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ECONOMY

Business opportunities in post-GAFA era

  • April 22, 2019
  • , NIKKEI Business Daily , p. 26
  • JMH Translation

By Junji Koike, principal at the Nomura Research Institute’s Global Infrastructure Consulting Division

 

Governments around the world are slapping regulations on Internet giants, such as Google, Apple, Facebook and Amazon, known collectively as GAFA. GAFA have triggered the decline of local retailing and the leakage of personal data. Measures had to be taken, and it is thought this trend will not reverse.

 

The markets of nations worldwide were on the verge of being controlled by GAFA, and now we are at a turning point where the markets will fragment. At the same time, it also presents local companies with business opportunities. This article will showcase three kinds of digital platform businesses likely to flourish.

 

First are digital platform businesses tailored to the unique characteristics of a given region. These businesses will create a niche position. For example, M-Pesa, a mobile phone-based money transfer, financing and microfinancing service, has spread throughout East Africa because it catered to the local context where few people have bank accounts but many have mobile phones. Other examples include Indonesia’s ride-hailing app Go-Jek, that mainly targets motorbike taxis, and India’s StoreKing, an e-commerce platform that enables micro, small, and medium-sized enterprises in rural areas to sell on the Internet.

 

Second are digital platform businesses that target specific industries. These businesses offer platform-based solutions targeting such sectors as agriculture, education, and health. DigiFarm offers agricultural information and financial services to hundreds of thousands of farmers in Kenya. Ping An Good Doctor, a one-stop healthcare platform, matches up doctors and patients and is thought to be used by 200 million people in China. Educational software firm Arco Platform is used by hundreds of thousands of students in Brazil.

 

Third are digital platform businesses that revolutionize existing businesses through digital technology. Indonesian state-owned oil company PT Pertamina, jointly with state-run PT Bank Mandiri, has introduced mobile payment services at its gas stations nationwide and has enabled customers to top up their prepaid e-money cards by harnessing the bank’s nationwide ATM network. There are high expectations for platforms that leverage existing assets because they can expand into many fields such as restaurants, shopping, and utility fee payments.

 

In March 2019, Google was fined $1.7 billion by the European Commission for engaging in anti-competitive practices in Internet advertising. Many issues related to the protection of personal data have been exposed through Facebook. In addition to business, there are many extremely important aspects of the GAFA matter, including democracy and personal dignity.

 

Given the current situation, the enormously powerful GAFA are declining now, and it may not be long before the post-GAFA era dawns. Competition is heating up in platform businesses in nations around the world. Japanese companies are being called upon to get actively involved in various ways, including providing capital and engaging in technology tie-ups, instead of letting these opportunities slip by.

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