Opinion: Chinese tech giants fight a bloody war for SEA. Local casualties are expected

In his seminal presentation at DLD15, NYU professor and serial entrepreneur Scott Galloway coined the term “The Four Horsemen” to describe the four most dominant companies in digital that have a combined market cap of US$1.3 trillion (as of 2014). These companies are Google, Facebook, Apple, and Amazon.

Galloway’s Four Horsemen theory assumes a Western-centric view; the moment we move east, we start to see different pockets of power, most notably in China, and increasingly in Southeast Asia.

Romance of the Three Kingdoms

China’s version of the Four Horsemen is called BAT, representing the Three Kingdoms in China: Baidu, Alibaba, and Tencent.

Baidu: The search giant

Often considered the “Google of China,” the bulk of Baidu’s revenues come from search advertising. Unlike Google, Baidu has struggled to stay relevant in an environment that has rapidly shifted toward mobile and ecommerce.

With the dominance of Alibaba as well, product searches are moving away from Baidu and straight onto Alibaba properties like Taobao and Tmall. The very same is happening to Google with over 55 percent of product searches now starting on Amazon, and this is not even accounting for the damage Alexa (aka Amazon’s next trojan horse) may inflict on Google.

Alibaba: Ecommerce and more

Alibaba is the king of ecommerce, responsible for over 80 percent of online sales in China (B2C and C2C combined). Over the last 20 years, Jack Ma’s empire has grown, putting even Jeff Bezos to shame.

With expansion and investments in advertising, health, entertainment, and transportation, Alibaba is more than just ecommerce. Its digital advertising business last year surpassed Baidu to become the number one in China in terms of net digital ad revenue share (28.9 percent vs. 21.3 percent) and is estimated to reach 33.7 percent by 2018.

Tencent: Gaming and WeChat

Tencent, the biggest among the BATs in terms of market cap (US$300 billion vs. Alibaba’s US$288 and Baidu’s US$60 billion in 2017) is best known for its popular messaging app WeChat. Its main revenue sources are gaming and value-added services like virtual goods and others.

The company has dabbled in ecommerce since the early 2000s until it gave up on organic growth and took an investment in Alibaba’s competitor JD. Today, Tencent is JD’s biggest shareholder with 21.25 percent ownership, surpassing the 16.2 percent stake of JD founder and CEO Richard Liu Qiangdong.

Three Kingdoms become Four Horsemen

With the global rise of on-demand services and ride-sharing, China’s Didi Chuxing has cemented itself as the fourth horseman in China. The company is the result of a civil war between Didi Dache (backed by Tencent) and Kuaidi Dache (backed by Alibaba). The newly merged entity subsequently assimilated Uber China to become the third most valuable private company globally, only trailing behind Uber and Ant Financial.

The proxy war in Southeast Asia

Southeast Asia’s fourth horseman

Why Southeast Asia? Not for the obvious reasons

Learning from past mistakes