DIGITAL ECONOMY PAPERS

DIGITAL ECONOMY
REGULATIONS AND POLICIES
HEADING

CLASS III D

GROUP 6
GROUP MEMBER NAME :

1. Ni Kadek Dwi Anggi Maharani (2417011038)

2. Luh Putu Meri Saptiani (2417011064)
3. Dwi Suci Jayanti Nirmala (2417011051)

ECONOMIC EDUCATION STUDY PROGRAM

DEPARTMENT OF ECONOMICS AND ACCOUNTING
FACULTY OF ECONOMICS
GANESHA UNIVERSITY OF EDUCATION
YEAR 2025
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 TABLE OF CONTENTS
HEADING ............................................................................................................... i

TABLE OF CONTENTS ...................................................................................... ii

A. Analyzing Digital Economy Policy Frameworks ....................................... 1

1. Definisi Digital Economy Policy Frameworks ............................................ 1

2. Key Components of the Digital Economy Framework ............................... 2

3. Weaknesses and opportunities of the Digital Economy Framework in

Indonesia .......................................................................................................... 4

4. Solutions and Recommendations for Strengthening the Framework .......... 6

B. Antitrust Analysis and Competition Policy for Digital Platforms ............ 7

1. Definition of Antitrust and Competition Policy ........................................ 7

2. The Importance of Antitrust and Competition Policy in the Digital Economy

................................................................................................................... 7

3. Key Challenges of Antitrust in the Digital Age .......................................... 8

4. Humanist Recommendations for Digital Competition Policy in Indonesia 9

C. Analysis of E-commerce Tax and Rules ..................................................... 9

a. Implementation and Rules of E-commerce Tax in Indonesia.................. 10

b. Comparison with the Global Tax System ................................................. 10

c. Potential and Challenges in Implementation ........................................... 11

D. Menganalisis Cross-Border Data Flow Regulations ............................ 12

1. Conceptualization of the Data Governance Trilemma ............................ 12

2. Policy Paradigm Based on Digital Maturity ............................................ 12

3. Case Study: Key Country Perspectives ................................................... 13

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 4. Strategic Implications of the Trilemma ................................................... 14

E. Analysis of Digital Rights and Consumer Protection in the Digital

Economy ........................................................................................................... 14

1. Definition of Digital Rights and Consumer Protection ........................... 14

2. Situation & Challenges of digital rights and consumer protection in

Indonesia .................................................................................................. 15

3. Relevant Regulations ............................................................................... 15

4. Transformation of Consumer Regulation in the Midst of the Development

of the Digital Economy ............................................................................ 16

BIBLIOGRAPHY ................................................................................................21

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 MATERIAL DISCUSSION

A. Analyzing Digital Economy Policy Frameworks

1. Definisi Digital Economy Policy Frameworks

"Digital Economy Policy Frameworks" which means Digital Economy Policy

Framework, which is a set of rules, strategies, and guidelines created by
governments to regulate, direct, and encourage the development of a digital-based
economy.

This framework is like Roadmap: how the state builds digital infrastructure,
regulates online transactions, protects personal data, ensures healthy business
competition, and empowers people to participate in the digital economy.

The digital economy is growing very fast. Nowadays, almost all aspects of
life are connected to digital services: people shop through e-commerce such as
Tokopedia or Shopee, send money through fintech such as OVO or Dana, travel
using ride-hailing such as Gojek or Grab, to enjoy entertainment through streaming
services such as Netflix or Spotify. This growth brings great opportunities, but also
serious challenges (Lee, 2022)

Without a clear policy framework, the growth of the digital economy can
actually present new problems:

a. Platform monopoly: one or two large companies dominate the market,

making it difficult for MSMEs and small businesses to compete.
b. Tax injustice: foreign companies reap huge profits in Indonesia, but their
tax contribution is minimal.
c. Personal data vulnerability: cases of user data leaks are common, while
consumers don't know where to complain.

This is where a policy framework comes in. Which functions as a compass

that provides the direction of development so that digital transformation is not only
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enjoyed by large companies, but also by MSMEs, informal workers, students, and
rural communities.

In addition, regulations also ensure security and justice. With the rules of the
game, consumers are protected from online fraud, their data is kept confidential,
and business actors, both large and small, have legal certainty in running digital
businesses.

