The Divided Internet

There has been a lot of discussion about TikTok lately, from the ban in India, to apparently national security risks according to the US to Microsoft talking to acquire them and now the US is going to ban them in the US together with WeChat.

What makes this so difficult isn't really the ban alone, but what it does with the internet as a whole. China has, for better or worse, been blocking firms from entering their market. Facebook, Google, YouTube, Instagram, Twitter just to name a few.

But there are also exceptions, like Apple who is doing exceptionally well in China, even though there is a field of debate following recent App Store exclusions and following orders from Chinese government.

The Case of India

With India being the biggest up and coming economy in the world, it faces a tough challenge. Allowing external investors and companies in and risk destroying the local economy. For many of the big tech companies India isn't a challenge from local competition, it has its challenges with adoption of internet and culture but the rest can be handled.

So facing this, India is looking to make sure that everyone plays fair. Asking for data and algorithms for all major tech players, including Google, Facebook and Amazon, to make sure there is nothing "in it" that suppresses local competition.

This has been somewhat of a tradition with India, in 1977 the Foreign Exchange Regulation Act (FERA) was instated:

To consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.

According to data from the Reserve Bank of India (RBI), at least 54 companies applied to exit India. By 1978, Coca-Cola, IBM, Mobil and Kodak had already quit India or had applied to do so.

This might very well happen again, but history also shows that Coca-Cola is back in India, and they didn't hand over the keys to the castle for it. But what it also did show is that many local companies where much quicker able to gain traction and market share.

Something that presumably India is looking for again, having companies pure in money and help with infrastructure or live saving medicine is totally acceptable. But they also would like it very much when they leave the period of transition with an Indian power house in Social Media / E-Commerce / Search and other fields.

The US Mentality

While the USA was very much on the forefront of creating global superpowers in tech, it had a very long time no reason to even think about how foreign investors or companies could hurt there very own economy.

With every major company sitting in the USA, maybe besides Spotify and Shopify, there is nothing to worry about.

Until TikTok came along ans swept teenager from their feet. Jumping App Store charts and become a real threat.

Wannabe EU

The EU is in a tough spot in all of this, on one hand the big tech / internet companies are dwarfed compared to what others look like. But they desperately also want to have their own players.

There are government funded Search Engines, GPS Satellites, in Germany we did heavily push money into the automotive segment and the result have been less than desirable.

Investors are welcome and so are foreign companies, until the EU once again starts fighting them for anti-trust issues or avoiding taxation.

Why I ended up calling the EU a "wannabe" is because they would love to be that US power house, having all these major companies like they had 50 years ago. But that just isn't the case anymore, the other side is that they want to protect like India does. Giving local companies a better chance, but that doesn't help anymore. We gave local companies money and time, and they still came in short.

Trying to push now on big tech will make thinks even worse, especially because the future is not being played out in Europe. As the US had to learn that eventually they will be overtaken by China, so will we realize how we will get past by India and other emerging markets.

If I needed to make a bet today, I rather milk EU as long as possible and rather focus on India instead of trying to please a somewhat divided European nation which still isn't able to compete in a majority of relevant fields in the current age.

The Great Separation

With so many geopolitical players in the field, not even touched on Africa (still not developed enough), Russia, Japan, SEA and others, it is no surprise that we start to see a more and more divided internet.

This will severely limit expansion potentials and investor stories, will reduce customer value and creates so much friction overall.

But looking at the current situation, everyone is pulling more and more in that direction.

Who will benefit from these? Can we stop it and should we? What other implications are there?

I honestly don't know, but this shift is surely a big one and should be followed closely.