> If countries are allowed to assert extraterritorial jurisdiction, anyone running a website might need to know and obey the laws of nearly 200 countries.
Yes, that's how it works. Specifically, the common argument that applies to most companies (incl. Rumble), is that you're trading within that country if anyone from that country is either paying for your product/service, or making money from your product/service; and therefore you essentially need to function as (if not actually legally have) a per-country corporate subsidiary amenable to the laws of that country, if you want to continue doing that.
And sometimes it's even worse; for at least the US and Canada, companies trading with people living in these countries have to know and follow the laws of the state or province their customers live in, when serving those customers.
These are mostly simple things like tax codes, yes; but sometimes it's things that are far more arcane — for example, Quebec prohibits promotional first-period pricing that automatically transitions into regular pricing (they consider this a predatory practice.) Companies that advertise promitions in Canada often have fine print that says "offer not valid in Quebec" because of this.
This tangled mess of required region-specific logic is, by and large, the moat of e-commerce platforms and payment processors. It's why even large e-commerce services like Steam, that build all this logic internally for most countries, will still integrate with payment processors like Stripe or PayPal — those services are made options to cover the long-tail of countries they don't want to learn and maintain regional rules for.
It's also why many companies don't bother to actually sell into every market; and instead allow companies that specialize in "partnering with foreign companies to sell their products into our own domestic market that we understand well" — a.k.a. importers — to do that for them (and skim off some of their margin in the process.)
> Yes, that's how it works. Specifically, the common argument that applies to most companies (incl. Rumble), is that you're trading within that country if anyone from that country is either paying for your product/service, or making money from your product/service; and therefore you essentially need to function as (if not actually legally have) a per-country corporate subsidiary amenable to the laws of that country, if you want to continue doing that.
I think an equally valid (and frankly more reasonable) interpretation is that if anyone from another country is paying for your product/service, then they're trading within _your_ country. If in doing so they contravene laws of _their_ country (e.g., forbidden speech, taxes, etc.) then that's their problem, not yours. This interpretation has the advantage of actually being enforceable, unlike the alternative.
And if a country doesn't like that then they're free to "protect" their citizens by building a Great Firewall, which is _totally and only_ for their people's benefit.
That's the interpretation that would apply if you were trading in e.g. equities. The stock exchange doesn't come to you; you come to it. (And therefore, you need to have a legal presence in the country where the exchange is located, with bank+investment accounts registered there, holding deposits denominated in that country's currency. You can't buy stocks from the NYSE using a European bank account, let alone one holding Euros — you have to first fund an American bank account with USD; then transfer that into a special American [government-]registered investment account; and then use that account to buy the stocks.)
In this scenario, the foreign investor is in a sense creating a legal "proxy person" — a virtual citizen of the country where the exchange exists. The foreign investor is then telling the proxy person to do the trades for them. If the pretend proxy person breaks the law, the real investor gets in trouble... but in ways that are more similar to the ways corporations get in trouble, than the ways citizens of the country get in trouble.
(And some countries don't even allow the creation of these pretend proxy persons; instead requiring you to employ, and hand your money over to, a real proxy person, who will face the domestic legal consequences for executing your trades! This is how e.g. Bahamian shell corporations work; it's also how foreign real-estate investments work in the Philippines. It's never a good time.)
"The purchaser representing themselves legally in the country they're buying from" is also how the aforementioned import arrangements work. The importer registers an export company in the source country — essentially a proxy-person, though in the shape of a corporation — and the export company is what buys the goods and sends them to the import company.
Most trade isn't like this, though, because most trade isn't between legal peers (like an exchange and an investor — both basically "typed as" corporations for the sake of the trade, even if one is a sole proprietor); but instead is between one large company and a potentially-huge number of individually-legally-naive individual consumers.
It is impractical to ask all the people who want to buy a product, to create a foreign trading presence for themselves in the country of origin of that product, as if they were a professional importer. Governments don't want to maintain — or especially to validate and audit — huge databases of hundreds of millions of foreign individuals trading locally. Banks don't want to have to open and maintain hundreds of millions of tiny, individual, unprofitable(!) foreign-deposit accounts for those individuals to use to operate legally in the country.
So instead, governments and banks choose the far simpler route: making the foreign corporations register themselves in the markets they operate in. There are far fewer corporations to keep on the books for both the governments and the banks; and it's far easier to manage their accounts (because corporations are on average more competent at that kind of thing; because unlike individuals, corporations can afford to pay ~hundreds-of-dollar levies to maintain the systems tracking them and keep the bank-accounts revenue-positive for the banks; and because corporations will coalesce bank transfers, turning billions of little daily transactions to individuals' foreign-deposit accounts, into just a few daily transactions to each corporate foreign-deposit account.)
Ignoring the pragmatics, though, there's also a key distinction even in theory: when a company X from country A, trades with consumers in country B, company X is seeking to pull money out of (or put money into) a credit card or bank account that exists in country B (and which is denominated in the currency of country B), and move that money to/from country A, where it will then get exchanged for the currency of country A and drop into the company's country-A bank account.
The manipulation of the country-B bank account, can only legally be done (for most values of country-B) by a company legally registered in country-B to operate on the payment networks of country-B. There has to be a payment server sitting there physically in country-B, connected by dedicated line to the inter-bank network the banks of country-B use; and that payment server has to have signing certs installed to emit messages on the line that will be accepted by the network — signing certs which required a bunch of legal and contractual and trust-handshake hoops to be jumped with the banks of country-B before they'd be issued.