2. Key Components of the Digital Economy Framework

To be broadly useful, the digital economy framework generally includes

several main pillars:

a. Digital infrastructure

The main foundation of the digital economy is fast and equal internet
access. Without strong internet networks, data centers, and cybersecurity,
people will not be able to enjoy digital services.

• Example: Indonesia is building the Palapa Ring project, a fiber

optic network that connects remote areas so that they are not left
behind in the flow of digitalization.
• Impact: Internet access is not only a matter of technology, but of
equal rights. Children in Papua or NTT deserve the same online
learning opportunities as children in Jakarta.

b. Regulation of Electronic Transactions (E-Commerce)

In the digital economy, online buying and selling transactions must

have clear rules: from the identity of the seller, the consumer's right to
return goods, to a dispute resolution mechanism. (Fazriati et al., n.d.)

• Example: Government Regulation No. 80 of 2019 concerning

Trade Through Electronic Systems (PMSE) which requires
online business actors to be transparent in offering their products.

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 • Impact: This rule provides a sense of security for small people
who shop online, so that they do not fear being scammed or
harmed.

c. Digital Taxation

The digital economy must provide fair benefits to the country. Giant
digital companies should not just take profits without paying taxes.

• Example: Indonesia sets an 11% VAT on foreign digital products

such as Netflix and Spotify.
• Impact: Taxes collected can be returned to the community in the
form of public services: education, health, and infrastructure
development. That way, the digital economy not only benefits
investors, but also the entire people.

d. Personal Data Protection and Privacy

Personal data is a "new treasure" in the digital age. If it is not protected,

the data can be sold, stolen, or misused.

• Example: Law No. 27 of 2022 concerning Personal Data

Protection (PDP Law) stipulates that any data processing must
be with the consent of the data owner.
• Impact: Data protection provides a sense of dignity and security
for the community. A person's data is not just a number, but a
human identity that must be respected.

e. Empowerment of HR & MSMEs

The policy framework must also provide space for MSMEs and local
workers to upgrade. Without empowerment, MSMEs will only become
spectators in the midst of the dominance of large platforms.

• Example: The government's "MSMEs Go Digital" program that

trains small traders to enter the marketplace.
• Impact: A housewife who sells handicrafts in the village can
reach national and even international consumers, so that her
family's income increases.

f. Healthy Business Competition

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 The digital economy must ensure fair play. If the market is controlled
by a handful of companies, innovation will die and consumers will be
harmed.

• Example: ICC (Business Competition Supervisory

Commission) supervises predatory pricing practices in the
marketplace.
• Humanist Impact: Healthy competition means economic
justice. MSMEs have the opportunity to grow, consumers have
many choices, and workers are not victims of monopoly.

Several Indonesian and Global Digital Economy Frameworks, Indonesia is active

in building digital regulations, for example: (Susmala et al., 2025)

1. PP PMSE No. 80/2019 for e-commerce.

2. PDP Law 2022 to protect personal data.
3. Digital taxes for foreign companies.
4. In addition, Indonesia also participates in the ASEAN Digital Economy
Framework Agreement (DEFA) 2025, which unifies digital payment
standards, data security, and e-commerce regulations between ASEAN
countries.
5. The European Union launched the Digital Services Act (DSA) and the
Digital Markets Act (DMA). These rules protect consumers from harmful
content while curbing the excessive power of giant companies like Google,
Meta, and Amazon.
6. The OECD developed international digital taxation guidelines, so that
global companies cannot avoid taxes in the countries where they operate.

3. Weaknesses and opportunities of the Digital Economy Framework in

Indonesia

Although Indonesia already has a number of regulations (PP PMSE, PDP Law,
digital VAT, etc.), there are still various structural and implementation weaknesses:

1. Weak Law Enforcement

Many cases of data leaks, such as BPJS Kesehatan, Tokopedia, and eHAC
data, are not clearly followed up. As a result, people feel unprotected.
Regulations exist, but public trust is low.

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 2. Digital Access Inequality

Fast and stable internet is still a privilege of big cities. In villages, people
often have difficulty with signals, so their access to digital services is
limited. This creates a gap between those who are connected and those who
are left behind.

3. MSME Capacity Gap

Many MSMEs have difficulty entering the marketplace due to a lack of

digital literacy, capital, and adaptability. As a result, they lose competition
with large companies that have large promotional funds.

