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Rise of Asian Platform Enterprises: A Regional Survey

While Silicon Valley has played a central role in generating successful platform businesses, other parts of the world cannot be ignored. Asia, in particular, has emerged as a major area of growth for enterprises that harness platform business models. In this new survey, I examine the most significant platform enterprises operating in Asia today.

The growing significance of Asian platform companies is perhaps inevitable, given the size and scale of the region in the global economy, a large and growing middle class, rapidly growing internet usage and a knack for quickly trying and adapting new business models. Platforms such as Tencent, Alibaba, Baidu, Rakuten, Naver, and Flipkart — to name but a few — are becoming important vehicles to efficiently provide services to the region’s large and growing middle class as it embraces digital technology.

As in other parts of the world, Asian platform companies leverage digital infrastructure to facilitate the creation of interactive ecosystems that enhance the efficiency of aggregation, matching, exchange and innovation. Through increasingly sophisticated networks, recommendation engines and online-offline linkages, platform companies are both benefiting from and enabling consumers and businesses to find and purchase goods, get rides, find accommodations, book travel, access media, make payments, locate jobs, find mates and much more.

The survey identified 62 major platform companies operating across Asia, with a market capitalization of $800 million or more. The final list of companies is diverse. The companies serve 10 major industry sectors, with headquarters in 18 different cities. They have grown dramatically in the past decade, with a significant number of platforms now servicing hundreds of millions of users. These companies have also attracted significant investor attention. The market value of the 62 companies now exceeds $1.1 trillion, and they are having a growing influence on shaping markets throughout the region.

Asian platform companies are more than efficient matchmakers bringing together two sides of a market. They are integrating in new ways that cross and often disrupt traditional industry structures. This is particularly true in e-commerce, banking, travel, media and transportation. Asian platforms are becoming an important source of innovation, taking a lead in messaging technology, online payments and, more recently, artificial intelligence. While primarily focused on Asian markets, there have been growing moves to build global linkages, especially to connect buyers within Asia to goods and services outside the region.

The survey also reveals a complex regulatory environment in which governments have at times worked to promote platform growth and innovation, but have intervened in ways that stifled development. Most of all, the survey lends support to the notion that in Asia, like elsewhere in the world, everywhere that there can be a platform, there will be a platform.

Asian platforms have demonstrated a growing commitment to artificial intelligence (AI) and machine learning. Robin Li, CEO of Baidu, has called artificial intelligence “the next big development in the internet industry.” Not surprisingly, Baidu has been one of the region’s major investors in developing AI capabilities. The company has been developing AI systems to enhance its platform in areas such as advertising, search ranking, large-scale image classification, image character recognition and natural language machine translation. The company recently announced that it would open its deep learning architecture to developers outside of the company.

Other Chinese platform companies also have AI projects. Alibaba, through Aliyun, its cloud computing unit, has begun an artificial intelligence service called DT PAI. The initiative draws on deep learning techniques and a simple drag-and-drop interface. Like Baidu’s offering, developers can use DT PAI to build predictive models without having to write new code. Meanwhile, Tencent has invested in Diffbot, a technology that visually recognizes, reads, understands and monitors web pages and components, including product pages, news articles, discussion forums, videos and images. Each element of the web page is extracted, organized, tagged, cross-referenced and stored as an “object” in the Global Index with billions of objects.

Japanese and Korean platforms have also announced AI programs. SoftBank has made substantial investments in the AI-enabled humanoid robot called Pepper. In May 2016, the company opened its software platform to third-party software developers with the goal of growing its application platform with larger offerings of “roboapps,” including those that leverage artificial intelligence. SoftBank also joined with Honda Motors to develop a system that uses artificial intelligence to analyze speech and offer information and recommendations tailored to drivers. Rakuten is building AI capabilities to help shoppers better navigate online stores and linkages to Viber, a major messaging platform that it acquired in 2014. Rakuten acquired additional capabilities through its acquisition of Nextperf, a company with advanced machine learning for real-time ad optimization and smarter recommendation engines. Not to be outdone, Korean platforms have also joined the rush to develop AI capabilities. Naver has developed a program called “LAON,” which uses an AI speech-recognition program that is able to engage in intelligent search and human dialogue to enhance customer queries and shopping experiences.

As this survey illustrates, Asian platforms have grown rapidly in size and scale, facilitating interactions among hundreds of millions of users and transactions worth hundreds of billions of dollars. If the underlying demographic, economic and technology trends driving the so-called Asian Century hold, then the region promises to be particularly fertile ground for continued Asian platform growth with important implications not only for Asia but the global competitive landscape.

The survey benefited from valuable input from Professor Weiru Chen, Cho-Hsuan “Joseph” Yu and Sangeet Paul Choudary. I am deeply appreciative of their contribution but hold responsibility for any errors or omissions in the final survey.


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