So these are the only options for getting access to such a payment server. Either:
- company X forms a country-B subsidiary XB, that goes through the process of applying for the certs and setting up the payment server; or
- company X pays existing country-B-local payments company Y to use their payments server to do the money-moving-around for them; or
- company X pays multinational payments company Z to provide them a country-agnostic interface for moving money around; when requested by X to perform a country-B transaction, Z will then either signal the servers of their existing country-B-local subsidiary ZB — or will pass the message to their country-B-transaction-partner Y — to do the real money-moving around.
Anything that seemingly doesn't have one of these three fundamental shapes — but which still results in a company in country-A moving around money in a country-B bank account — is just window-dressing on top of underlying infrastructure that does have one of these shapes.
> it's also how foreign real-estate investments work in the Philippines
Strange - here in Lapu-Lapu, a too-nasty salesperson has convinced me (a foreigner) to enter a contract to buy a not-yet-built condo unit. I just pay a certain amount every month using my bank account, they get the money, and on an agreed-upon date, the unit will be mine. I can go at any time and watch how the construction work proceeds. So far, their proposed date looks like a reasonable expectation of when the unit will be ready.
In other words, it's the same process as in my former home country.
Extremely fine point of distinction that's important here: a condo is treated as real-estate, but it isn't. (Condo ownership is really more of a transferrable, indefinite exclusive use-right.) Real-estate is fundamentally about buying and selling plots of land, and is only coincidentally about what's sitting on those plots. Buying a condo doesn't put you in top-level possession of a plot of land; even if the building is a residential co-op, what you'd get would be equity in a corporation that holds the plot of land. For non co-op buildings, you don't even get that.
For legal and tax purposes, most countries do abstract over the separate low-level concepts of plot-of-land ownership and condo ownership, resulting in a legal ADT called a "lot"; where each "lot" has its own title that can only be transferred through a notarized process; has yearly property taxes levied against it in proportion to its market value; etc. This isn't a natural abstraction, though — just a common legal "interface" used by the government to manage instances of the two separate underlying contractual implementations. Those implementations still each have their own separate laws that apply to them.
Which brings me to the point: foreigners are forbidden from owning plots of land in the Philippines.
That doesn't stop you from owning a condo — because buying a condo doesn't translate to buying any land.
But you can't legally buy a house in the Philippines — since that purchase would come with land. (Or rather, is a purchase of land, where that land happens to at this moment have a house on it.)
Instead, to do something equivalent to buying a house, you'd need
1. a Philippines citizen (a real proxy person) to buy the house for you, and then assign you
3. possession of the "materials that make up all current structures built on the land" (so you can tear the house down, if you like), and
4. the right to build whatever other new structures you like on the land, and use them for whatever purposes you see fit, including subletting.
(I'm actually not sure whether there's any legal instrument the proxy-person can grant you that would allow you to apply to re-zone "your" land. They might have to apply for that in your stead!)
Thanks for writing this up — that's a really interesting perspective on the problem, and definitely worth pondering. I'm not familiar with the underpinnings of cross-country payments so I'll just take your description as valid.
I think it's not completely incompatible with my view, though: if you don't have a country B subsidiary (the assumption underlying this entire discussion!) then the most country B can do is tell the payment processing company you're contracting with to stop doing business with you. That's completely fair and I see it as a kind of "financial firewall" for country B.
Even this power is subject to some checks and balances, though:
1. If your service/site is popular, country B's population may object to no longer being able to do business with you and put pressure on country B's government.
2. You could bypass the financial system with crypto payments. (Yeah, not terribly practical for most use cases, but could become more popular in case of government overreach.)
3. Ad-supported businesses — like the one in the original article, apparently — are immune to this kind of intervention!
Ultimately, a country can only control entities with a physical presence inside its borders, and while some common commercial architectures necessitate this (to some degree) not all do. Countries that make laws that pretend otherwise just end up looking silly.
Yes, that's how it works. Specifically, the common argument that applies to most companies (incl. Rumble), is that you're trading within that country if anyone from that country is either paying for your product/service, or making money from your product/service; and therefore you essentially need to function as (if not actually legally have) a per-country corporate subsidiary amenable to the laws of that country, if you want to continue doing that.
And sometimes it's even worse; for at least the US and Canada, companies trading with people living in these countries have to know and follow the laws of the state or province their customers live in, when serving those customers.
These are mostly simple things like tax codes, yes; but sometimes it's things that are far more arcane — for example, Quebec prohibits promotional first-period pricing that automatically transitions into regular pricing (they consider this a predatory practice.) Companies that advertise promitions in Canada often have fine print that says "offer not valid in Quebec" because of this.
This tangled mess of required region-specific logic is, by and large, the moat of e-commerce platforms and payment processors. It's why even large e-commerce services like Steam, that build all this logic internally for most countries, will still integrate with payment processors like Stripe or PayPal — those services are made options to cover the long-tail of countries they don't want to learn and maintain regional rules for.
It's also why many companies don't bother to actually sell into every market; and instead allow companies that specialize in "partnering with foreign companies to sell their products into our own domestic market that we understand well" — a.k.a. importers — to do that for them (and skim off some of their margin in the process.)