There is no specific rule in Indonesia that governs online advertising activities. Considering that online advertising is part of an electronic transaction, such advertising is subject to the provisions of Law No. 11 of 2008 on Electronic Information and Transactions (the ITE Law), Government Regulation No. 71 of 2019 on the Implementation of Electronic Systems and Transactions (the Electronic Transaction Regulation) and other relevant regulations on internet-based activities.
In relation to capital investment restrictions, the Negative Investment List stipulates that activities concluded using an electronic system, including online-based ads, are subject to a maximum 49% foreign ownership if the investment value is less than 100 billion rupiah.
The Electronic Transaction Regulation only provides that an electronic system provider shall formulate a feature for the purpose of accessing information regarding advertisements.
Definition of Online Advertising
There is no specific definition of “online advertising” provided in the applicable laws and regulations in Indonesia, because online advertising is deemed an inseparable part of an electronic transaction. Online advertising activity is useful for merchants to introduce and promote their products and services. However, there are also companies established with the sole purpose of conducting online advertising services. These companies profit by designing advertisement materials, distributing those materials to numerous platforms and arranging for the ads to be published. It is unlikely for online editorial content to be classified as online advertising, since online editorial content may not necessarily be intended for commercial purposes.
Law No. 8 of 1999 on Consumer Protection (the Consumer Protection Law) provides that any business entity that uses misleading information for online advertisement purposes shall be subject to imprisonment for a maximum period of five years or financial penalties up to a maximum nominal value of 2 billion rupiah.
If the content providers merely host the content, then their liability would be limited to the information indicated within the relevant content. If the content is unlawful, but remains unpublished, then the content providers will be solely liable. However, if such unlawful content is published on a website, the relevant internet system provider can also be held liable, if it cannot prove that its system is not classified as a user-generated electronic system. If it is published in a non-user generated electronic system, the internet system provider would have control to decide whether the content is lawful before publishing.
This first appeared in the Lexology GTDT e-Commerce 2021 global guide. You can find the full chapter here.
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