4. Monopoli Platform Besar

Companies such as Shopee, Tokopedia, or Gojek have a large market

dominance. MSMEs often feel that they are just "following the rules of the
game" of the platform without being able to negotiate.

5. Taxation Is Not Optimal

Despite the existence of digital taxes, there are still many cross-border
transactions that go unmonitored. As a result, the potential for big taxes is
lost, while small people continue to pay taxes every day.

Opportunities for Indonesia's Digital Economy Framework Behind these

weaknesses, Indonesia has a great opportunity to maximize the digital framework:

1. Large and Dynamic Markets

With 270 million people, Indonesia is the largest digital market in Southeast
Asia. Every right policy can have a big impact on the people's economy.

2. Regional Support (ASEAN DEFA 2025)

Indonesia's participation in the ASEAN Digital Economy Framework

Agreement opens up opportunities for digital integration in Southeast Asia,
ranging from cross-border e-commerce to smoother data flows.

3. Tech-Literate Young Generation

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 Indonesia has a demographic bonus. The young generation who are digital
natives can be the engine of innovation, if facilitated by regulations and
empowerment programs.

4. MSMEs as the backbone,

MSMEs, which number more than 64 million units, can be the main driver
of the digital economy if given market access, digital literacy, and financing
support.

4. Solutions and Recommendations for Strengthening the Framework

In order for the digital economy framework to be truly human-friendly,
several strategic and humanist steps can be taken:

1. Strengthening Law Enforcement and Transparency

a. Form an independent institution dedicated to the supervision of
personal data.
b. Apply strict sanctions to companies that neglect to maintain data.
c. Involve civil society as policy transparency watchdogs.
2. Removing the Digital Divide
a. Continue the development of internet infrastructure in the 3T area.
b. Provide subsidies for education data packages so that children in
villages can learn online without obstacles.
3. Empowering MSMEs
a. Provide incentives for MSMEs that enter digital platforms.
b. Hold regular digital literacy training in villages.
c. Develop a local e-commerce platform that favors regional MSME
products.
4. Setting Large Platforms Fairly
a. Implement antitrust rules that protect MSMEs.
b. Make sure the platform's algorithm is transparent so that MSME
products are not buried under big promotions.
5. Optimizing Digital Taxes for the Public Interest
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 a. Digital taxes must be directed back to the people in the form of
education scholarships, free healthcare, and subsidies for MSMEs.
b. Make sure people know that digital taxes really provide immediate
benefits.

B. Antitrust Analysis and Competition Policy for Digital Platforms

1. Definition of Antitrust and Competition Policy

Antitrust is a set of rules that prevent the practice of monopoly, cartels, or

abuse of dominant positions by business actors. Competition policy More broadly,
it can be said to be a policy that ensures market competition remains healthy, fair,
and provides benefits for consumers and small business actors.

In the context of digital platforms (Shopee, Tokopedia, Gojek, Grab,

Google, Meta, Amazon, etc.), antitrust means preventing them:

5. Using market power to shut down competitors.

6. Unilaterally set prices or commissions.
7. Handle user data to close competitor opportunities.

2. The Importance of Antitrust and Competition Policy in the Digital

Economy

According to (Lee, 2022), The digital economy is different from the

traditional economy. Digital platforms tend to move towards "winner takes all":
whoever gets big first, will be more dominant. Without competition policies such
as:

1) MSMEs will not have room to compete. For example, Shopee and
Tokopedia can set algorithms so that products from large sellers appear
more often, while MSME products are buried.

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 2) Consumers have few choices, and end up being disadvantaged. For
example, Google is accused in the European Union of prioritizing its own
ad search results.
3) Platform workers (drivers, couriers, freelancers) are stuck in the company's
unilateral rules. For example, Grab-Gojek was feared if it merged, because
it could reduce choices for consumers and pressure drivers

3. Key Challenges of Antitrust in the Digital Age

1) Data Dominance
Data is the "new oil". Large companies control user behavior data, making
it increasingly difficult for small players to compete with.

2) Network Effects
The more users on one platform, the more attractive that platform will be.
For example: the more people use WhatsApp, the harder it is for new
competitors to get in.

3) Closed Algorithm
The algorithm of marketplaces or social media is not transparent. Small
sellers or content creators don't know why their products are rarely seen.

