IGF 2021 WS #121 Platform economy: (post-pandemic) chances for SMEs

Time
Wednesday, 8th December, 2021 (15:50 UTC) - Wednesday, 8th December, 2021 (17:20 UTC)
Room
Conference Room 4

Organizer 1: Alex Ntale, Rwanda ICT Chamber
Organizer 2: Friederike Grothe, Grothe Medienberatung
Organizer 3: Katharina Mosene, Leibniz-Institut für Medienforschung | Hans-Bredow-Institut (HBI)
Organizer 4: Thorsten Grothe, Grothe Medienberatung

Speaker 1: Alex Ntale, Private Sector, African Group
Speaker 2: ATSUSHI YAMANAKA, Civil Society, African Group

Additional Speakers

Mr  Shivendra Singh  - Vice President & Head - Global Trade Development at NASSCOM
Ms Manan Voskanian  - CEO Founder - STYLIQUE GmbH 
Ms Ana Paula Bialer - Founding Partner at BFA - Bialer Falsetti Associados

Moderator

Friederike Grothe, Private Sector, Western European and Others Group (WEOG)

Online Moderator

Katharina Mosene, Civil Society, Western European and Others Group (WEOG)

Rapporteur

Thorsten Grothe, Private Sector, Western European and Others Group (WEOG)

Format

Panel - Auditorium - 90 Min

Policy Question(s)

Regulation, competition and innovation: How could regulatory and self-regulatory frameworks help foster more competitive Internet-related markets, a larger diversity of business models, and more innovation? How to enable equitable access to data, marketplaces or infrastructures for fostering competition and innovation on the Internet?
Data transfers, trade, cooperation and trust: What is the role of local and international norms and principles in facilitating trustworthy international data transfers for trade and cooperation?

Additional Policy Questions Information: Refinement of Policy Questions selected: How could regulatory and self-regulatory frameworks as well as forms of cooperation help SMEs to improve their participation in the platform economy? How can a proper balance be found between acknowledging the local/national norms and creating awareness of the global nature of trade which affects SMEs as much as larger companies?

For many SMEs, it is essential to use digital platforms for selling products and services or to develop their own platform offerings in order to survive successfully on the market. However, since network effects promote the emergence of oligopolistic market structures, SMEs often are faced with a few dominant platforms. These can define the rules and standards applicable to their marketplaces. Against this background, the workshop intends to address the following issues/challenges through the selected Policy Questions: - Potential of platform economy for new business models and innovation of SMEs - Transparency and information measures of platforms towards commercial customers including complaints management procedures - Feedback between customers and retailers/manufacturers - Access to data generated by commerce on platforms - Monitoring the development and engagement of SMEs in the platform economy and related Internet Governance processes

SDGs

4. Quality Education
4.4
8.2
8.3
8.5
8.a
9.3
9.5
9.a
9.b

Targets: Small and medium-sized companies often lack the time and personnel resources to develop consistent strategies for digital transformation, they lack the financial resources for innovation and growth, and they don’t have access to own or shared R&D resources, which would help them to establish new business models, e.g. in the platform economy. These structural challenges make it also difficult for SMEs to get access to knowledge of digital tools, to good practice models as well as to the systematic information needed for transforming one’s business. Moreover, many regions face a scarcity of skilled labour, in particular IT specialists. This is true for developed as well as developing countries. The SDG Targets mentioned can function as guidelines for overcoming the obstacles for the digital transformation of SMEs. The growth of micro-, small- and medium-sized enterprises should be nourished and they should be empowered to innovation by: - increasing access to financial service, affordable credit, and their integration in value chains and markets - supporting domestic development of technology and economies, as well as favourable regulatory and political framework conditions - fostering technological upgrading and innovation, e.g. by promoting the platform economy - putting special weight on the creation of decent jobs, well educated and trained workers, and equal pay for work of equal value - increasing awareness and stressing the importance of research and development for small and medium-sized companies, e.g. by programmes targeted at individual companies or by establishing joint facilities for transfer - fostering entrepreneurship, creativity and innovation, e.g. by establishing support programmes, transfer initiatives, knowledge hubs and reliable networking opportunities

Description:

Participation in the platform economy can be a game changer for small and medium sized enterprises. Digital platforms offer great potential not only for better serving existing customers but for establishing new economic ecosystems and business models, in particular regarding COVID-19 recovery. However, to really increase prosperity of entrepreneurs in the digital economy, SMEs need to have a strong voice in Internet Governance and join in the relevant decision making processes. In the proposed session, stakeholders from SME’s businesses, chambers of commerce, academia and from the political realm will present practical know-how and successful models for promoting SMEs’ participation in Internet Governance and, as a result, in the digital economy. The proposed session follows up on IGF 2019 where strengthened support for small and medium sized enterprises was stipulated. This was, inter alia, documented in one of the IGF 2019 Outputs: the Elements of SME Charter in which SMEs agreed upon nine action items for successful digital transformation.

Expected Outcomes

Participants will get insights on the importance of SMEs’ contribution to Internet Governance processes, because their specific needs (e.g. lack of resources regarding time, knowledge about digital issues, education in IT, investment money) are often not heard - the criteria for an adequate and supportive regulatory framework regarding the platform economy - how fostering SMEs can contribute to the recovery from COVID-19 - what SMEs need for participating in the platform economy, which obstacles need to be overcome and how the challenges can be tackled -about practical know-how that was actually helpful for SME’s B2C and B2B platform businesses - what promotion models/programmes have proven helpful - how learning from each other and knowledge sharing of SMEs can be fostered.

