Today, technology firms are the corporate titans of the world - and data is the prized asset. At the start of the World Economic Forum's Annual Meeting of the New Champions in Dalian, China on 1 July, journalists, academics, and business leaders gathered to discuss the state of technology monopolies in 2019. Here are some of the best quotes from the session, Technology Power Play.
Andrew Dowell, The Wall Street Journal’s Asia Editor: “These companies mediate a lot of economic activity, whether it’s getting cabs or finding your way around the internet or connecting with friends … these companies have a tight lock on users’ time and attention, and advertisers’ dollars.
“There’s a lot of concern about what goes on these platforms… regulators are starting to pay attention and look at the problem. What’s going on in the marketplace, and what are the most reasonable solutions?”
Should we fear digital monopolies?
Arun Sundararajan, Harold Price Professor of Entrepreneurship and Technology at the Stern School of Business, New York University: “The design of digital technology makes monopoly far more likely [now than before]. There’s something intrinsic about how the tech machine operates – software running on hardware – that leads to network effects of different kinds. Users benefit from Facebook being connected to over 2 billion people … Android users benefit from fact that developers can develop for [only] one or two [platforms].
Fatoumata Ba, Founder and Chief Executive Officer, Janngo: “[In the] context of emerging markets, [huge tech companies can be] enablers of very strong value to users. If I take a look at e-commerce platforms … in the US there was one retail outlet for every 400 inhabitants, but in Africa one for every 60,000 inhabitants … so it can level the playing field for quality, for users.”
You can’t just break them up
Jessica Tan, Co-Chief Executive Officer, Ping An Group: “The concept of the monopoly is not new … we’re in digital world, so the way we look at assets is different. Data is an asset, but it’s the same concept. The way to deal with these things … as they accumulate data as valuable assets… is not to say, ‘You’re evil and [we] should break it up.’ [It’s about] ensuring fair access for everybody, like the telecommunications industry has done.”
Sundararajan: “It used to be that you should not let a firm get too big … if it gets too big, break it up, [like what happened with] AT&T [the US telecommunications firm]. With these tech platforms, ‘breaking it up’ is hard to define and not in the interest of consumers. You’ll weaken the network effects without sorting the problems. If you broke up Facebook and Instagram, it would not stop Facebook copying Instagram’s features.
Chen Xiaohua, Chief Executive Officer, 58 Daojia: “The Huawei example shows that there is fierce competition among the platforms, and with different countries’ political systems or cultural traditions there is also competition. You have Amazon, we have Taobao; you have Facebook, we have other platforms. Talking about monopolies, I believe that as long as human civilization is diversified, we’ll always have different platforms and competition.”
Regulation needs to keep up
Chen: The existing regulations are built on traditional industries. For example, I was asked by a professor: ‘If I train housekeeper, does she become my employee?’ In the traditional sense, no, but I believe [as head of 58 Daojia] she actually is my employee in my new context. I provide the training and the platform for this individual to do her job. We need the whole of society to come together to come up with something suitable for today’s working styles.”
Tan: “Intangible assets, data … who you gather it from, what you gather, what you use it for … rules need to be set around that. [For the online] activity itself … lines are blurring. People can be doing financial services without having a licence … [but] it’s like practising for a doctor. We should licence by activity, not by people. Any company, if they do the activity, they should be governed by the same rules and regulations. It makes it more complicated.”
Sundararajan: “[Companies] should open up data access, then it’s up to everybody how to monetize that. In reality, many regulators are catching up to this idea: how you would you make it open.”