How Southeast Asian states are tightening the screws on tech giants

Big Tech is on a roll, with the share prices of companies like Google, Facebook and Tencent nearing their all-time highs. This contrasts sharply with the pain that Covid-19 is inflicting on the global economy.

Yet ominous clouds loom on the horizon.

The European Union (EU) is reportedly drawing up a “hit list” of 20 major internet companies that will be subject to new and more stringent rules. Even the United States, home of the world’s Big Tech companies, is ramping up the pressure. A Congressional report released this month accused the tech titans of abusing their market power and raised the prospect of breaking them up.

Southeast Asia has been something of a haven for Big Tech, which is drawn to the region’s numerous mobile-first young consumers. Singapore has lured many Chinese tech giants looking for a safe harbor amid mounting pressure from governments including the US and India.

But like their counterparts elsewhere, governments in Southeast Asia are also tightening the regulatory screws.

The effects of this greater scrutiny will be felt not just by Big Tech but by startups and investors as well. Businesses and consumers will face increased costs, while access to content may be curtailed. And yet, the benefits of increased regulation are uncertain.

Current regulatory landscape

Based on publicly available information and insights from industry experts that Tech in Asia spoke to, Big Tech can expect enhanced oversight from Southeast Asian regulators in the areas of data, content, tax and merger control.

Why is this happening?

In 2017, The Economist magazine featured a cover showing Big Tech companies as oil rigs, and described data as “the world’s most valuable resource.” Comparing data to oil may be trite nowadays, but it could help us understand why governments have felt the need to regulate Big Tech.

The global oil industry was developed by private companies. In the middle of the 20th century, most of the world’s oil was in the hands of seven Western corporations. Over time, many countries began to nationalize their oil industries to prevent the exploitation of locals and protect their sovereignty, among other reasons.

Similarly, governments have begun to realize the value of data and become wary of the outsized role that Big Tech plays in their societies.

You cannot do business with the EU otherwise.

The EU response to this was the General Data Protection Regulation (GDPR), according to Chia Ling Koh, managing director of Singapore law practice OC Queen Street.

“The US has Facebook. China has Alibaba. The EU does not have its own giant data-collecting platform. Instead, its citizens have become consumers of these services, which benefit from collecting their data,” says Koh.

Laws on data in flux and uncertain

Conflict over content ahead

The taxman cometh

Potency of local competition laws in question