How China, India, and Singapore are changing the rules of platform competition
China's playbook for creating global interoperability
China's platforms are expanding globally, but using a very different playbook from their global counterparts.
Ant Financial is a case in point. To understand Ant Financial's (and Alibaba's) playbook for international expansion, we need to understand their international investment strategy. Instead of taking China-bred financial services global, Ant Financial is taking its financial infrastructure global.
An overview of China’s playbook
Money quote:"With an investment from Ant Financial, comes a whole lot of technology transfer. The investee companies also tend to run their applications on top of Aliyun, a.k.a Ali Cloud, the cloud infrastructure owned by Alibaba. Besides the infrastructure, now, Aliyun has plans to offer to design and run fintech applications and even core banking software for big banks."
Why is this important?
Global financial interoperability remains a huge challenge. Ant Financial is attacking this problem by providing a common technology stack to financial institutions around the world. FIs adopt this because Ant's credit-scoring and risk-scoring algorithms also help unlock new revenue streams for traditional banks in developing economies.
More important, by exporting infrastructure, Ant Financial ensures that partner wallets and banks play in the regulated space of financial services while as a provider of technical infrastructure to these companies, Ant can expand globally without being hindered by local regulation.
In the long run, trade wars are won through standards, not sanctions. China's platform strategy could play an important role in the future landscape of global trade.
The rise of the societal platform model: Why Pizza, not Facebook, will save the world
This brings us to the next interesting feature of the Asian Platform Economy: The Societal Platform.
One of the best places to start understanding societal platforms is this FastCompany article.
Money quote: "First, pizza can be thought of as an open-source platform. An Italian creation, it is now found all over the world, in all incarnations, tailored to local tastes and cultures, yet all recognizable as pizza. Second, pizza can be made by local artisans serving local customers, as well as by large, international corporations that serve mass markets.... Pizza allows for a diverse array of possible creations. The basic platform dictates what is common: a square or disc of dough, transformed by a hot oven and some appropriate toppings… The pizza platform allows customization for whatever you, your family, or your community wants. The platform creates a thriving pizza economy, producers, vendors, pizza makers, customers, experts, and even reviewers. Occasionally, pizza-lovers or inventors will make great advances, like pizza ovens or stones or new kinds of pizza altogether. Or pre-made pizza, perhaps a complete pizza already made, but then frozen, to be cooked at home, or just premade pizza dough, so the toppings come from the cook. Today the global annual pizza economy is over $100 billion."
The societal platform model has been pioneered in India and one of the most successful examples of this model is the EkStep Foundation. This is an area of research I'm deeply engaged in at the moment. I think what's truly interesting here is the idea of open public infrastructure rather than traditional data-driven or identity-driven control.
This leads us to the next important cog in the Asian Platform Economy scene.
The role of public digital infrastructure: The India Stack
The idea of open public digital infrastructure is especially compelling for the future of countries and governments.
I talked about this at the recently concluded platform economy summit in Frankfurt.
One of the best examples of country-level efforts is the India Stack.
This Medium article provides a nice overview.
Money quote:"The Indian government is building out the digital equivalent of the freeway system and calling it “The India Stack”. Through an open application programming interface (API) sitting atop the biometric-enabled Aadhaar system, the India Stack provides a way to build an entire digital world around a uniquely identifiable individual."
The most interesting thing about public digital infrastructure is that it is also exportable. Once exported, there is the potential for standards creation. If different countries build their public digital infrastructure on a common technology stack, the host country is in a unique position to create a global standard. A standard created not through committee, but through adoption.
Morocco is the first country that is importing the India Stack infrastructure.
Country as a platform - A model for public-private cooperation in the platform economy
A lot of my recent work with governments has focused on this idea of public digital infrastructure. What does the government provision in the platform economy (beyond piecemeal regulation) and how can it enable the private sector to build new platforms. I believe the role of the government is to create this public digital infrastructure.
I've written about this in the past, taking Singapore as an example.
Singapore has built both extensive digital infrastructure and regulatory sandboxes to attract complementary IP around this infrastructure. The India Stack is doing something similar. This model of public-private cooperation is truly unique to the development of platforms in Asia.