Big Tech: equally powerful and powerless

by | Nov 30, 2021 | Uncategorized

The term “Big Tech” refers to the most dominant and important technology companies in their respective industries. Their products and services are used around the world and are increasingly relied upon by businesses and individuals alike. This ubiquity is a concern for privacy and security regulators, as these “Big Tech” companies have a huge user community.

Lydia

Source : UP’ Magazine

Who are the Big Tech?

The term Big Tech echoes that of GAFAM, BATX or more recently NATU, acronyms often used to talk about the behemoths that are Google, Alibaba, Facebook, Netflix or Tenscent.  These American and Chinese companies are among the most influential in the world, with a huge number of users:

  • 5 billion people have a Gmail account, which is only one of the many features of the Google group.
  • Alibaba’s active users were 925 million in March 2021, almost all of them Chinese.
  • Facebook now has more than 7 billion users, or about 30% of the world’s population.

These staggering figures make us understand the importance of these companies in the daily lives of many people around the world. They benefit from the ever-growing influence of digital, both in the private and professional spheres. Their resources and knowledge of the digital world have given them a head start over some of the older players who are struggling to make the transition to these new dematerialized modes of operation.

Big Tech enters the financial world

One of the sectors targeted by Big Tech is finance. As we have often mentioned in our articles, PSD2 and the advent of Open Banking have opened up financial flows.

This opening has allowed many new players to propose their vision of financial products and services. We are talking about Fintechs and especially Neo-banks, which compete with traditional banks thanks to their digital and remote offers. The success of some of them, such as Revolut or N26, confirms the idea that users are ready to trust these new banks to manage their finances.

The Big Tech companies have grasped this appeal and are seriously starting to enter the remote financial services market. And as we mentioned above, they have a considerable advantage: a huge user base, even before the launch of such services. Where a newly created neo-bank will have to do everything possible to attract and convince new users, Big Tech can rely on the influence they already have on their millions of users to more easily encourage them to use their financial products.

Big Tech

Source : Le nouvel Economiste

Some of the most prominent examples include:

  • The Apple Card, which is simply an Apple bank card. It allows you to pay contactless with your smartphone, is compatible with the fleet of Apple devices (watch, mobile, mac …), and it works like a classic bank card.
  • Google recently launched a current account service, called Google Plex. Building on the already existing Google Pay application, it will allow the user to open an account with a partner bank.
  • Facebook, for its part, has chosen to test the cryptocurrency In experimentation for some time now, Diem will be the cryptocurrency issued by Facebook. The company has actually recently offered a cryptocurrency wallet service called Novi, which will likely be linked to Diem once it launches.

The interest of Big Tech in the financial world is clear. Confident of their loyal and numerous community, they know that these services can convince it in a context of transition and financial opening. This phenomenon is closely observed by certain regulatory authorities such as the BIS on a global scale or the American Congress in the United States.

The BIS for its part published a note in August 2021 pointing to the entry of these giant companies into the financial world. The BIS fears that the combination of market power and data governance of Big Tech will lead to a form of monopoly. Facebook’s Diem project is one of the concerns cited, as it could lead to the loss of monetary control historically regulated by states.

Some American parliamentarians have proposed 5 bills directly targeting the GAFAM monopoly. They are afraid that many companies less powerful than GAFAMs will be destroyed, without any chance of competing with them. A monopoly also implies unequal price management, another element that worries Congress. The GAFAMs are buying up nearly 100 companies a year, confirming the idea that their overwhelming power does not promote fair competition.

 

Big Tech therefore divides as much as it unites. Adored by their loyal users on the one hand, monitored by authorities on the other. The debate is not really about reducing the influence of these giants, but about making sure they don’t take advantage of their power to create unequal competition that can also harm their dear users.

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