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LEGAL PROVISIONS FOR A COMPANY’S DIGITAL TRANSFORMATION IN MEXICO.

By Luis Mario Lemus Rivero posted 05-02-2019 02:19 PM

  
  1. ¿What is digital transformation?
 Digital transformation is the activity prone to the reconstruction of the internal dynamics of a company to adapt them to the present and future needs. The purpose of companies’ digital transformation is to not fall behind and assure their survival through time.

Nowadays, companies searching for a real transformation are focusing their efforts in the so-called “Industrial Revolution 4.0”. This revolution is the merging of two worlds: the world of Information Technology and the world of Operational Technology, whether using the cloud, artificial intelligence, Internet of Things or Blockchain -among others- to be more efficient, competitive, and to achieve added value for clients.

This revolution, in addition to reducing the use of the capital to create products, involves the creation of an ecosystem of collaboration with win-win relationships for all its participants, for example, the FINTECH business models.
 
¿Which are the key factors in the digital transformation?
 
  1. Internet of Things (IoT).Companies must seek for their products -in case of it being doable and considered as ideal- to be online, because according to CISCO, a well-known technology company, the growth of things connected to the internet in 2020, will be between 25 and 50 billion, and according to SAP, in 2030, 100 trillion of the sensors will be able to operate worldwide.
 
  1. Mobile. At the closing of 2017, according to data from The Competitive Intelligence Unit Mexico, there are 99.5 million smartphones registered and, it is expected that in 2020 there will be three mobile phones for every citizen in our country.
 
  1. Social Networks. According to figures from Hootsuite, Facebook has 2.167 billion active users per month YouTube has 1.500, WhatsApp has 1,300, Instagram has 800, and Twitter has 320.
 
  1. Big Data / Analytics. According to IDC’s statistics, from 2005 to 2020, the global volume of data -in the digital universe- will rise to a factor of 40 trillion gigabytes.
 
  1. Cloud Computing. Cloud Computing has become a key factor for companies. The investment that big companies such as Amazon, IBM, and Dropbox have made, has been vital to facilitate mass storage of data securely, always looking for flexibility and efficiency in the information management, as well as the generation of strategic value.
 
  1. Blockchain.  This is one of the most interesting and important technologies in today’s market, this technology can make information transactions and its processes more efficient, transparent and secure.
 
  1. Artificial Intelligence. This technology allows to be more efficient and to process information systematically as if 1,000 brains were connected at the same time.
 
  • Legal aspects in the digital transformation.
 
When we talk about digital transformation in businesses, it is believed that it only comprises analyzing the business model and reinventing how things are done, digitalizing the processes or implementing new technologies to be more competitive and to provide a better service at a lower cost. It is not only that, but it also requires multiple actions prone to determine the risks in carrying out a real digital transformation, for example, the legal implications.
 
In Mexico, it is very common to think that technology is not regulated or that the existing regulation is outdated or minimum.

It is important to emphasize that there are multiple laws in Mexico that regulate activities that are executed through informatics and/or technological means. For example, the Commercial Code, the Federal Consumer Protection Law, the Industrial Property Law, the Federal Labor Law, the Federal Criminal Code, the Federal Law on Protection of Personal Data Held by Private Parties, the Federal Civil Code, among many others.

It is vital to have counsel from an attorney specialized in business and technology, mainly because every step in the transformation must be analyzed. Also, it is necessary to carry out due diligence of the technologies that are sought to be implemented. 

Attorneys, as professionals in the field, must ensure that this transformation adheres to the law, safeguarding, always, businesses from the risks that come with not complying with our country’s legal framework.

For example, a company that intends to start selling online should be advised by a lawyer, who must ensure compliance with the consumer’s protection, personal data protection, and intellectual property provisions. Such lawyer must also design adequate policies and terms and conditions in accordance with the business.

We can find another example in the digital transformation of financial businesses, in this case, the lawyer must be a specialist in business, technology, and Financial Technology Institutions. The specialist must ensure that this transformation complies with the Law to Regulate Financial Technology Institutions, known as FINTECH LAW, the Industrial Property Law, the General Corporations Law, the Commercial Code, the Federal Law on Protection of Personal Data Held by Private Parties, the Mexican Federal Tax Code, among others.

As we can see, each business transformation is different, every one of them has a different legal impact, therefore counsel should be customized to each business model and to each legal act. Not having proper counsel implies an economic and reputational risk for the business and, everything that entailed a competitive advantage for the company may cause its detriment, or even worse in its closing.

 

Luis Mario Lemus
Partner
Calderon & de la Sierra
Mexico 

 

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