Thailand New Draft Digital Platform Economy Act

The outbreak of the COVID-19 pandemic has significantly altered consumer behavior, leading to a surge in reliance on digital platforms for activities like shopping and food delivery. This shift has played a pivotal role in the rapid growth of the digital economy, both in Thailand and globally. Citizens have become increasingly dependent on these platforms, which offer convenience and ease in daily life. As digital platforms now cover almost every facet of modern existence, the government has recognized the need to regulate these services to ensure economic and social stability, enhance credibility, and mitigate any potential risks to the public at large.

In response to this, Thailand initially enacted the Royal Decree on the Operation of Digital Platform Service Business Subject to Prior Notification B.E. 2565 (2022) (“Royal Decree”), which regulates and imposes obligations on digital platform service operators. These operators, such as Shopee or Lazada, manage platforms that connect business users and consumers through data networks to facilitate electronic transactions. However, recognizing the evolving landscape, the Ministry of Digital Economy and Society (“MDES“) has proposed the Draft Digital Platform Economy Act B.E. …. (the “Draft Bill”), which aims to expand regulation to include a broader range of platform services not covered under the Royal Decree, also known as, digital media services.

The Draft Bill seeks to regulate various digital platform services more comprehensively, promoting fair trade, encouraging self-regulation, and supporting operators in adopting good governance principles. Below are the key aspects of the Draft Bill.

Categorization of Digital Media Services

The Draft Bill defines Digital Media Services as any service provided over a computer network, internet system, or telecommunications network that acts as a medium between the sender and the data receiver. It categorizes these services into three types, each with distinct legal responsibilities for the operators:

1. Mere Conduit Service: This refers to the provision of electronic data transmission services or access to an electronic communications network. Mere conduit providers are not liable for illegal activities during data transmission, as long as they can prove they neither initiated the data nor altered it in any way.
2. Caching Service: Caching services involve temporary data storage for faster transmission. Providers are not held responsible for illegal activities, provided they meet the terms for data access and follow standard industry practices.
3. Hosting Service: Hosting services provide data storage on behalf of users. These providers are only held accountable if they are aware of illegal content stored and fail to take action by either removing or blocking access to it.

General Obligations for Digital Media Services Platform Operators

Under the Draft Bill, platform operators are required to comply with obligations prescribed in Chapter 3 of the Draft Bill, which includes notifying the users of their rights and obligations, as well as the risks associated with using digital media services; providing a complaint resolution channel that responds within 24 hours and reports on the investigation outcome within 60 days; disclosing advertising information, publishing clear terms and conditions, as mandated by the law, and appointing a point of contact to liaise with the Electronic Transactions Development Agency (“ETDA“).

Very Large Online Platform (VLOP)

The Draft Bill introduces the concept of Very Large Online Platforms (“VLOP“). To qualify as a VLOP, a platform must meet one of the following criteria:

1. A net income (before expenses) of over 1,000 million Baht per year from the provision of services in Thailand.
2. More than 6 million active users per month.
3. Poses a high risk to the economic or social security of Thailand, as determined by the ETDA.

VLOPs are subject to additional obligations, such as reporting data to the ETDA, tracking business users’ activities, suspending services for users engaged in serious illegal activities, and submitting annual transparency reports.

Core Platform Services & Gatekeepers

Chapter 5 of the Draft Bill defines core platform services and identifies platform operators that act as “gatekeepers” to other service providers. Core platform services currently include 10 types of digital media services such as online search engines, video-sharing services, cloud computing, and online advertising services, among others. A platform operator may be classified as a gatekeeper if it meets three criteria:

1. Significant impact on the economy, with annual income (before expenses) exceeding 7 billion Baht.
2. Serves as a critical gateway for business users to reach end users, with more than 15 million consumer users and 10,000 business users annually.
3. Has the power to limit competition from other platform service providers, maintaining a dominant position.

Gatekeepers are subject to additional responsibilities, such as ensuring fair treatment of business users, facilitating free communication between consumers and businesses, preventing unfair practices that hinder competition, and more.

ETDA and Digital Platform Economy Committee’s Power to Enforce Data Platform’s Compliance

In order to enforce the Draft Bill effectively, the Draft Bill grants ETDA various powers to enforce compliance, including but not limited to the power to request data from platform operators to assess compliance, power to access and inspect platforms’ computer systems and physical premises if there is reasonable suspicion of illegal activities, the power to impose fines, service suspensions, or even criminal charges for severe violations.

Regulatory Transition

To ensure a smooth transition in the enforcement of this Draft Bill from the existing Royal Decree, the Draft Bill includes a grandfather clause allowing the platform operators who have already submitted notification under the Royal Decree to be deemed to have been notified under this Draft Bill as well. Nonetheless, they are required to update their information to align with the new requirement within 120 days of its enactment. Whilst the Royal Decree shall cease to be effective on the enforcement date of this Draft Bill, the sub-ordinate regulations issued under the Royal Decree shall remain in effect for as long as they do not conflict with the Draft Bill, or the new-subordinate regulation to be issued under the Draft Bill.

Conclusion

The Draft Bill represents a proactive step toward regulating the rapidly expanding digital economy in Thailand. By establishing clear guidelines for digital platform operators, categorizing services, and introducing additional obligations for large and influential platforms, the Draft Bill aims to foster fair competition, ensure consumer protection, and maintain economic stability. As digital platforms continue to play an integral role in modern society, this legislation will be crucial in balancing innovation with accountability, ensuring that the digital economy can thrive in a secure and sustainable manner. As such, the passage of the Draft Bill will likely have far-reaching implications, not only for platform operators but also for the broader economy and society.