In my 27 October 2017 blog, China: from Hukou to Social Credit, I stated the following:
The Social Credit System will be built by the Chinese technology giants and is remarkably simple: it uses the collective data of the Chinese Amazon, Chinese Facebook, Chinese PayPal, Chinese Tinder, Chinese Uber, and Chinese WhatsApp. The combination of buying, chatting, dating, paying, social media posting, and transport is used for the ranking & rating of Chinese citizens.
In the next several decades, other countries will (slowly) follow the Chinese example. Integrating government databases is already common to prevent (tax) fraud. The fight against terrorism has required governments to expand such efforts. The forthcoming (voluntary) sale of banking transactions will enable companies to improve their ratings of individuals. Also see my 2016 blog on data ownership and PSD2. Privacy rights is slowly becoming an academic topic.
Technology has always had two faces: efficiency versus control, gadget vs spy, information vs propaganda, master vs slave, and tool vs weapon. To some extent, I am impressed by China’s new Social Credit System: it has perfectly captured technology’s other face. Following deeds and words, the next big step is thoughts (eg, the 1956 book and 2002 movie Minority Report).
I concluded that blog with this quote:
Every once in a while, a new technology, an old problem, and a big idea turn into an innovation. A quote by American inventor Dean Kamen.
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Financial Times title: US and China tech giants look increasingly similar
FT subtitle: There is an inconvenient likeness between the main protagonists in both countries
Author: Louise Lucas, the FT’s Asia technology correspondent
Publishing date: 16 April 2019
“US tech giants have been carrying out some nifty remodelling in recent months.
Apple is ramping up its activities in films, payments and gaming to reduce its dependence on iPhones — much like Xiaomi, the Chinese group that started out making cheap smartphones and branched into internet services including entertainment and finance.
Google has been spending heavily on content, data centres and equipment, blowing $25.1bn last year. It is also, via the cloud, making a big bet on gaming — recalling China’s gaming and investment tech conglomerate Tencent.
Facebook’s move to integrate its messaging app WhatsApp and social media Instagram also carries more than a whiff of the Shenzhen-based tech giant’s modus operandi.
It would be too much to suggest that US tech is taking a chapter or two from China’s playbook. But there is an increasingly inconvenient similarity between the main protagonists in the US and China.
This has two sets of repercussions, one local and one global. Locally, it means that in south-east Asia and India — the part of the globe where US and Chinese players compete on a broadly even footing — they will be doing so with more comparable offerings than was previously the case.
Take India, where Tencent will battle with Google, WhatsApp and Xiaomi on payments.
Globally, the backlash against big tech would appear to be calling time on the conglomerate model. Baidu, Alibaba and Tencent, the BAT trinity, began — respectively — in search, ecommerce and social media.
But Alibaba and Tencent in particular added ever more activities in a bid to keep users captive within their ecosystems for ever bigger chunks of the day: shopping, watching sports and films, listening to music or reading literature — and an app to pay for it all too.
The duo now command such huge swaths of the economy and are so inextricably stitched into the fabric of people’s lives that Beijing is chafing at their power and influence in the same way that Washington frets about the might of Silicon Valley.
Some financiers and start-ups believe some parts of the government are even pushing for a break-up of the duo; the government, they say, is particularly leery of a repeat of the shadow banking crisis, and would like to see finance operations carved out.
Evidence of this thinking is afforded by the long delay — 14 months and counting — in approving Alibaba’s proposal to swap its profit-sharing arrangement with Ant Financial, its payment affiliate, for a 33 per cent equity stake. “If [Beijing] don’t like what you are doing, it just drags and drags,” says one tech banker.
Another longtime China investor also sees the delay as deliberate. “The government likes two different companies, even though they have overlapping shareholders.
The US has different beef — lack of competition, political bias and disregard for data privacy — but for some the answer is the same. Democratic senator Elizabeth Warren, for example, has promised a break-up should she be elected president in 2020.
But perhaps the more pressing copycat question for investors right now is whether US start-ups will follow their Chinese peers’ path — or should that be cliff? — as they head to the public markets.
Uber, Pinterest, Airbnb and Palantir follow in the steps of, among others, Xiaomi, Meituan Dianping, China Literature and Tencent Music Entertainment.
There is more than a whiff of similarity between some of these and some of the upcoming US listings: cash burn, aggressive competition, unclear paths to profitability and acres of risk factors.
Most of the Chinese IPO class of 2018 ended the year below their issue price, but the pain did not stop there. Several launched follow-on offerings before the ink was barely dry on the first one, including ecommerce group Pinduoduo, which tapped the markets six months later, and esports streamer Huya.
The US has had endless spats over Chinese copying. Investors could find it is every bit as irksome when imitation goes in the opposite direction.”
Source: https://www.ft.com/content/55435194-5f46-11e9-a27a-fdd51850994c
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