Global Issues Explained | Regulatory Compliance and the New Rules of Digital Multinationals

Welcome to Global Issues Explained, where we unpacked the complexities of our interconnected world. Join us as we delve into the most pressing global challenges. This podcast is brought to you by the Master of International Business Program at Universidad de Afeid in Beijing, Colombia. Edward, how are you? Hey, very good, Danny. Long time no see. Long time no see. That's our main signature from the podcast. How's it going, good? Very good, very good. Really happy to be here again to record the second part of a previous podcast. Yes, correct. Today, we are going to talk about the second part of the podcast of host-style acquisition in the digital era, the TikTok delam in the United States, correct? We talked about the role of the government in digital times, right? Regulations. We talked about norms, duties, right? Basically, the United States demand for the control over TikTok, the United States operations, right? We had the opportunity having Juan Camilo, Líaz Anches, International Legal Council and Professor of International, Master of International Business in Afeid, right? It's really good having you back here, Camilo. How are you? Thank you guys. I'm very good. Thank you for the invitation. Thank you for your first episode. We had an open question, right? Yeah, definitely. I remember that during that podcast, I asked just a short question, apparently, and the question was about the regulations. I remember if I'm not wrong, I ask about the. If the GDPR or the California regulation, which one was a little bit more extensive or restricted, it was something like that. And then, Camilo said, "No, that's definitely for another podcast." And here we are. My first question, I guess, is going to be about those regulations. So let's begin by contextualizing our listeners, Camilo. So what does this regulations mean? Because that's episode. We just barely mentioned those rules or those regulations. Thank you, Edward. And the regulation is the new frontier of power. Today, the idea is that we start with data because data is not oil. It's electricity. It's invisible, it's essential. It's impossible to live without today. But for this electricity to work, we need the law. In Europe, for instance, we have the general data protection regulation or GDPR that is the most comprehensive privacy framework around the world. It applies the criteria to apply this applicable law is that you work with European companies. But also, this framework, this European framework has an extra territorial reach because it's not only to European companies, but to any organization offering goods or services to European Union citizens. So here in Colombia, we can be attracted to this law if we have any business with any EU organization. So the general framework today, international regulations is the GDPR. In Europe, they also got the E privacy directive. What is more to the regulation of cookies, pixels, advertising, for instance, the E privacy directive is complemented by the Digital Service Act, which is the DSA in 2024. The idea is that companies they cannot target miners using the same AI behavior algorithm. Miners and the age of consent varies from issue restriction, from instances comes from 13 to 18 years old. So depending on the market, the companies can target or not their advertising campaigns. And that's one of the main problems today in terms of issues faced by global platforms such as TikTok. So we got this European framework that is in contrast with the California CCPA, the California Consumer Privacy Act, which is the favorite regulations of American companies, of course, but brings different value. I even remember the last episode you told us something that, for example, there are the regulations where I was a little bit more, I don't know, it was in the podcast of another guest that in the United States they try to make these regulations more for the companies for companies. Yeah, more market oriented. Yes. It was in this one. Okay. Yes, it's more market oriented instead of GDPR that is more into the users' protection. Yes. So but I'm going to ask you a question just to highlight our listeners. So in this case, we are talking about TikTok, right? And TikTok is global, right? It's actually, I would say, in every single country. So TikTok must like accomplish with every single regulation in every single country. They should. They should. Right. So this is not like they are accomplishing only the United States regulations and it is going to apply globally. So they have to fit in every single country to regulation. Yes. For instance, in Europe, at least it's easy because of the European market. So you got one regulation for 27, 29 countries. When I worked at TikTok as a contract manager, I saw how compliance had to move very fast and with a lot of creativity because from filters to e-commerce ads, you have to pass through a privacy lens all the time. So TikTok, like every other platform, they collect information. So let's go into the detail of information. TikTok gathers instead of all their platforms. You have three blocks. The first one is the developer data. It's all the device information, the IP, the language, the browser. All what is inserted in your hardware, in your phone. You have another block that is the even data, is that how users interact with other users and with content and with ads. They challenge your behavior, they analyze your behavior, the time you spend on the screen, the time you spend to scroll another ad. If you like that ad, if you click on that ad, if you got through these cookies and pixels to another landing page, they analyze every single move. And the third one is the contact data, is the information that you give to the platform when you register. So your email, your phone, your name. These, also all of these three blocks are more generally in every platform. I