Will Data Privacy spark the next Wave of Innovative Applications?

Privacy is a top agenda as we live in an era where data is a fundamental requirement to access healthcare, education, financial facilities, commercial services, employment, security, welfare, social networks, media and even exercise voting rights. Everything around us is designed to optimise and improve by harnessing data, that it has become an undeniable asset with unprecedented utility. 

This makes data a prime heist for unethical hackers and modern day criminals who steal, doctor and manipulate it for illicit purposes including financial gain, scams, terrorism, identity theft, spreading fake news or spying. Some notable breaches from 2018 are the Aadhar breach involving a staggering 1.1 billion records, forum site Quora, Googleplus, Facebook, several airlines and other online entities.

This is why many large corporations that gauge petabytes of user data are under heavy scrutiny by privacy enforcers and regulators such as National data protection authorities in the European Union through the much debated GDPR guideline. For instance a recent announcement by one of Alphabets subsidiary, Sidewalk Lab on a plan to package and sell cellphone data for various service enhancement sparked outrage from various ethics observer and human rights groups, even when the company justified that the unique identifiers will be removed from the dataset.

Staying connected at all time and living somewhat transparently, is the future reality...

But harnessing data is an unavoidable exercise when it comes to achieving greater quality of life, good decisions and optimal utilisation of natural resources.  As such, refraining from the internet, social networks, online media and performing digital transactions will only result in disadvantages, inconvenience and missed values from economic, social and safety standpoints.

Even if we successfully retained a mysterious existence, we will not be free from unwarranted surveillance by both businesses, independent institutions and governments in public places for various reasons as cities, buildings and public amenities become embedded with sensors, camera feeds and chips that connects to the Internet or clouds to perpetually collect data and create values.

Privacy in Asia....

Asia witnessed multiple incidents of data breach last year among CSPs, healthcare providers, financial service providers and even government sources that lead the public to question credibility of domestic institutions in protecting personal, usage and behavioural data. According to a report by Gemalto, Asia Pacific region contributed to over 35% of cybersecurity incidents last year. 

In most cases, institutions took no further action to restore user confidence apart from the breach announcement, which is a mandatory compliance requirement. Gemalto further stated that the numbers could have been much higher in reality, due to unreported incidents especially in Southeast Asia. Singapore is an exception to this as the authorities take great pride in concluding data breach cases successfully to safeguard the regional digital economy.

Asia also suffers from an overall weaker legal framework and laws for privacy though dedicated privacy task force is emerging in India, Thailand, Indonesia, Singapore and Philippines, out of which Singapore perhaps is the most advanced in ratifying and enforcing the aforesaid laws. 

At the same time, there is a rise in governments that are explicitly developing and extending state surveillance under the pretext of national agenda, security and cyber crime laws for political reasons. Technologies such as facial recognition, artificial intelligence, biometric, advanced identity card systems, ever increasing compute capacities and various citizen facing applications are converging into social scoring systems that provides granular monitoring of individuals, regardless of their consent. 

But there is a new way to tackle privacy - a new form of application architecture is on the rise .....

Apart from comprehensive legal framework, enforcements and the use of advance security architectures, strategies and tools, the application design and architecture itself can serve as a mechanism to protect privacy by separating personal data and identities from applications.

For instance, a project led by Led by Tim Berners-Lee called 'Solid' and is currently run from MIT, consist a set of tools and conventions that helps to preserve integrity of identities, privacy and data ownership while enabling developers and businesses create a new wave of innovative web applications. Solid is a web decentralisation project that aims to put rightful ownership of data back to every users and empower applications that are completely decentralised. 

Currently the use cases are limited for developer community alone, though discussions on Solid servers and tools are beginning to emerge in Quora, Reddit, FB Groups and GitHub.

Similarly Digi.me and HAT are all projects aiming to decentralised applications on the web, where users can create libraries of their data and is completely in control of how the data is used by corporations and governments.

Privacy concerns will lead to new opportunities ....

Most large businesses perceive privacy as a critical challenge to overcome with growing pressure from regulators. Though regulators approach are not helping as solutions developed around privacy laws are difficult and expensive to attain technically, especially for Internet giants.

