Cutting off tech’s nose to spite the West’s strategic face?

The disruption of Covid-19 is subsiding in many markets (at least for now). Regulators are coming up for air. As predicted in our Technology Legal Outlook 2020, the drummers in the war against Big Tech are again sounding the charge – albeit at an appropriate social distance.

While Elizabeth Warren’s failure to become the Democratic Party’s candidate for the White House may mean that the systematic break-up of the world’s largest tech firms is no longer proposed as an election must-do, the current US president’s personal battle against his country’s social media platforms has re-energised those who wish to bring to heal these online news carriers. Then, on the other side of the Pond, the European Commission has recently opened formal anti-trust probes into Apple, with most of the other FAMGA giants also still under investigation.

But against this backdrop, digital services are for now ubiquitous. Through economies of scale, the biggest tech companies in the US and (to a much lesser extent) Europe have generated huge revenues that have allowed them to grow overseas. As I remarked upon a couple of weeks ago, Singapore and the wider South East Asia region is presently another battleground – this time between US tech giants and their Chinese peers as they all seek to gain market share in online services and digital infrastructure.

In many aspects, the household names attached to these services and kit act as flag-bearers for their proud home nations. However, if US and EU regulators cut down their champions at the knees in their home markets, can they continue to compete abroad? Even if regulatory changes in western markets are not as extreme as to force Big Tech’s break-up, an accumulation of measures may stifle growth and innovation and ultimately the will or ability to compete with Chinese players in Asia and other emerging markets. On the contrary, government policy in China actively encourages this “go abroad” expansion.

While this FT article suggests that public opinion will now get behind regulatory intervention in the US and Europe, and that may well be true in the short-term, we all love these services, right? If services at home are no longer refreshed or are no longer available at the right price-point, the Internet allows savvy users to reach out to platforms on servers elsewhere for equivalents of their desired services.

In the long-term, is “Techlash” in the West potentially strategic suicide in the ongoing tech wars? A little far-fetched? Maybe. However, following the first 6 months of 2020, I, for one, will never say “never” again!