mean, it's used for matching purposes because the monetization model from these platforms is kind of a premium style with advertising industry. So when TikTok goes to Christian Dior or Riveton or other big spend advertisers, they tell them, we are going to match your ads to the users that we have, our community. So this data, how you mentioned correctly, this data has to be protected in every single jurisdiction. That's another question because it's interesting what you're saying in terms of, if what if we protecting every single jurisdiction, but what about the transfer of data in different jurisdictions for a company like SocialStickTalk that they got their servers in Europe but also in Asia, in America. So they need to be interconnected all the time. There is no today an international framework that allows that international transfer of data. We got before some rulings that is called Tremstool that was a regulations or an award that allow this kind of international data transfer between Europe and the US. But our Edward explained it correctly too is that Europe in their users options and user consumer protection, they say that the United States, they cannot offer enough warranties and warranties to protect international data transfer. So European Commission to get out the companies of this situation because when I was working at Tiktok we got this ruling so how can we transfer the data that we got here in Ireland to the United States. The European Commission created something that is called the standard commercial closest SEC, that is the guidelines, soft power, telling the companies if you need to protect or is not a need, is an obligation. protecting. international data transfer, you should incorporate into your contracts this kind of standard clauses. So the problem today is that in the pyramid of the sources of low, we don't have an international framework, but we got some guidelines, we got some soft power about how to behave, how to regulate itself, the international data transfer for instance. So just correct me if I'm wrong, but I mean, these regulations, they are just about data treatment policies, you should or you must in this case because there are regulations, you must like trade data this way, you cannot collect these, you cannot like transfer data this way. But then there is another interesting aspect such as soft power as you mentioned, what is that soft power, what does it mean? I mean like to enlight our listeners that's also really interesting to know because yeah, like we have on the one side, just the strict regulation, right? You cannot do this or you cannot collect and share the information this way. But then we have other aspects such as soft power. In this case, I mean like for these companies, what does it mean? Like I understand that soft power is mainly about like, for instance, that you are not like, it is not forbidden, but at the same time, it's kind of like an implicit regulation over there. Like, but please correct me if I'm wrong, please tell our listeners a little bit more about that soft power and. Okay, yes, as we're soft power from a distinction with hard power, I would say that is all the certain regulations and values that are not binding, but they can be used as a guideline to drive your business. So countries and companies are now using digital regulations today that are not enforceable, that are not binding, but come from a diplomatic corporate site. So when companies go into in the internationalization and that they try to fit in every single jurisdiction, what what it happens is that we go into a globalization of legal values. So in the pyramid of sources of law, we find that the main the most important I mean is the international regulations per se, which are mandatory. Second, you have the jurisprudence and you have the doctrine. These are more considered hard power. When you go into the soft power vision is that you are adopting some recommendations of international institutions, international bodies that issue recommendations, guidelines with good principles and good practices. So it's not obligatory, it's not mandatory for companies, but it's well and strongly advice and recommended. That's the main difference between soft power and soft power. Let's turn a little bit of a conversation because like two weeks ago and to keep it really short, the Chinese government decided to regulate the participation of some influencers in social media. I was taking a look here really quick in the news and basically in terms of medicine, right, health, in terms of finance and in terms of law, right. The regulation aims to restrict a little bit the participation of some influencers in those topics if they don't have like some kind of education, right. And for me, it makes a lot of sense, right, because how can a person like freely talk about a topic without actually knowing the impact of his hair voice, right. So how do you see, what are your thoughts about that new? Yeah, because it is hard power in that case. They are just regulating, they are sending the restriction. But at the same time, like it's kind of like also a good practice, I mean, like, so what's your perception, Juan Camilo about it? Thank you. Yes, indeed. Influencers are not longer just creators. They are not longer YouTubers, Instagrammers. They are also economic actors and they are getting paid for that. So when I was working at TikTok, I was in charge of being the liaison between TikTok and the advertising regulatory council. They try or in France in 2023, they issue the law about influencers. So what did the government look with that? First of all, professionalism, because we are talking here about a new position, job position. That's why the mentions at partnership are obligatory today in most of the platforms, because we understood the power of persuasion of influencers. So influencers move markets. They, a single post can cost up to $15,000, $20,000, for