In the end, solution might just emerge from the tech world itself through new architectures and business models lead by smart startups willing to embark on new frontiers such as Solid, Digi.me and HAT to develop fully decentralised applications that satisfy users, businesses and regulators.

Larger companies might use 'business within business' approach to innovate in the privacy space or quickly get onto the new themes through acquisitions, mergers and rethinking business models. On the another note, decentralised web may lead to even larger paradigm shift, similar to the ones we experienced when organisations moved from on-premise to cloud of everything, creating new digital eco-systems altogether. The one thing that no one can afford to do, is to remain unchanged.

Southeast Asian Tech Startups – Race for Alpha

Southeast Asia is bustling with thousands of tech-startups and budding entrepreneur communities mostly centred in cities such as Singapore, Jakarta, Bangkok, Kuala Lumpur, and Ho Chi Minh. Between 2015 and 2018 the region secured some US$ 11 billion in investment through 1,412 deals with Singapore (US$ 8.4 billion and 888 deals) and Indonesia  (US$ 1.6 billion and 228 deals) accounting for 85% of the deals. At least US$ 7 billion of this amount was locked in 2017 alone.

If that's not stunning enough, 2017 and the first half of 2018 also witnessed several unexpected moves by key players and most sublime moments in the sector with Uber selling operations to Grab, Grab’s over US$ 2 billion funding round, Lazada’s acquisition by Alibaba, Rocket Internet shaving down holdings, the emergence of the 4th Indonesian unicorn - Bukalapak, Amazon’s e-commerce service debut, several billion dollar funding rounds (Traveloka, Tokopedia, Go Jek), Philippine based Revolution Precrafted expanding into Latin America and most probably becoming the region's ninth unicorn.

The progression of local tech scene is rapid, driven by the confluence of state backed initiatives, access to best class of technology, availability of massive amount of data through connected devices and a booming Southeast Asian economy.

The region is integrating unexpectedly through a common digital cultural imagery

Business professionals however, have repeatedly warned of the insurmountable difficulties that is associated with scaling businesses and navigating the market in Southeast Asia. The inherent diversities geographically, culturally, and economically makes standardisation impossible but the region somehow brilliantly encapsulates the economic themes of some 10 to 11 different nations with a collective population of 650 million people through a common recursive digital cultural imagery. A digital society that is highly tech savvy, predominantly young, connects ubiquitously, consumes, plays, works and socialises online. Staying attuned to latest of technologies, apps, and tools, is a mandatory routine for this psychographic.

Abundance of opportunities

This highly interactive, well informed and sound ‘digital society’ is one of the key forces behind the stupendous growth of consumerism and staggering expansion of the SMB market in the region. This generation is open and willing to endeavour new methods in resolving growth challenges, rethink experience, update legacy utilities and foster new data driven services. These encouraging signs unlock infinite opportunities, especially for businesses centred on new technological frontiers namely mobility, artificial intelligence (computer vision, speech recognition, robotics), Bigdata, IOT, 3D printing, blockchain, and virtual reality.

Emergence of new type of data driven services

For instance,ViSenze specialises solutions in advanced visual search and image recognition solutions for eCommerce, mCommerce and online advertising. The company’s core research and development is anchored on computer vision technology and machine learning to help shoppers simplify search for items by uploading images on social media or video networks.

ADDO.AI is based out of Singapore with branch offices in Germany, Dubai, Philippines, and Pakistan. With no investor backing announced so far, Ayesha Khanna, CEO of ADDO.AI, has been striving hard to position the company as an artificial intelligence advisory firm that focuses on various multi-dimensional projects in agriculture, transportation, and finance. The company has been featured several times by media for successes with SMRT Singapore, a crop prediction project in Pakistan, and SmartDubai.

Trax Image Recognition is another revolutionary service provider, also based out of Singapore. The company’s image recognition and deep learning solutions can empower enterprise data science capabilities - all using pictures taken by smartphone cameras as input for analyses by algorithms that decipher the images into a series of real-time actionable insights. For example, consumer brands can monitor and analyse retail shelves across stores and enforce more control over how products are arranged on retailers’ shelves.