4) High Commissions and Platform Dependencies

MSMEs often feel "suffocated" by the commission, advertising, and

promotional fees that must be paid for their products to appear in search.

5) Global Practice as a Comparison of the Use of Digital Platforms in

Indonesia.

a. European Union: Through the Digital Markets Act (DMA), the EU

regulates that "gatekeepers" (Google, Meta, Amazon) do not abuse
market power. For example, they shouldn't force certain apps as the
default on the device.

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 b. United States: The Federal Trade Commission (FTC) is suing Meta
(Facebook) over the acquisition of Instagram and WhatsApp that it
considers to weaken competition.
c. China: Alibaba was once fined billions of dollars for forcing
merchants to sell only on its platform and prohibiting selling on
competitors.
d. Indonesia: The Business Competition Supervisory Commission
(ICC) has investigated allegations of predatory pricing practices by
large marketplaces, but law enforcement is still limited.

4. Humanist Recommendations for Digital Competition Policy in Indonesia

a. Algorithm Transparency : The platform must explain how the

product is displayed. MSMEs need certainty that their products can
compete without always having to pay for advertising.
b. Commission and Advertising Cost Limits : The government
needs to set reasonable limits so that MSMEs are not burdened with
high costs.
c. Prohibition of Exclusivity Practices : Marketplaces must not force
sellers to sell only on one platform.
d. Empowerment of Local MSMEs : The state can provide tax
incentives or promotional support for MSMEs so that they are not
less competitive.
e. Platform Worker Protection : Online motorcycle taxi drivers,
couriers, and freelancers should be seen not just as "partners", but
workers who are entitled to living wages, social protection, and fair
labor policies.
C. E-commerce Tax Analysis and Rules

The rapid development of digital technology has made e-commerce one of

the important components in the world economy. In Indonesia, this sector is
showing great growth with the number of transactions continuing to increase every
year (Susmala et al., 2025). However, behind these opportunities, the government
faces a major challenge to make fair and effective rules to increase state revenue.

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This paper will discuss the implementation of e-commerce taxes, compare them to
systems around the world, and reveal the main challenges faced.

a. Implementation and Rules of E-commerce Tax in Indonesia

The Indonesian government has been trying to establish a tax legal framework
for e-commerce transactions, which is regulated as an important part of the national
tax system. E-commerce transactions are usually subject to Income Tax (PPh) and
Value Added Tax (VAT). The legal basis refers to the applicable tax laws, such as
Law Number 7 of 2014 concerning Trade and a circular from the DGT (Bambang
Haryadi & Agus Sari, 2020).

However, the regulatory process in Indonesia is often marked by changes that

make the situation uncertain. For example, PMK 210/PMK.010/2018 regarding e-
commerce tax was repealed and replaced by PMK 32/PMK.010/2019. This rapid
policy change sparked controversy and even caused injustice for conventional
business actors, which showed that regulations often do not keep pace with rapid
technological developments.

b. Comparison with the Global Tax System

The e-commerce tax system in Indonesia can be understood better when

compared to the existing models in other countries. Indonesia implements digital
VAT at an 11% rate based on the consumer's location. This approach is different
from more advanced systems in other countries (Susmala et al., 2025):

1. The European Union implements VAT (Value Added Tax) at an average

rate of 20% and an integrated One-Stop Shop (OSS) administration system,
making it simpler for businesses to manage international transactions.

2. The United States has a sales tax that varies from state to state, creating
uncertainty and administrative difficulties for business actors.

3. In Australia and Singapore, GST (Goods and Services Tax) is implemented

efficiently through an integrated system run by local tax authorities.

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 In addition, countries such as the United Kingdom and France have
successfully leveraged the Digital Services Tax to tax large tech companies and
increase state revenues from international digital activities.

c. Potential and Challenges in Implementation

The e-commerce sector in Indonesia has great potential to contribute
significantly to state revenue. Forecasts suggest that potential tax revenues from
this sector could help cover the deficit of the national tax target. However, to
achieve this potential, there are several challenges that must be overcome: Low
Taxpayer Compliance: Many e-commerce players do not have an NPWP or do not
report their taxes correctly (Bambang Haryadi & Agus Sari, 2020).

1. Administrative Barriers: The tax administration system in Indonesia is still

manual and unintegrated, making it difficult to oversee millions of cross-
platform transactions.