instance, in TikTok. We don't call influencers, we call them talent. So the talents, they get paid for a post, of course. They get paid astronomical amount of money at one point. They are not journalists because they are not credited for that. And they were enjoying of a lack of legislation. I think we talked about this last time, is how tech surfaced all the time in the lack of legislation. Sorry, I interrupted coming. Is it that included into GDP and CCP, like data protection policy, that's totally different? That's kind of different. Of course, influencers are subject of GDPR. They have to comply with GDPR. But these new legislations about China, France, UK, even here in Colombia, they are trying to do the same. These are more niche market-oriented regulations, because what the government looks with this all the time is a question of taxes. So how to get, I mean, to collect more money from this job, because it's a job for. Which actually moves a lot of money. Of course. They are considered sometimes as traders. So in terms of regulations, what is the most advanced today? It was the Digital Service Act in Europe that constitutes like a responsibility for platforms for any harmful content that the creators are engaging in their platform. So you find out that every single platform they have their community guidelines about how to use the platform, how to engage with other users and consumers. In France, for instance, the legislation about influencers, they went even further. Define and qualify, what is an influencer? It prohibits the promotion of certain sensitive products, for instance, like cosmetic surgery or regulated financial services. What is most important in every legislation is the sanctions, because that's the power of deterrents. But that makes a lot of sense once back again with the kind of regulations, United States and the European Union, because you mentioned France and how they are protecting the consumer by restricting some people without actually knowing what they are talking about. But as you mentioned, cosmetic surgery is in whatever. So would you say it's a personal question for you? Would you say that is like restricting the freedom of the speech or is more like, yeah, and I'm sorry, complement that question with another one. And I mean, like we were talking about self-power. So yeah, there's some hard power involved over there and they cannot do this. But then on these platforms, then you're free to post whatever you want. But then they have some guidelines for the user, some self-power. So if you do this, we ban you. So I don't know, Danny, but my question was mainly about your perception or what's your opinion about it? I don't know. Yes, we're on the same page. Yeah, correct. Here, there's a question about accountability and transparency. Because when we talk about self-power, we should, it's not a compliance checkbox. When a platform is open about these policies and the community guidelines are clear. And when The creator is honest about their partnership. They earn something that is more valuable than engagement. It is trust. And trust is influence in its pure form. Influencer laws as their core, they are not about limiting a speech. They are just about protecting the authenticity and originality of creators. This is my perception. They influencers legislations what they are seeking for is to ensure that audiences can distinguish between personal, opinion and pay promotion. Because it's not the same. Here we are talking about a financial counterparty. When you get paid for something, there is another interest behind. It's not just the position that the influencer takes. So it's more about the interests that are behind. When I was a TikTok, I had the opportunity, how I was saying, to work with the advertising self-regulatory council, to align the TikTok's influencer policies with national advertising standards. It wasn't easy because we had to translate TikTok legal obligation like avoid deceptive practices into creative, understandable language for content creators. That process was not regulation but force. It was regulation by collaboration. On the table, everyone was on the table. Influencers, public sector, private sector. Because we needed to create something that the industry itself couldn't just do. That's a perfect case of corporate diplomacy, for instance. Corporate diplomacy can be where legal compliance becomes a bridge between creativity, ethics and governance. It means that there are some multinational, international companies that are even stronger than international law actors such as the states or international organizations. So corporations are dealing directly in a one-to-one situation with states, for instance. So that part of the corporate diplomacy makes that we have today a sure responsibility. Because here we are talking about a triangular relationship. On one side we have the influencers from the other side we have the brands that pay for that and from the third side we have the platform. So how you get all these three blocks on the box, how you obligate the influencer to disclose the partnership he's working with, how you allow the brand to include compliance clauses in the contracts and how the platform is subject of digital service, ag, GDPR, CCPA, any regulation that allows them to provide tools and transparency to users. That's the main concern. It's to ensure this accountability and transparency. So that's corporate diplomacy in action. Three actors sharing one ethical ecosystem. That's another question about risk assessment. Behind the influencer we have really big companies backing up them. That I mean in Mexico a couple of months ago we had a bunch of influencers that were paid to trash talk about other companies. So we had people with a lot of influence, a lot of power with recognition with a lot of people trusting them and they were paid to trash talk about other companies. So there is like that backup