Thailand: Overview of the new Royal Decree regulating onshore and offshore digital platforms
In line with the intent of the law under the Electronic Transactions Act B.E. 2544 (2001) (ETA) to maintain financial and commercial security and strengthen the reliability and credibility of data message systems, the Royal Decree on Regulating the Digital Platforms which are Subject to Prior Notification B.E. 2565 (2022) (the Digital Platform Royal Decree) was enacted under the ETA. It was recently published in the Government Gazette on December 23, 2022. After a 240-day grace period, the Digital Platform Royal Decree will become fully effective on August 20, 2023.
Kritiyanee Buranatrevedhya and Thananya Chaikamonsuk, from Baker & McKenzie Limited Attorneys at Law, dissect the Digital Platform Royal Decree, with a particular focus on obligations of digital platform service operators.
The objectives of the Digital Platform Royal Decree are to regulate and control digital platforms both onshore and offshore, to make digital platforms in Thailand secure and reliable, as well as to protect consumers. The Digital Platform Royal Decree generally applies to digital platform operators who provide digital platform services and act as a medium between platform users in Thailand (e.g., business users and end consumers), regardless of the location of the establishment of such platform operators, i.e., both onshore and offshore, if the legal criteria are met.
Definition of digital platform service
The Digital Platform Royal Decree provides a broad definition of 'digital platform service,' which refers to any electronic intermediation services that administer information with the purpose to create a connection, by using computer networks, between business users, consumers, or service users to generate electronic transactions, with or without remuneration. Nonetheless, the definition of digital platform service excludes platforms that offer goods or services of a single operator of a digital platform service or its affiliate (i.e., digital platform service that provides its own products/services).
Examples of digital platform services are digital marketplace platforms and content platforms which are digital platform operator intermediaries that connect business users with end consumers.
The Digital Platform Royal Decree has extraterritorial applicability, where offshore digital platform service operators are subject to the Digital Platform Royal Decree if such digital platform service provides services to customers in Thailand and meets one of the predetermined criteria set by the law, for instance, displaying results wholly or partially in Thai language, registering a domain name of '.th' or '.thai,' using Thai currency for payment, or having a local entity or person to support platform users in Thailand.
Additionally, any offshore platform operator who is subject to the Digital Platform Royal Decree is required to appoint a coordinator in Thailand in writing, provided that such coordinator does not carry out any activities that are deemed as conducting a foreign business operation.
Obligations for digital platform service operators
Several obligations are prescribed for digital platform service operators who are subject to the Digital Platform Royal Decree, including, but not limited to:
Any digital platform service operator that is a juristic person, must notify the Electronic Transactions Development Agency (ETDA) of its business operation if it:
- has a gross income of more than THB 50 million (approx. ＄1,465,000) per year; or
- has more than 5,000 monthly active users in Thailand per month.
Although there are digital platform services that do not fall under the criteria above or are exempted by the ETDA, they are also obligated to notify the ETDA of certain information in brief.
Existing digital platform services that have operated before the effective date of the Digital Platform Royal Decree shall be required to notify the ETDA of its business operation within 90 days after the Digital Platform Royal Decree comes into force. As such, existing digital platform service operators will have until November 17, 2023, to submit the notification.
Terms and conditions obligations
Digital platform services, with the below characteristics, are required to notify users of their terms and conditions clearly and appropriately, prior to or while using the service:
- a digital platform service that:
- provides services to users for remuneration;
- acts as an intermediary to offer goods/services to consumers, whether or not the transaction is concluded on the digital platform service; and
- there is an agreement between the operator and business users regarding offering goods/services to consumers; or
- search engines.
For the benefit of promoting transparency and fairness in providing services, the Digital Platform Royal Decree prescribes that the terms and conditions mentioned above must include at least the following details:
- conditions of service provision, suspension or termination thereof, and charging of service fees;
- important factors in the algorithm or criteria applied by the operator to rank or recommend goods or services to users;
- important factors in the algorithm or criteria applied by the operator to advertise goods or services to users;
- important factors in the algorithm or criteria applied by the operator to assess the satisfaction and opinions of users;
- access to, and use of, information acquired from the provision of the digital platform service by the operator or user;
- help center, complaint management process, and dispute resolution, as well as timeframes for such actions;
- rating of the offering of goods, services, or content which is appropriate for each group of users; and
- actions against goods, services, or content which fall within the scope of illegality.
Complaint and remedial mechanism obligations
Digital platform service operators shall provide damage relief measures and indemnification or remedy for any person suffering damage from their digital platform service business operation, which shall consist of at least the complaint handling process and channels for aiding the service users who suffer damage from the use of service. Please note that there could be other measures which will be further prescribed by the Electronic Transactions Commission (the Commission) later on.
Business cessation obligations
Any digital platform service operator who wishes to cease its business operation must notify the cessation to the ETDA at least 60 days before the date of cessation in accordance with the methods prescribed by the ETDA.
Regarding digital platform service operators who are subject to the terms and conditions obligations above, they must notify the ETDA at least 120 days before the date of cessation and must also inform the ETDA and users of plans and measures to assist users.
The digital platform service shall be deemed to have ceased after the receipt of business cessation has been issued.
Apart from the obligations set out for general digital platform service above, any service that is deemed to be a large digital platform service or digital platform service with unique characteristics is also obliged to perform certain duties under this Digital Platform Royal Decree. For example, large digital platform services shall be subject to additional obligations, such as conducting risk assessments, setting up measures to manage such risks, system security measures, crisis management, the appointment of compliance officers, and audits by external auditors. Conversely, digital platform services with unique characteristics shall be subject to additional obligations, such as conducting risk assessments, setting up measures to manage such risks, and other activities as to be further prescribed by the Commission.
Digital platform services that operate without notification shall be subject to imprisonment for a term not exceeding one year, a fine not exceeding THB 100,000 (approx. ＄3,000), or both.
Please note that in March 2023, the ETDA held first and second public hearing sessions on the subordinate regulations to the Digital Platform Royal Decree regarding:
- the criteria for calculating average monthly active users (AMAU) in Thailand;
- characteristics of digital platform services that are exempted from notification obligations prior to its business operation;
- the details of the terms and conditions of digital platform services;
- terms and conditions of the service report form; and
- criteria, methods, and timeline to notify the ETDA and users of the changes to the terms and conditions of the digital platform service.
Recently, on April 10, 2023, the ETDA held a third public hearing session on the subordinate regulations to the Digital Platform Royal Decree regarding:
- the form for the notification prior to operating digital platform services business subjected to notification;
- the form for annual notification of the digital platform services business operation;
- the criteria, methods, and conditions for notifying the cessation of the business operation of digital platform services; and
- the criteria, methods, and conditions for the operator to compensate or remedy the service user suffering damage from using the service, or other activities necessary to protect the service users.
In the near future, a fourth public hearing session for a subordinate regulation and a guideline for digital platform service operators will be held in June 2023. Since the Digital Platform Royal Decree is newly published and there is currently not much precedence in Thailand, these subordinate regulations and guidelines would provide more transparent information and guidance to business operators in Thailand.
As such, it is advisable for business operators in Thailand to keep an eye on the newly published regulations and guidelines from the ETDA when operating an online platform or application.