2. Hard-to-Trace Nature of Transactions: Unbound e-commerce transactions

involving digital products (such as software or music) make it difficult for
tax authorities to track and impose taxes.

Overall, although Indonesia has a good legal basis, the country still needs to
make many improvements in its administrative and supervisory system in order to
maximize the potential of digital taxation and ensure fairness for all economic
actors.

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D. Menganalisis Cross-Border Data Flow Regulations

Regulations relating to the flow of data between national borders are one of
the most complex aspects in the context of the global digital economy. This issue
includes not only the transfer of information between countries, but also about how
governments can balance various conflicting priorities, which are described in the
concept of the Data Governance Trilemma. This concept suggests that it is
impossible for a country to simultaneously achieve three main goals: data
monetization optimization, seamless cross-border data flow, and a high level of data
privacy and security. Prioritizing two of the three elements will require a
compromise on the remaining elements (Zaber, 2024).

1. Conceptualization of the Data Governance Trilemma

Fundamentally, this trilemma describes the inherent trade-off between three
strategic parameters. The desire to optimize data monetization, for example,
requires extensive data collection and use, which may be contrary to strict privacy
regulations. Similarly, facilitating the free flow of data between countries across
jurisdictions makes compliance with various privacy standards a significant
challenge. On the other hand, the implementation of strict privacy and security
policies can reduce the way data is used and shared, thereby hindering potential
revenue and data transfer (Privacy & Zaber, 2024).

To illustrate, a global social media platform seeks to maximize the

monetization of user data through targeted advertising and wants that data to flow
freely to data centers in different parts of the world for efficiency. However, if the
platform ignores privacy interests, the user's personal data is vulnerable to leakage
or misuse, which can reduce the level of trust and violate privacy rights. This is the
main problem of the trilemma.

2. Policy Paradigm Based on Digital Maturity

Regulatory approaches to these challenges tend to vary and are closely related
to the stage of development of the digital economy in a country (Privacy & Zaber,
2024).
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 Watch-Out Economies: Countries that are in the early stages of
digitalization tend to focus more on data monetization as well as cross-border data
movement to drive economic growth. Such a focus often ignores the privacy and
security aspects, due to the fact that the regulatory framework is not fully
developed. A concrete example of this phenomenon is Indonesia, which in its early
phases sought to attract the attention of foreign technology companies with loose
regulations to support the local digital ecosystem.

Break-Out Economy: In this phase, a country begins to increase its attention

to privacy and security as the digital sector grows and public awareness increases.
However, this change may lead to restrictions in data flows, as data localization
policies are increasingly implemented. For example, when a country starts
implementing a requirement for its citizens' data to be stored on domestic servers,
this can complicate the activities of global companies.

Stall-Out and Stand-Out Economies: Developed countries in this category

have managed to strike a balance between data flows and privacy, supported by a
mature digital infrastructure and legal framework. However, growth in data
monetization tends to slow down as a result of high data protection standards. For
example, the European Union, through its GDPR regulations, restricts companies'
ability to profile users for aggressive advertising purposes, although this move helps
build consumer trust.

3. Case Study: Key Country Perspectives

The main differences in the way a country understands data have a profound
effect on its regulatory methods (Privacy & Zaber, 2024).

a. United States: Views data as a critical economic source for trade and
innovation. This view supports open data flows, with a greater emphasis on
opportunities for making money and freedom of movement.

b. European Union: Considers personal data to be a fundamental human right.

Through the General Data Protection Regulation (GDPR), the EU

13
 establishes strict privacy rules as a condition for data transfers worldwide,
which has a major impact on regulation globally.

c. China: Understanding data as a matter of national security. China

implements strict data localization laws to limit data transfers between
countries, aiming to maintain government control and support companies in
the country.

4. Strategic Implications of the Trilemma

This trilemma has a great impact on various parties. For companies, the
challenge is to face often conflicting regulations in different places, which makes
the cost of complying with those regulations higher and can stifle new ideas (Zaber,
2024). For example, a tech company needs to follow GDPR in Europe while also
complying with strict rules on data in China, which requires them to use very
different ways of managing data in each market. For the government, the challenge
is to create policies that can help the economy grow while maintaining public trust
and protecting citizens' rights. For users, this trilemma affects how much control
they have over their personal data and how much trust they have in digital services
(Privacy & Zaber, 2024).

