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Digitalization | New Opportunities or New Problems?
It is no surprise that we live in a digital economy.
1. We shop online
2. We bank online
3. We read the news online
4. We socialise online
5. We date online
The common denominator in the digital economy is that they’re examples of two-side markets: markets where buyers and sellers interact via an intermediary e.g. the eBay platform.
Globalsation has also made the world a smaller place. You can buy and sell all over the world. Take MNCs (multinational companies) like McDonalds, Coca Cola and Amazon. These companies operate all over the globe: something unimaginable a century ago.
Globalization has made the world a smaller place, which means that buyers and sellers from every corner of the earth can exchange goods and services.
Funnily enough, the global economy has become bigger. How do we decide who to do business with?
Two-sided markets like Amazon make this easier. Buyers and sellers can connect wherever they are. These platforms also act as regulators to ensure that transactions are fair: whether it be returns policies or payment methods. Sometimes prices are even regulated. Take, for example, the regulation of prices at the moment with the COVID-19 outbreak. People who have been found to be profiteering from hand sanitizer have been removed from Amazon and eBay platforms.
But there’s a catch. Digital platforms only work when we trust them not to misuse our personal data.
How can you tell which websites are safe? The answer, troublingly, is that you often can’t. So, there is an asymmetry of information here in many cases. Even large companies have been subject to cyber attacks over the recent years. Take for example Sony Entertainment Network and TalkTalk Broadband, one of the leading ISPs in the UK.
Add to the mix the often dubious terms of use that many websites make users sign and there’s plenty of cause for concern.
So, how can trust be reestablished?
One solution is legislation that protects users against one-sided clauses. Take for example the introduction of GDPR in 2018. We don’t need to look far to see what that might look like in practice, since we already have laws of this kind in the offline world.
For example, a parking lot. If you leave your car there, you accept the property owner’s terms of use. But these terms are strictly limited – they can’t include a clause that says it’s fine for the parking lot owner to take off in your car!
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