Online platforms:  Boosting counterfeits  

As the year ends, we can observe that “brick and mortar” stores (the traditional street-side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents) are packed again. If you are keen enough, however, you will notice that these are not as packed as they used to be. 

We can only surmise that, probably, the pandemic just drained some pockets or that, through technology, other avenues of accessing goods have become more prevalent.

True enough, technology accelerated tremendously in recent decades. Nowadays, it is even moving at a dizzying speed. Notably, rapid changes are experienced in technologies that are addressing climate change (renewable energy) and manufacturing inefficiencies (artificial intelligence and robotics). 

In the same pace, there are huge developments too in big data, the Internet of things, machine learning, 3D printing, biotechnology, nanotechnology, blockchain and satellite and drone technologies.  Certainly, these changes are directly affecting the global economy, society and culture. 

Notably, platforms are those business models that are so dominating nowadays. However, make no mistake. The platform business model is not about the technology or the software. A platform business model is all about value creation. The software is just the underlying technology that propels it.  Just like the community pantry, the value is created by facilitating exchanges between two interdependent individuals or groups, usually the producers and the consumers. 

 In order to make frequent exchanges happen and consequently create a huge network of both providers or producers and consumers, big platform companies are using technology or software.  Simply put, platforms create a place where users (both consumers and producers) can connect, interact and transact. 

Today, these platforms are household names.  In fact, to some, they could hardly live without them. Notably, Google, Apple, Facebook, Amazon and Alibaba are so prevalent. Also, in the country, Lazada and Shoppee are easy recalls.

As a testament to this business model’s domination, in just ten years, the composition of the top five global companies changed dramatically. In 2008, the top five were PetroChina, Exxon, General Electric, China Mobile and ICBC.  In 2018, the top five were Apple, Google, Microsoft, Amazon and Facebook. Markedly, these companies are all based on the platform model.

Of course, there are downsides too that we can’t ignore. For one, governments are way behind in crafting and implementing relevant policies to regulate, at the very least, the use of these technologies. As richer countries have better policymakers and are well-funded, the gap (adoption-wise) between the rich and poor countries widened. Inarguably, our government is one of those that is lagging behind. 

For instance, gone are the days when sidewalk vending was the only avenue for the commercial distribution of bootleg DVDs, fake designer-garments, etc. To recall, these items, depending on where these are made or plagiarized, find their way to the Philippine market either through wicked importers or smugglers. These items are undocumented and sneaked into the country through the backdoor. Since legitimate business establishments demand for BIR registered receipts, these items seldom go through the normal distribution channels like department stores or specialty shops. Finding difficulties through legitimate channels, these unscrupulous beings found some advocates in our sidewalk vendors. 

Today, the same crooks are still in the same business but are largely using the known techno-driven platforms. Consequently, they are raking in, collectively, millions in sales.  Good for them, yes, but in a bad way. Yes, bad enough that in using these platforms and still maintaining their street vending activities, they still enjoy the same tax-free existence. Needless to say, they are also propelling the growth of counterfeit activities. 

Undeniably, the “brick-and-mortar” stores are badly affected. Not only that they are badly affected by online sales of legitimate competing products, but also with counterfeits (which are sold cheap). Needless to say, as they are the usual tax compliant businesses, the burden brought about by these statutory obligations have added to their costs and they have become less competitive. 

Reportedly, the Organization for Economic Cooperation and Development (OECD), emphasized that there are huge losses incurred due to these counterfeiters’ activities. Actually, these do not only “affect the producers of genuine items, but they also involve social costs.” More often, in fact, some consumers are “exposed to health and safety dangers.” The governments shall also lose out on “unpaid taxes and incur large costs in enforcing intellectual property rights.”

Unfortunately, there will be more products that are so attractive that will come out. Therefore, counterfeiting shall become so irresistible.