Johannes Nugroho: Facebook Scandal Sends Timely Reminder to Gov't

The question remains whether it is ethical for tech companies to peddle data on their customers. At the moment, we can only have ambivalent answers. (Reuters Photo/Dado Ruvic)

By : Johannes Nugroho | on 8:22 PM March 29, 2018
Category : Opinion, Commentary

Earlier in the week, two incidents took place involving two tech giants: the first, more widely reported, was the data harvest allegation against Facebook in which the social media company was accused of passing on 50 million users' data to a third party, United Kingdom-based Cambridge Analytica, which then misused it in the 2016 United States presidential election; the second was the tragic road accident in which an automated Uber experimental car in Arizona rammed a woman to death.

In the Indonesian context, the two events offer us a glimpse of the future and serve as a reminder to the government that the tech sector is one in need of further regulation.

Application-based transport services such as Uber, Go-Jek and Grab have become extremely popular in all major cities in the country. These services became an instant hit with the public because, foremost of all, they are very affordable, if not downright cheap to use. In fact, their rates are so low that conventional taxi services have seen their earnings cut to shreds as a result.

Questions have been bandied about for some time whether companies like Go-Jek and Grab make money at all, since, on top of offering below-average rates to customers, they also pay their affiliated drivers. Their popularity has meant many partnership openings for a great many people who can work as drivers in their spare time using their own motorbikes or cars.

The trend to work with app-based services snowballed to the extent that the government was caught off guard, as conventional taxi stakeholders protested over what they say is unfair competition from an unregulated competitor.

Under pressure from legitimately taxpaying taxi companies, the government tried to outlaw app-based transport services in 2017, only to find resistance from both the public and app-based drivers. It was also taken to court by its opponents, ending with a Supreme Court ruling that the ministerial decree was invalid.

It would seem that since their inception, most of the drivers have come to depend on the income from what was supposed to be a part-time occupation. Late in January, thousands descended on the offices of Ministry of Transportation to protest a new ministerial decree trying to regulate the sector.

Financial analysts believe application-based transport companies such as Go-Jek and Grab are running deficits in their operations and yet they have continued to draw investors. Go-Jek for example, secured a $1.2 billion investment from Alphabet, the parent company of Google, this year, not to mention the $150 million from local conglomerate, Astra International.

Since they remain unprofitable, what possible long-term benefits can they bring investors? Like Facebook, the most plausible commodity these companies have is data. By conducting transportation services linked to GPS, both Go-Jek and Grab are able to accumulate data on routes in Indonesia's cities, which will prove valuable at a later date when driverless vehicles, such as those Uber experimented with in Arizona, become the normative mode of transportation.

More immediate uses of their data include most-visited places and areas that could be pooled for the real estate industry. Since both Go-Jek and Grab also provide food pick-ups and deliveries through Go-Food and GrabFood, respectively, they inevitably also collect data and statistics on the types of food popular in each locality and a customer database that will be a boon for consultancy firms that advise on marketing strategies.

Similarly, popular online shops and marketplaces such as Tokopedia, Bukalapak and Lazada have at their fingertips data on consumer preferences, popular goods and services and buyer trends through the transactions that take place in their respective stores.

The question remains whether it is ethical for these companies to peddle data on their customers. At the moment, we can only have ambivalent answers.

On the one hand, these companies do provide helpful services to people across the country and make their lives more convenient. More and more Indonesians can get from A to B more affordably, thanks to these services; office workers and the housebound can save time by ordering their lunches through food delivery services.

On the other hand, we must also ask ourselves whether these services can last indefinitely. Will a time come when such data harvesting ceases to be viable that these services will have to terminate? If so, what will happen to the thousands of people who have come to rely on them as a source of income? More troublingly, what about the hundreds of thousands of members of the public who have come to depend on their services?

It is only a matter of time before the government will have to address these issues through legislation. The current Facebook scandal has already prompted lawmakers in the United States and Europe to look into regulating the tech sector.

The European Commission has recently announced that it would table legislation to make digital giants, such as Facebook and Google, pay taxes on the sales of goods and advertisements they carry in EU countries. In what now looks like a prescient move, Indonesian Finance Minister Sri Mulyani Indrawati has since 2017 been urging tech giants to start paying taxes to the government, a call Google subsequently complied with last year.

In today's digital world where information is power, data has become the latest hot commodity. The cutthroat competition in the globalized age has meant that minimizing risks through informed choices based on pertinent data is now more important than ever. As such, it is time for the Indonesian government to start thinking about appropriate legislation for the digital sector, something of the right mix that does not stifle the market, but still provides maximum protection to consumers.

Johannes Nugroho is a writer from Surabaya. He can be contacted at johannes@nonacris.com and on Twitter @Johannes_nos.

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