A growing fraternity of prestigious unicorns

The region is now cohabiting colonies of startups at different stages (development, optimisation, growth, expansion, mature) with some 9 unicorns, namely SEA, Bukalapak, Go Jek, Traveloka, Tokopedia, Grab, Lazada, Razer and Revolution Precrafted. Both Indonesia and Singapore are tied in terms of the number of existing unicorns, while Singapore is leading in the number of total startups and advance technological solutions. Crunchbase cited that more than half of the 2,151 seed and early-stage rounds recorded between 2008 through 2017 were involving startups based out of Singapore.

3x more funding than the previous year

In 2017 alone, the region secured an astounding US$ 7.8 billion in venture fundings, threefold from the earlier year, though the number of deals dropped significantly from 335 to 320,  according TechAsia. A significant slice of the pie was captured by ride-hailing, fintech, e-commerce and gaming segments. These excludes the latest fund raising activity undertaken by Grab for a staggering US$ 2 billion, lead by its Japanese investor, Toyota. Go Jek, Tokopedia and Lazada each raised funds exceeding the range of US$ 1 billion in their last late stage funding rounds.

Signature investors

China’s tech giants namely Alibaba, Didi, Tencent and JD, the region’s conglomerates owned by some of the region’s richest families, and venture capital funds are some of the biggest investors in the region's startups.  In addition, as the scene intensifies with new innovations, super apps, vibrant research and development offices, several new funds have emerged, specifically targeting the region – the likes of  500 Startup, KK Fund, Kejora, Insignia Venture, Meranti Growth Fund and Vertex. Southeast Asia is now fully loaded with funding to grow a lot more startups aiming for high yield exits.

Is there enough ‘fish’ in the pond

As deal activities ramp up with several high profile funding rounds last year, investment patterns begin to signal a strong shift to quality rather than quantity. Mature segments such as e-commerce and ride-hailing witnessed execution of several higher value deals whereas massive amounts of early stage fundings was issued in other growing segments such as fintech, gaming, crypto economies and AI infused customer experience.

For now there are still plenty of startups in the pipeline though unevenly dispersed across the region with more than half based in Singapore, followed by Indonesia, Malaysia, Thailand and others. Besides, many more early stage startups are predicted to enter the pool as governments race to campaign acculturation of state owned innovation platforms and compete for intellectual properties.

Still nascent but the tipping point is near

As expected, Singapore is the leading destination for startup businesses in the region.The ease of doing business, a global talent pool, mature infrastructure, supportive government initiatives, and a US$ 13 billion research and development facility are some of the reasons why startup community sets-up shop here.

Singapore hosts an impressive line of startups namely, Trax Image Recognition (Computer Vision), AirTrunk (Datacenter), Advance.AI (AI driven Financial Services), Ninja Van (logistics), Tessa Therapeutics (Bio Medical), oBike (Bike Sharing) and many other well funded venture, mostly focusing on B2B models. Many are migrants from neighbouring countries to take advantage of the flexible business conditions there.

Singapore’s comfortable seat is fiercely challenged by Indonesia, Malaysia and Thailand, all picking more pace than ever. Indonesia alone is aiming for 8 or 9 unicorns in the coming years, with some rising names such as Matahari Mall (e-commerce), HaloDoc (online medical services), Pundi X (Crypto marketplace), Snapcart (Bigdata for consumer brands), and Akulaku (lending services).

The rest of the region seem to be focused around fintech, blockchain and B2C e-commerce platforms. Some upcoming names worth mentioning - iflix, MOL, Supahand and iCar from Malaysia; aCommerce from Thailand; Tiki.vn from Vietnam; and Cogito from Philippines.

It will take time for Southeast Asia to catch up with other global startup hubs in China and America, but chances are, the region will become a critical trade bet between east and west. This unique time bound opportunity, can be cleverly exploited by the region's startup community if only more speed can be acquired in mobilising their visions to fully tap the market.



Links to references

• SEA focused seed funds - CBInsight Report
• Grab picks up another US$ 2 Billion - TechCrunch Report
• List of Top funded Startups in SEA - TechinAsia Report
• State of SEA Startups Report - by Slush
• Crunchbase for Startup Data
• Let's Kopi Unicorn Tracker

Come Not Between the Dragon Riders, Rise of Asian Platforms

The Asian Platform business scene is worth over a trillion dollars in market value and is only the second most prominent after North America. The region’s thirty over publicly traded platform companies and thousand other startups is enough to make any investor exuberant over growth opportunities for expansion, acquisitions, investments and joint ventures.

