Bhavya Siddappa

Nov 18, 2021

6 min read

US & China Big Tech Crackdown

China and the US sabotaging their Own Tech Companies; the question is who will lose more?

Big Tech Technology giants around the world are facing increasingly higher regulatory barriers to expansion. Long uneasy with monopolies, governments, and consumers in North America, Europe, and China have pushed back against Big Tech’s increasing concentration of market dominance.

In China….

China’s antitrust regulator has fined three of the country’s largest technology companies for failing to disclose acquisitions of smaller competitors, stepping up its enforcement against monopolistic corporate behavior to protect the interests of the consumer and small business. The first salvo for tech companies came in November 2020; regulators accused Ant Group of disregarding financial regulations and over-collecting personal data. One specific concern in China has been the imposition of exclusivity deals that prevent vendors from selling on competing platforms, forcing merchants to “pick one from two.”

Tencent’s revenue grew a slower-than-expected 13%, after the child gaming crackdown took a toll on businesses like gaming and advertising. Players in China say they can no longer access the popular survival game Fortnite. Its developer Epic Games pulls the plug on a Chinese version amid a crackdown by authorities on gaming and the tech sector.

The ride-hailing app Didi has been the biggest victim of data security enforcement thus far. The CAC (Cyberspace Administration of China) suspended Didi’s app on July 2, two days after Didi’s IPO in the US, for violating data security protocols.

Summary of China Big Tech Crack down

It is anticipated that the recent antitrust enforcement activities in China’s internet sector will continue to facilitate competition and strengthen the level of supervision and control of SAMR (State Administration for Market Regulation) over Chinese technology companies.

In the US….

The belief that companies like Amazon, Apple, Facebook and Google are monopolies, dominant in individual markets like search, social networking, e-commerce and app stores. They are confident that mergers between companies like Facebook and Instagram reduce competition and that these companies must be broken/divided.

On the other side of the debate are sure that competition is flourishing in the tech sector, with innovation yielding great products at ever-lower prices and companies like TikTok and Snapchat emerging to challenge incumbents. They are certain that mergers have benefited consumers.

Big tech is not complacent but they can get evil. Big Tech’s impact on money flow in the economy as leading technology firms use real-time consumer payments systems that collect huge amounts of personal data. There are many places where regulators should be promoting competition and innovation in ways that are good for small businesses and families and not in a way that allows dominant firms to control more and more about our lives through our data.

So, what are the incentives for tech companies to gain market dominance?

Consumer Rebates: With a bigger consumer base, they will capture market share and manipulate consumers by keeping a check on the consumer pulses. They can gain massive mind share and drive sales, revenue, and profits.

Big Data: Giant tech companies can take advantage of consumer data, build AI models and cloud-based resources that can support a wide range of diverse activities, and get better and more efficient the more they are used. They can predict user behavior. The combination of big data and machine learning amplifies network effects and returns to scale, strengthening tech market leaders’ dominance and deterring other firms from entering.

Monopoly, kill future competition: Use sales allowances to protect against price erosion. Keep close track of the price points where consumers are engaging. Tech companies deploy a range of strategies to lock users in by making it difficult or costly to switch to a rival. They can offer competitive pricing, making it a monopoly and difficult for tech startups to compete.

Be Non-replaceable: This enables them to attract the best technical, managerial and commercial staff, further reinforcing their product-market dominance. It won’t be easy to replace them as their position will keep going strong and they can manipulate markets and consumers. It won’t be a perfect market; consumers will have to pay what the big tech offer as they will be the real kings and not the consumer.

So what should Big Tech do going forward?

1. They must stop the pick one from two policy. Have a fair and open market competition.

2. Be transparent to users and the government about their data and usage policy and be transparent about their acquisitions.

3. Adhere to Government Anti-trust regulations

4. Find a way to collude with competitors instead of having a monopoly market.

5. End platform Monopoly and encourage other platform players and competition, not create a harsh market environment. Create a competitive market rather than an imperfect market

6. Policymakers must accept the gap and learn more about tech to design fair policies.

7. Apple should quickly restructure its app store, stop charging excessive fees in the name of privacy and security, and allow outside payment systems.

8. Amazon and Google should stop favoring their products and services in search results. Or if they do, have some transparent system and scoring to explain why and always offer easy links to alternate, non-favored results.

9. Facebook, Twitter, and YouTube need to create clear policies on takedowns. If a post or video is censored or an account suspended, explain precisely why.

10. Policymakers should make it easier for platforms to share data with researchers studying competitive dynamics in the tech sector.

11. Platforms should publicly report data privacy and platform mergers.

12. Data portability could make it easier for people to leave established platforms for smaller ones. It might instead entrench large platforms by giving them access to user data at competing startups. It could harm privacy if people transfer data to less secure services. With so much unknown, a regulatory sandbox on portability would help us learn which policies work best.

13. A House bill package currently under consideration would force US without strong security requirements or safeguards, tech companies to grant competitors direct access to US data and digital infrastructure — including app stores, marketplaces and search engines.

14. Follow guidelines and ethical business policies endearing to list prohibited behaviors that regulators said could harm internet users and limit market competition, including controlling user traffic, blocking competitors’ products, and discriminatory pricing.

15. Data Usages, Cross-Platform Data mergers, Privacy, killing competition Forcing exclusive deals, unfair practices, Monopoly, blocking traffic, manipulating users, influencing choice, app store, installing and running software without the user’s knowledge or consent must STOP.

We certainly need regulation in the digital economy. All these recommendations can be executed in a perfectly competitive market. Sadly, Big tech don’t function is a perfect market. Its dominated by a few players and with the power of data, they can be unbelievably evil. Hence I support governments trying to regulate them in the interest of the consumers. If the US wants to break Google, Meta, and Microsoft into different companies, I will be very interested in seeing how that will shape our digital world and economy.
After all, the big fight is about who gets to own and control the DATA — Governments or Big Tech! Data will rule the world.