Barriers to International Digital Trade for App Makers
ACT| The App Association’s report The App Economy in Europe found that app developers contribute £74.8 billion to the UK economy and employ 400,000 people, demonstrating the positive impact UK app makers have.
While the global economy holds great promise for small tech companies, they face many challenges when entering new markets. Many domestic laws, regulations, policies, or practices actually represent barriers to trade and innovation that impede UK exports.
In this blog, we explore some of the barriers to digital trade that prevent small companies from accessing a global customer base and suggest policy recommendations that could open the world for UK app makers.
Boosting international digital trade
Enabling Cross-Border Data Flows: Seamless data flows between economies are essential to a functioning global economy. Innovative UK app developers must be able to rely on unfettered data flows as they seek access to new markets.
Prohibiting Data Localisation: Regulations that force UK companies and other foreign providers to depend on local infrastructure in a new market effectively exclude them from commerce. Small companies cannot build or maintain unique infrastructure in every country they do business in.
Prohibiting Customs Duties on Digital Content: UK companies must utilise the internet’s global nature to reach the 99.13%of people who live outside the UK. Applying customs duties to e-commerce adds complexity and cost to international trade. These practices jeopardise the internet’s efficiency and effectively block products and services from market entry.
Ensuring Market Entry is Not Contingent on Source Code Transfer: Some governments require companies to transfer or provide access to proprietary source code to enter their national market. IP is key to app developers’ innovation, and transferring source code presents an untenable risk of theft and piracy. Policies imposing these requirements disincentivise international trade.
Preserving Strong Encryption Techniques to Protect End Users: Digital trade depends on strong encryption techniques to keep users safe. However, some governments demand backdoors to encryption keys for government access. These policies jeopardise the safety and security of data and end users’ trust by creating known vulnerabilities that unauthorised parties can exploit. This matters because the viability of an app depends on end users’ trust.
Securing IP Protections: Infringement and theft of IP threaten small companies’ success and hurt consumers who rely on their products. These IP violations can lead to customer data loss, service interruptions, revenue loss, and reputational damage – each a potential ‘end-of-life’ occurrence for a small app company.
Avoiding Reckless Application of Antitrust to Software Distribution Platforms: In key markets for UK small business innovators, regulators are considering or already implementing, policies that stand to damage the harmonious relationship software distribution platforms have with developers based on rushed competition law analyses. A deliberate and reliable antitrust landscape is critical to digital economy growth and job creation.
International digital trade makes the world go round
If we want international trade rules to work for app makers, we must help make them. Working with membership bodies like ACT | The App Association and TechUK can help you to make your voice heard when policies like the ones described above are being developed. The beauty of global trade is that with the right policies in place, the next big thing can start in a bedroom anywhere in the world and end up on billions of mobile devices across the globe. Speaking from my personal experience of talking with numerous innovative and brilliant app developers around the country, I believe the next must-play game, life-changing health tech, or trending social media platform may very well come from the UK!
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