is really interesting because it's not only the influencer is the amount of companies behind that influencer. Yeah, that's completely true because companies are brands, how they use the language in the advertising industry. They are really into buying for the services of the talents and because they have a voice today. And I mean, is that regulated? Because I mean like take a look at that kind of cases of like let's say some kind of corruption itself but like I haven't heard about any regulation. Like, well, I mean like like paying someone else to do that. Like it's kind of an unfair practice and competition. But at the same time like like it's really difficult to trace back like the payment and if it was true or not. So like what about those regulations? I mean like, or if for instance those companies are washing their hands because they were like I only paid for advertisements for those influencers. So it's up to them. I mean, the risk is them not ours. That's a tricky question again. Yeah, we know but we're just curious about it because yeah, we're talking about regulations but we saw also that kind of like like black spot over there. I would say that it depends on the country, right? Because the jurisdiction, the norms and whatever. But I mean that really calls our attention because it's really interesting. Yeah, because for example that happens in Europe or the United States and well immediately there's some action behind it. But for example, imagine here in Colombia, yeah, emerging countries like emerging countries in general. Yeah, with some institutions or whatever. So another company paying to others to like yeah, this gives like bad information or wrong information. Well, at least China is now regulating that people must be professional but this is something really difficult in emerging countries. Like what's your perception about it? Is there any regulation that they have? I know it's difficult but yeah. Yeah, you know, for this let's go to China because there were like we have all this economy, influencer economy and online content. For example, some recent reports indicate that new rules require influencers who discuss professional fields such as law, finance, medicine, education. They have to hold verified credentials to do it or degree or university degree or other regulatory pieces that just show that you are a professional into that field. This is a rich area for discussion because influencer law is the intersection between data, the platform responsibility as you saw and the content regulation. In Latin America, we have a big challenge because we are cashing up. In most countries, there's still no specific influencer law. What we have here is more consumer protection and advertising rules that are already apply. Not specifically to influencers but consumers to advertise an industry. But for instance, in Brazil, they issue some guidelines back in 2020 about the influencers they have to disclose the paid partnerships. You remember when Instagram did that modification in the functionalities that you can add today and mention that this is a paid partnership. Before you didn't get that obligation. For the user and consumer point of view, you couldn't just distinguish between what is paid partnership and just the opinion of the influencer. That said, when we go to the chair responsibility of the platform, it's not a question about washing the hands or so, but to create good community guidelines that can be enforced. That leads me to another reflection is about the content moderation. How you're going to moderate the content with a limit in the speech, but with the forcing existing laws about racism, about harm from content, about a lot of stuff that we see online that cannot happen. Tiktok, for instance, they are considered themselves as an agent. When you got this agent notion, your responsibilities are different. Because they say the user generated content is not ours, it's from the user. So shall be the user be attracted to the tribunals in case of racism or harm from content or is the company that allowed that? That's a big question. Because at one point, Tiktok can be considered as if you look up at the contracts inside Tiktok and that you see that the user generated content you just see for Tiktok platform is whole. or held by TikTok, the platform that they can use that content, means that they take ownership of that content. Since the platform does that, it means that they are responsible. And also that their algorithm is just like targeting that content to someone else. So that's also part of the responsibility there. But it's really tricky. It's a really, really, really tricky topic. But those regulations, I mean like Danny, like what about the future? I don't know. So I would ask our last question. And as we're joining here to the conclusion of this podcast, as always, I want to remind our listeners that the focus will be on your perception of this matter. But come here one last question. As always, is this global issue shaping our future for better or for worse? Your point of view. I'm very positive about it, by the way, because this is a challenge. Those regulations are totally necessary. Yes, correct. Yes. So thank you for joining us. And Kami, thank you for being here once again, a really, really good episode. We talked about several topics from the point of view of the regulation and the impact of a lot of. Let's say, modern issues, right? Digital and digital issues. Nothing. Thank you for being here, Kami. Thank you so much guys for your invitation. And thank you all for joining us in this journey to understand and address the critical issues shaping our world. Remember, together we can make a difference. Tune in next time for another enlightening episode of Global Issues Explained by the Master of International Business Program at Universidad FD at Inveje in Colombia. Global Issues Explained Empowering Minds Shaping a Better World.