Uneven Business Landscape, Full of Opportunities

Market conditions does differ from country to country, hence the contrasting maturity levels. Overall, favourable economic condition, trade policies, maturing infrastructure, growing middle class and an upswing in GDP, is paving way for incredible growth unattainable in developed markets of North America and Europe.

Leaders of the Pack – China, Japan and Korea

Growth is mostly fuelled by China, Japan and Korea where there is high domestic demand for online services, concentration of capital, available talent, a frenzy of innovation projects surrounding core technologies aimed to realise full business potential, enhance services and user experience. Alibaba, Tencent, Baidu, Softbank, Yahoo Japan and Kakao is clearly taking the lead in diversifying their businesses into multi-platform conglomerates, through series of acquisitions, investments and joint ventures.

Pioneers In Challenging Environment

India and Southeast Asia’s best performing platforms such Flipkart, Snapdeal, InMobi, PayTM, OYO, Lazada, Olacab, Garena and Grab on the contrary, are focusing on becoming profitable on well tested e-commerce, gaming, payment, ride sharing, transportation and advertisement models. They are making way for other players by addressing the region’s weak investment landscape, antique trade regulatory policies, uneven access and speed of Internet services. Though, the region is never short of startups. Arrival of newcomers such as Omise (Fintech), and TripAlly (Travel Platform) based out of Thailand, are just two examples reflecting the region's ongoing commitment to platform economy.

Noteworthy Observations on Business Model

The platform business model of the Asian region is centred on consumers and SMBs, unlike American platforms that evolve around enterprises mostly.

Online marketplaces for buying and selling goods, financial services, communication, gaming, transportation and travel are some examples of where good response is tracked in Asia. As such, Asian Platforms generate a significant share of revenue from transactions and trade as opposed to American platforms (e.g. Facebook and Google) which depend on advertising.

A massive population which is learning quickly to adopt consumer technologies for various lifestyle reasons, is a huge encouragement to the sector to digitise existing and create new innovative services.

Innovations centred on Artificial Intelligence, Blockchain and Robotics

China, Japan and Korea is pumping tons of cash on developing capabilities in artificial intelligence, blockchain architecture, virtual reality, augmented reality, Internet of things, cloud computing and robotics.

The breakthroughs are expected to help:
• Automate search ranking, recommendations, image classifications, image character recognition, speech recognition, natural language translation
• Improve experience for Asian customers whose native language characters are complex and cumbersome to type
• Last mile delivery automation with drone (e.g. Alibaba, JD.com)
• Build virtual assistants to enhance shopping, education and gaming (e.g. Baidu)
• Develop a Broader payment solution (e.g. Tencent and Alibaba)
• Establish transparency of supply chain (e.g. Alibaba)
• Ensure food safety (e.g. Tencent, Alibaba)
• Development of humanoids (e.g. Pepper, Softbank)
• Development of autonomous vehicles (e.g. Apollo, Baidu)
• Blockchain e-commerce (e.g. TripAlly)

Research and development centers are scattered between China, Japan, Korea, Hong Kong and Singapore. Government initiatives to utilise upcoming technologies to upgrade industries further aggregates efforts between public, private and government affiliates.

Investments in Stakes and Acquisitions

There is no doubt that Asian Platforms are stepping up their game in the international arena to compete with the likes of Amazon, Google, Apple and Facebook.

Softbank's $100 Billion Vision Fund

The $100 Billion Vision Fund's recent investment track record probably is the best evidence to point out how critical platform businesses are to generate expected return. The largest tech investment portfolio ever to be created, the investment dollars are spread to both international and many promising Asian Platforms such as Flipkart, OYO, Ant Financial and Didi Chuxing. Softbank is also aggressively pursuing stakes outside the scope of this fund in Asian Platforms such as online insurer Zhong An, Grab, OLA Cabs and Snapdeal.

Tencent versus Alibaba Race in Southeast Asia

Just before the arrival of Amazon in Southeast Asia, Rakuten shutdown operation in the region. This was later followed by Rocket Internet’s (operator of Zalora and Lazada) exit, selling most businesses it operated. But, what seemed like a drawback of key players from the region very swiftly started a healthy regeneration with close to $3 Billion in investment from Chinese players.

