agenda
Report of the WGIG June 2005,
The NETmundial Multistakeholder Statement April 2014,
The UN CSTD Mapping of international Internet public policy issues (May 2015),
Secretary General’s UN Roadmap for Digital Cooperation 2020 “Build an inclusive Digital Economy and Society”,
EU call for members digital cooperation - Digital Service Act 2020,
Books/ Papers to read
“The Internet Trap” 2018
How Digital Economy
Builds Monopolies and
BRETT M. FRISCHMAN
Social Value of Shared
OECD Principles for
Internet Policy-making -
Dec 2020, OECD Paper
Competition Seriously in
the Digital Economy–
Nicolas Petit and David J.
Hearing on Competition
Economics of Digital
“The Wealth of Networks”
Y. Benkler 2006
T. Wu Network Neutrality,
Shapiro C. and Varian H.R.
Information rules a
strategic guide to the
network economy. 1998