Ultimately, this trilemma shows that there is no one-size-fits-all way to

manage data flows between countries. Every country needs to make strategic
choices that align with their priorities, whether it's economic growth, sovereignty,
or the protection of individual rights.

E. Analysis of Digital Rights and Consumer Protection in the Digital

Economy

1. Definition of Digital Rights and Consumer Protection

Digital Rights are the rights inherent to individuals as users of digital
technology, including the right to privacy, data security, freedom of access to
information, the right to cybersecurity, the right to transparency, and the right to
redress in the event of a violation (Lubis et al., n.d.).

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 Consumer Protection is any legal and regulatory effort aimed at ensuring
that consumers are protected from adverse business practices, fraud, personal
data breaches, inappropriate products, unfair services, and others, especially in
digital transactions and interactions (e-commerce, applications, online
platforms).

2. Situation & Challenges of digital rights and consumer protection in

Indonesia

1. Law No. 8 of 1999 on Consumer Protection (UUPK) and Law No. 11 of

2008 on Electronic Information and Transactions (ITE Law), as well as its
revisions, are the main legal frameworks, but they are considered not fully
effective in dealing with the unique characteristics of digital transactions,
such as data security issues, online fraud, transparency in digital platforms.
2. Many consumers are not aware of their rights in digital transactions and the
fast and transparent mechanism for resolving consumer disputes, especially
online/non-litigation, is still lacking.
3. Current regulations have efforts to strengthen, for example in the renewal
of the ITE Law, personal data protection regulations, but there are still
regulatory gaps that have not fully answered challenges such as AI-based
products, cross-border data protection, and the responsibility of digital
platforms as intermediaries/transactions.
4. Weak aspects of law enforcement: supervision of business actors, easily
accessible complaint mechanisms, sanctions, and accountability of digital
platforms.
5. Consumers' interests/trust are compromised if their rights to privacy, data
security, and clarity of information from the seller/platform are not met.

3. Relevant Regulations

• Law No. 8 of 1999 concerning Consumer Protection (UUPK)

• Law No. 11 of 2008 concerning Information and Electronic Transactions,
and its revisions (ITE Law and its amendments)
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 • Personal data protection regulations, cybersecurity regulations, and digital
platform regulations are among others that affect digital rights and
consumer protection.

4. Transformation of Consumer Regulation in the Midst of the Development

of the Digital Economy
a. Digital Rights in the Context of the Digital Economy

The development of the digital economy has given birth to a new form
of legal relations between consumers, business actors, and digital platforms.
Digital rights (digital rights) is an extension of human rights into cyberspace.
These rights include the right to freedom of expression, the right to privacy,
the right to personal data protection, and the right to fair access to digital
services (Lubis et al., n.d.).

In practice, digital rights often clash with the commercial interests of

technology companies that collect, process, and monetize user data. For
example, the cases of personal data leakage that are rampant in Indonesia
show the weak mechanism for protecting digital rights. This demands stricter
regulations so that consumers' digital rights are not sacrificed for business
interests (Yuwono & Israhadi, 2025).

b. Consumer Protection in the Digital Era

Consumer protection (consumer protection) in the digital economy is

an important issue because the characteristics of online transactions are
different from conventional transactions (Yuwono & Israhadi, 2025).
Consumers often do not meet with sellers in person, cannot verify the quality
of products in real life, and are prone to fraud.

Digital consumer protection ideally includes several aspects:

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 1. The right to correct and clear information about the product, prices,
and terms and conditions of service.
2. The right to the security of personal data, in particular in online
transactions involving the storage of account numbers, credit cards, or
personal identities.
3. The right to security and safety, such as protection against
counterfeit goods, dangerous products, or illegal digital content.
4. The right to a fair dispute resolution, both through litigation and
non-litigation mechanisms (online dispute resolution).

However, in reality there are still many gaps. Most consumers don't know
how to report a violation, or are reluctant because the process is convoluted.
This shows that the implementation of digital consumer protection still faces
structural and cultural obstacles.

c. Challenges in Regulatory Implementation

Some of the main challenges in enforcing digital rights and consumer

protection in Indonesia include:

1. Regulatory delays: The Consumer Protection Act (1999) and the ITE
Act (2008) were born before the digital economy was booming, so they
are not yet fully relevant to current issues such as cross-border data
protection, AI-based services, and global platforms.
2. Weak law enforcement: Many cases of data leaks or online fraud are
not followed up with strict sanctions. As a result, business actors are
not deterred and consumers lose trust.
3. Lack of consumer awareness: Research shows that most consumers
in Indonesia do not understand their digital rights, making it difficult
to claim rights when a violation occurs.

