A new BIS paper reported that big tech’s power could be a cause for concern.
This comes from the way that the companies can overcome limits on their scales through the usage of greater activity making more data. That helps to reinforce the advantages from network effects.
Read More: BIS Bulletin, Regulating big techs in finance
That way, the big tech companies are able to establish a bigger presence in financial services, BIS said, which can lead to new concerns on how the dominant firms could emerge and make it so that there’s more of a concentration of market power along with maybe more of a systemic footprint.
BIS wrote that there have been more challenges due to over concentration of market power and that data governance has also emerged as a concern.
The report made the case that monopolization can happen quite easily due to the presence of big tech, with China seeing the two big tech payment firms, Alipay and Tenpay, accounting for 94 percent of its mobile payments market.
The BIS report also said the entrenchment of power by a few big companies has the potential to make costs run higher in general, with the costs not always immediately visible for customers.
The power of big tech has been reckoned with before, such as when China passed down new regulations on several big firms in the country including Tencent, ByteDance, JD.com, Meituan and Didi, along with several others.
The executives of these companies have been summoned to talk to the country’s central bank and numerous watchdog agencies.
Related: China Clips Big Tech’s Finance Wings With New Regulations
The new mandates, PYMNTS wrote, include limiting information monopolies, having stricter compliance for global listings, and offering more transparency for how they gather data.
The regulations could come off as similar to the ones leveled at Jack Ma’s Ant Group in early 2021, following regulators’ shutting down of the company’s planned historic IPO.
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