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Does Indonesia need its own digital markets act?
Indonesia's current legal framework is inadequate for the digital era.
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Big player: Figurines stand next to a screen displaying the logo of United States multinational technology company Google in Mulhouse, France, on Oct. 30, 2023. (AFP/Sebastien Bozon)
T
he Business Competition Supervisory Commission (KPPU) made headlines last month. On Jan. 21, it imposed its largest-ever fine of Rp 202.5 billion (US$12 million) on Google LLC. The ruling found Google guilty of violating Law No. 5/1999 on monopolies by abusing its dominance on Google Play Store.
Google’s abuse occurred in two distinct phases. First, Google forced app developers to exclusively use Google Pay Billing (GPB) for all in-app purchases, eliminating alternative payment systems. Then, once developers were locked into GPB, Google imposed a service fee of up to 30 percent; a drastic increase from the typical 3-5 percent charged by other payment providers.
The KPPU’s decision marks a milestone in Indonesia’s efforts to regulate Big Tech. However, it also exposes the limitations of Indonesia’s prevailing competition laws in addressing monopolistic practices in the digital economy.
Three fundamental weaknesses make the current legal framework inadequate for the digital era.
First, fines alone do not deter monopolistic behavior. When the European Union fined Google 4.3 billion euros ($4.43 billion) in 2018 for abusing its dominance, Google’s share value rose over 1 percent. This alarming market response signals such penalties as mere business costs for these tech giants.
Unfortunately, the KPPU’s fine is even smaller; just 0.004 percent of Google’s global revenue. This is akin to fining a $1 million company only $40. At such trivial levels, fines fail to make an impact.
Second, Indonesia’s Monopolies Law relies heavily on ex-post enforcement, meaning that authorities can only take action after a violation has already caused harm. This reactive approach can take years and allows monopolistic practices to persist before a binding legal decision is reached.