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 4. Dominance of global digital platforms: Large platforms (e.g. foreign
marketplaces) often operate with their own rules, while national
regulations are difficult to reach due to their cross-border nature.

d. The Role of Regulation and Policy

Some relevant legal instruments to regulate the relationship between

consumers, business actors, and digital platforms:

1. Law No. 8 of 1999 on Consumer Protection (UUPK): The Consumer

Protection Law is the normative foundation for economic relations
between business actors and consumers in Indonesia. In principle, this
law affirms the basic rights of consumers, namely the right to comfort,
security, safety, and the right to correct and honest information and
places basic obligations on business actors not to harm consumers. In
everyday practice, the UUPK is the basis when consumers face defective
products, misleading sales, or unfair commercial practices, this Law
provides a legal basis for compensation claims, information labeling
obligations, and consumer dispute resolution procedures.

But as the economy moves into the digital realm, the character of
transactions changes as consumers often buy without face-to-face,
quality information can be manipulated through fake reviews, and
platforms act as multi-party intermediaries. Many provisions of the
UUPK are generic and require technical translation to be able to regulate
the responsibilities of new parties such as marketplaces, digital payment
service providers, or electronic system operators. For example, the
UUPK gives the right to compensation for defective products, but it does
not specify who is liable if the seller is in a foreign marketplace or if the
dispute revolves around the data that the platform uses to recommend the
product. Therefore, the UUPK remains important as a foundation of

18
 values and rights, but it needs derivative rules and operational
adjustments to be effective in the digital realm.

2. Law No. 11 of 2008 jo. Law No. 19 of 2016 concerning ITE: The ITE
Law was born to provide a legal framework for electronic information
and electronic transactions ranging from the recognition of electronic
evidence, the basic rules of online transactions, to provisions on the
responsibilities of electronic system operators. Narratively, the ITE Law
acts as a "rule of the game" for digital communication and previously
unwritten transactions. The law allows evidence of online transactions to
be recognized in court, provides a basis for prosecution of fraud or
unauthorized access, and places certain obligations on parties operating
electronic infrastructure. For consumers, the ITE Law is a tool to enforce
rights when illegal acts occur in the digital space. But on the other hand,
the ITE Law also faces challenges when applied to modern platform
business models. Many new issues such as recommendation algorithms
that impact product exposure, content moderation/takedown practices by
platforms, or the role of intermediaries in trade disputes also require
sharpening of the rules, platforms must act proactively to remove
misleading content or problematic sellers. The ITE Law provides a
general framework for authority related to electronic information, but
implementing regulations and sectoral guidelines are needed so that these
regulations can be applied proportionately and do not cause uncertainty
for business actors and consumers.
3. Law No. 27 of 2022 on Personal Data Protection: strengthens digital
rights, including consumers' right to know the use of their data and the
right to delete data.

However, this regulation still requires derivative rules and consistent

implementation in order to truly provide real protection for consumers
(Melisa Melisa et al., 2025).

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e. Dispute Resolution Mechanism

The current digital consumer dispute resolution mechanism is still limited

to:

1. Litigation: Disputes can be resolved through the courts. This mechanism

has binding legal force, but is often considered less effective because it takes
a long time and costs a lot of money. For consumers, this path is usually a
last resort when other efforts have not been successful
2. Consumer Dispute Resolution Agency (BPSK): BPSK is present as a
special institution in charge of handling disputes between consumers and
business actors. The process is relatively faster than the courts, and it does
not require large costs. However, BPSK's capacity is still limited and has
not fully adjusted to the characteristics of digital disputes
3. Alternative digital dispute resolution (ODR): As digital transactions
develop, an online dispute resolution mechanism or ODR has emerged. This
model offers a faster, cheaper, transparent, and more accessible process for
consumers. Although in Indonesia ODR is still in the early stages of
development, this mechanism has great potential to become a modern
solution in resolving consumer disputes in the digital era. ODR can be one
of the regulatory innovations that is in line with technological
developments.

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