Big Tech stocks are pulling global markets out of their slump1. This reflects the digital transformation that has accelerated during the pandemic. It has helped governments track COVID-19 and enabled businesses to survive by pivoting to e-commerce and digital business models.
As leaders strive to future-proof against more disruption, there are new opportunities for Big Tech to deliver on this positive foundation, demonstrating a leadership role in efficient, resilient and responsible growth.
From business disruptor to business enabler
The adoption of digital technology has been one of the most positive pivots of Big Tech’s role in the COVID-19 crisis.
The pandemic may have permanently transformed the way individuals live, communities interact, and businesses work. From an organisational perspective, COVID-19 has compelled businesses of all sizes to digitise existing routine processes to improve productivity, facilitate automation, and create better customer and employee experiences – areas that are crucial for them to navigate their way through the prevailing uncertainty.
“I believe that technology and being connected are now essential services,” says Kahina Van Dyke, Global Head of Digital Channels and Data Analytics, CCIB at Standard Chartered. “And inclusive prosperity in our communities requires that this technology really needs to be provided to all of us.”
There are signs that Big Tech is conscious of this responsibility. Its companies are increasingly describing themselves as ‘utilities’, mindful of their role in stabilising business continuity and operations during the crisis.
The reliance on digital collaboration tools and video-conferencing platforms is a prime example. Another is the surge in demand for e-commerce during the pandemic, which has forced bricks-and-mortar retailers to adapt business models by embracing new technology. And traditional retailers are likely to keep doing so, offsetting high digital transition costs with warehouse robotics from specialists like the UK’s Ocado. Indeed, many businesses are looking beyond e-commerce, investing heavily in the full digital transformation of their supply chains3. But this is still far from universal.
“In our most recent digital transformation survey in Asia Pacific, 6 to 7 per cent of our customers were digital leaders,” says Amit Midha, President, Asia Pacific & Japan and Global Digital Cities at Dell Technologies. “But 10 to 12 per cent had no digital strategy and no plans to get onto digital platforms. The point is, this is where the opportunities exist.”
Unlocking the true value of data
For Big Tech to move into an enabler role, business must lead the application of innovative technology to solve existing challenges more efficiently. Data is a key component of transformation and, to fully realise the agility and resilience benefits, companies will need more data and more access to it.
This need is powering a jump in the cloud-related businesses of Alibaba4, Microsoft5 and Amazon6, in particular. Google is looking to India7 to help grow its cloud services. This opportunity may lead to an increasing shift in power among the Big Tech firms to those who offer paid-for services, a trend Microsoft is already benefiting from.
As more data moves onto the cloud, storage costs will become cheaper with a multitude of different cost options and models. There will also be an explosion in data servicing industries, from the centres themselves to the complex infrastructure needed to support it.
However, to unlock the true value of data, it must be managed and ultimately shared for the greater good. Therefore, data – and who owns it – will continue to be a central theme of regulation.
Companies that show that they can be trusted to keep data safe will emerge stronger. “It’s a Fourth Industrial Revolution, this time of data and robotics,” says Midha. “There’s a brave new world out there, but we believe all businesses want to make sure customer data is private and protected.”
Moving the needle on digital finance
Fintech is another sector to which COVID-19 has brought considerable change – one that has shown Big Tech and start-ups alike to be vital enablers. With physical contact disrupted, digital payments have proved a lifeline that has kept businesses functioning.
“Investments that the Indian government has made in digital infrastructure over the past 10 years are really paying off now, as we deal with the new COVID-19 normal,” says Padma Parthasarathy, Senior Vice President & Global Head, Consulting and Digital Services at Tech Mahindra. “Individuals and small businesses are now able to make and receive online payments. All this would not have been possible a decade ago.”
Globally, the crisis has challenged many early-stage fintechs, with public and private funding in short supply. Capital constraints will favour those who are able to transition from ‘growth at all costs’ models to profitability. More consolidation also seems inevitable.
“We need to create a healthy start-up scene because these are our future big companies,” says Van Dyke. “Big companies need to continue to partner with smaller fintechs to find new solutions.” This is now happening, as companies look to boost revenue and cost synergies, with TransferWise and Alipay’s partnership being one example8.
These trends also have important implications for consumers. The IMF says digital finance offers opportunities for greater financial inclusion9, especially for lower-income households and SMEs. However, it warns there is also a risk for greater exclusion, if lack of access to mobile phones and fast internet creates digital inequalities.
This is where banking partners like Standard Chartered can help. By collaborating with the wider financial ecosystem, with corporate and individual end users, as well as regulators, the financial industry can help advance technology agendas with a purpose.
Driving sustainable businesses
To be sustainable, the current rapid pace of technological change and growth needs to demonstrate wider social benefits, delivering what the World Economic Forum calls ‘The Great Reset10’. However, the industry still faces scepticism.
A recent poll for Standard Chartered asked if, in the future, Big Tech will primarily dominate industries or be the enabler of industry innovation. The response was mixed, with 53 per cent seeing these companies as enablers, but almost 45 per cent predicting domination.
Yet the pandemic has produced multiple examples of innovation and collaboration that would have been impossible without the tools offered by digital platforms. In China, Alibaba and Baidu offered gene sequencing software for free11. Using tech platforms, Ford collaborated on protective face shield production12 with global partners including India’s Mahindra & Mahindra. The lessons learned could help build sustainable supply chains, diversify sourcing, and connect SMEs with global markets.
Forging partnerships to serve the common good
A significant expansion in Big Tech’s remit has come from its partnership with governments. From South Korea’s use of location data to track the virus13, to Apple and Google’s contract tracing solutions14, many tools created by Big Tech have been used in positive ways.
The pandemic has also seen Big Tech advance into delivering basic societal needs like education and healthcare, a trend which is likely to increase. Shanghai launched 11 ‘internet hospitals’, affiliated to public hospitals, during the pandemic, delivering ongoing efficiencies for prescriptions and consultations15.
This increased role of Big Tech in society and its use of public data will inevitably renew calls for stronger regulation. Becoming ‘public utilities’ brings benefits of scale – but more scrutiny too.
However, Van Dyke says that the assumption that the concentration of stock market power is creating a ‘winner takes all’ future should be treated with caution. “This assumes there are losers and only a handful of winners.”
“In fact, Big Tech can be an enabler for ‘aggressive collaboration’. The expertise that finance, healthcare and education brings means we can use these platforms to work in partnership on the big challenges.”
What’s next for big tech?
Soaring stock market valuations show investors believe Big Tech can deliver. The best way to fulfil that promise of growth will be to expand opportunities and discover new partnerships.
Instead of concentrating market power, these companies need to reach out to start-ups, in fintech and elsewhere, using knowledge and scale to spur innovation, co-creating to solve the bigger challenges.
If Big Tech continues to be an enabler, there is a route ahead to a more sustainable future.
This article contains insights from the ‘Unravelling Uncertainty’ webinar series in partnership with The Economist.