To promote a similar experience for participants on-site and online the following tools and methods will be used to promote interaction: - Participants will be invited and encouraged to interact before, during and after the panel session, technically based on Slido and Zoom’s chat function as appropriate. - Before the panel session: Three simple questions for participants to consider will be integrated by the organizers in the programme description of the panel. In the programme description participants will also be invited to register with one of the organizers so that a Slido event code can be shared in advance. In Slido, the questions will be already integrated, but participants will have the opportunity to add questions in advance, too.

- During the panel session: discussion oriented set-up: only short introductory remarks by subject matter experts, on-site and online moderators will work towards equal time share for all panelists defining and communicating time slots for answering questions, including those that were asked in advance regular invitation to participants to actively bring in their perspectives, comments and questions via Zoom’s chat function, Slido AND via audiotrack (hop in into the discussion with video and voice) monitoring of activities on Slido and Zoom’s chat function - After the panel session: Links and other resources shared during the session will be made available to participants who have signalled their interest (e.g. via chat or e-mail).

Online Participation

Usage of IGF Official Tool. Additional Tools proposed: Participants will be invited and encouraged to interact before, during and after the panel session, technically based on Slido and Zoom’s chat function as appropriate. (See Answer to question 8b)

Key Takeaways (* deadline 2 hours after session)
The platform economy with its numerous facets is one of the drivers of digital transformation. ‎For micro-, small- and medium-sized enterprises (SMEs) it can be a game changer. Digital ‎platforms offer great potential not only for better serving existing customers but for establishing ‎new economic ecosystems and business models, in particular regarding COVID-19 recovery. ‎
This was an observation shared by the workshop’s participants for the regions they represent. ‎However, to increase the prosperity of entrepreneurs in the digital economy, SMEs need to ‎have a strong voice in Internet Governance and participate in shaping the regulatory ‎framework they operate in.‎
Call to Action (* deadline 2 hours after session)
There is a need for a better international alignment of data protection rules and standards. All ‎stakeholders involved, e.g. governments, the private sector including industry associations ‎and civil society organisations should work together to develop such standards based on ‎comprehensive criteria to improve free cross-border data flow. The latter is a prerequisite ‎especially for SMEs to access global markets.
SMEs need a place to participate in and contribute to the development of international ‎standards. The IGF would be a perfect place for such a multistakeholder dialogue.‎
Session Report (* deadline Monday 20 December) - click on the ? symbol for instructions

The participants of this session from Brazil, Germany, India, Japan and Rwanda and the audience discussed benefits and challenges of digital platforms which are acting as intermediaries connecting two or more market players or groups of users from the perspective of SMEs. Furthermore, issues of the corresponding regulatory and governance framework were addressed.

Benefits

Almost all of the growth of SMEs is related to digital transformation. The greatest potential of platforms for SMEs lies in the companies' expanded access to national and international markets. 

The experts observe a development towards a level playing field for SMEs when it comes to participating in the global economy. The improved access to the financial system which comes along with the growth of the platform economy also offers great opportunities for SMEs. Credit facilities and access to insurance are improving, and more data on creditworthiness are available. 

The implementation of mobile payment solutions is another important driver for the success of SMEs because it allows access to new customers without creating major (financial) burdens for the companies.

In many countries around the globe, the Covid-19 pandemic has been an accelerator for SMEs to get involved in the platform economy. In some countries, the pandemic has even been described as a wake-up call for SMEs to engage in digital transformation, and this engagement has, in return, developed a structural impact on the economy. Other beneficial trends next to the increasing importance of e-commerce in general have been the growing importance of digital and mobile payments for SMEs’ businesses and the rise of social commerce (i.e. doing business via social media). 

Challenges

According to all participants, a main challenge for SMEs in the platform economy is to find reasonable ways to handle data security and privacy issues. Both areas are described as most sensitive and important to ensure trust of customers and business partners across borders. There is a need for a better international alignment of data protection rules or standards (for instance, based on the European General Data Protection Regulation). All stakeholders should work together to develop such standards based on comprehensive criteria to improve cross border data flow which is essential for flourishing economies. 

Free flow of data is extremely important especially for SMEs as a prerequisite for accessing global markets. They need a place to participate in and contribute to the development of international standards. Such a place is missing, ideally the IGF would fill in.

It should also be noted that standardisation and certification schemes often are too difficult to be implemented by SMEs. There are solutions to overcome this bottleneck, e.g. the Rwanda Tech Seal initiative, which might serve as a best practice approach for SMEs, also to create trust on the side of customers. 

Another crucial point of the discussion and a main challenge for SMEs to implement digital and platform solutions is the scarcity of skilled labour. This obstacle to a thriving platform economy has been observed across continents. Especially start-ups find it hard to find the job employees and, once they’ve found them, to afford the high wages required. In this context, matching platforms might be helpful. 

To meet this challenge, even more effort is needed in education, too: Curricula on technology and coding should be integrated as early as possible. Also, there is a need for people who translate between the IT and the business sides because skills online are not identical with skills offline. Furthermore, the lack of language skills is an issue for SMEs who want to participate in global markets.

Regulatory and governance framework

The participants of the session were concerned about fragmentation trends in global internet governance. Especially restrictions of the free flow of data would threaten global trade and business perspectives of SMEs.

On the contrary, connecting SMEs across borders is essential for future development and a main challenge for governance processes. There is a continuing need for bringing together SMEs with the Internet Governance community. This requires translation between cultures and languages as well as places suited for these tasks. Therefore, further multistakeholder initiatives are essential.

Regarding cyber security, the panel agreed that thresholds for SMEs should not be lowered, but that SMEs should be enabled to level up.

Session Rapporteur: Thorsten Grothe, Grothe Media Consult