Some notable acquisition and investment news since then are;
• Softbank and Didi Chuxing took a large stake in Grab
• Redmart was acquired by Lazada at price point lower than initially raised
• Lazada was acquired by Alibaba
• Ant Financial acquired Hello Pay
• Ant Financial invested in Ascend Money, Mynt, M-Daq
• Tencent acquired Sanook
• Tencent invested in ABC 360, Go-Jek, Ookabee

The arrival of large Chinese players in the e-commerce, fintech and logistic space is certainly driving more pressure on regional groups such as Orami and Ascend Group that has been fighting for a clear marketshare for sometime. Nevertheless, this development can benefit the region by driving maturity of the sector, underlying infrastructure and regulatory designs.

The ‘Alibaba versus Tencent’ race may not necessarily create a conflict as many analyst cite. Close scrutiny may reveal that both companies are establishing dominance in different segments based on strengths. However, together the giants may impact advertising revenue for product search as consumers shift to their platform to conduct such searches.

Flow of Investments from China to India

Despite a large pool of skilled programmers, proficiency in English, and strong business ties with US and Europe, India’s platform startups continue to struggle to expand with uneven infrastructure, poor internet access, suboptimal government regulatory policies and lacklustre interest by other successful tech related public groups such as Reliance, Future Group, Aditya Birla, and Appollo.

But the potential of platform companies such Flipkart, Snapdeal, Ola and OYO is too good to be ignored by the Chinese giants, notably Alibaba, Tencent and Chinese Internet Plus Holdings who are constantly competing to get a stake in the countries platform scene. There is no mistake that these platform giants are building a ingrained presence in India at the moment.

Fuelling the Startup Eco-system

Programs such as SuSS by Alibaba and others by Tencent is quickly becoming a platform for entrepreneurs to connect and build business support structure. By encouraging platform startups in Asia, larger platform companies are able to cherry pick suitable acquisition targets.

Regulatory Challenges

Regulation over platform and online businesses remains a challenging area for governments in the region due to the border less nature of the business. Exposure to security and privacy matters, impact to local industries, government trade and taxation policies, flow of investments, and the overall economy are some of the factors which stifles effort to harmonise governance.  Self-governance may be helpful for some policy concerns, but deeper cross border regulatory challenges  require collective government effort to codify through regional and international trade  agreements such as the Trans-Pacific Partnership (TPP) which provisions for e-commerce and other digital trade.

Superior Service or Protectionism is Driving Success?

Many experts argue that some of the largest Asian Platforms are perhaps growing out of government protectionism and inability of foreign platforms to operate freely from unfair data, trade, compliance and other domestic policies. Often the region is target for criticism and accusations over inability to innovate effectively, espionage activities, poor privacy and security control.

Inbound and Outbound Trade Gateway

Even if there is truth to this, it’s extremely hard to dismiss the fact that millions of people and thousands of businesses are still transacting over Asian Platforms. In fact, their reach is starting to grow beyond the region. For instance many of the sellers on Amazon and eBay place orders in Alibaba for their stocks. Alibaba acts as a trade exchange to connect Chinese businesses to global consumers and global businesses to Chinese consumers. For small businesses, this is a valuable and cost effective service which includes handling of cross border transaction.

Exceeding Customer Expectations

Similarly Yue Bao an online money market fund owned by Alibaba offers a annualised seven day yield of 3.4% to customers who wish to save their leftover money from transactions. Over 60% of holders in this fund have less than $1000 in their accounts. This fund is currently sized at $165 Billion, performs better and is larger than the JPMorgan Chase US Government Market Fund ($150 Billion).

Not All Strategies Work in Asia

Asian Platforms understand that superiority in technology stack alone is not sufficient for success in diverse Asia. Aligning technology, innovations, investments, and consumerism to address netizens’ needs and SMB growth challenges in buying, selling, conducting secure payment and managing the cross border processes are key to their success.

Criticism, both ill intended and constructive, was taken to build a better business. For instance Alibaba and Tencent took market advice to further improve platform transparency by launching blockchain and artificial intelligence intersects to address issues around unsustainable supply chain and food safety. They are on a journey to debunk all disapproving claims over effectiveness of Asian Platforms.