To put this global trend in perspective, APAC’s consumer internet has never quite been a homogenous one. The search, social, video, and e-commerce ecosystems in APAC, have been split a number of ways for many years, as consumers are inclined to use what is locally relevant, shifting easily between global and local platforms.
China started to define its own ecosystem through governmental necessity from around 2009 setting the stage for today’s Chinese equivalent of FAANG in Baidu, Alibaba, Tencent, and now Bytedance. They are not only the dominant platform owners in China, but have also recently expanded into emerging markets in Southeast Asia and beyond.
Aside from the Great Chinese Firewall, we are also seeing the emergence of local platforms across APAC that counter a perceived platform consolidation around the FAANG companies. Japan, as is Hong Kong, is still a heavy user of Yahoo! where South Korea has its own Naver and Kakao.
LINE, a popular homegrown social and messaging platform in Japan, has also been very successful in Thailand, Taiwan, and Indonesia. Lazada and Shopee continue to challenge Amazon, particularly in the Southeast Asia markets. And of course, TikTok has just about conquered the region while upending the status quo globally.
As many of the emerging markets start to catch up and mature in their digital and mobile penetration and usage, we see the region’s internet shifting or splintering further in two ways.
With its features and formats evolving in lockstep with Douyin its Chinese sibling, it has been easy for global and regional brands to share their video content across both platforms. For other Chinese platforms like streaming giant iQiyi, whose model is primarily ad-funded, this could set an example should they choose to expand overseas.
Even in the emerging categories of digital services and OTT platforms, it is already incredibly fragmented. Traveloka has been expanding rapidly beyond Indonesia to establish a strong foothold against the Priceline group in Southeast Asia.
Grab and Gojek have essentially pushed Uber out from the region, at the same time driving fragmentation of other ecosystems such as food delivery, digital wallets, and e-commerce.
Where once the world of content appeared to be coalescing around Netflix, many favorite shows have now been dispersed to other platforms, including Disney+ and Hotstar in India, Stan in Australia, TVer in Japan, Wavve in Korea, and regional platforms Viu and iFlix in Southeast Asia.
Down the road, a certain degree of platform consolidation in the region seems likely.
As many of the emerging markets start to catch up and mature in their digital and mobile penetration and usage, we see the region’s internet shifting or splintering further in two ways.
For one, driven by the Chinese platforms’ global ambitions, whereby markets in Southeast Asia will experience further fragmentation, as already reflected in the online streaming race between Tencent and iQiyi, and their western counterparts, Netflix and Disney.
For the other, is a push back against the same Chinese platforms, as seen in India’s banning of 59 Chinese apps including TikTok, with “Made In India” apps rising on the clarion call for ‘Aatmanirbharta’ (Hindi for self-reliance). As it is, there already exists strong regional or local Indian giants in platforms like Flipkart, PhonePe, Delhivery, MX Player, Hotstar, and Times.
It is also likely that in the next few years, Reliance Industries, the largest private-sector company in India with a myriad of businesses including telecommunications, will build a version of the Indian internet ecosystem.
In a region as diverse as APAC, where every market has its own languages and cultural nuances, brands, and advertisers navigating the region have always had to grapple with balancing audience reach and engaging them in the most relevant way.
With their approach of owning the “pipe” as well as the “services”, they aim to garner over 500 million users over the next 3–5 years, offering broadband services to 20–25 million households and catering to 12–15 million small businesses.
Down the road, a certain degree of platform consolidation in the region seems likely. Already, we are hearing of Traveloka and Gojek potentially merging which would not be surprising, given the two companies have been actively exploring joint venture ideas.
A multi-tiered super bundle of digital services from Traveloka and Gojek tailored to various sets of user needs, akin to the Sky-like approach in entertainment, is not unforeseeable.
In a region as diverse as APAC, where every market has its own languages and cultural nuances, brands, and advertisers navigating the region have always had to grapple with balancing audience reach and engaging them in the most relevant way.
With hyper-fragmentation, this underlying challenge will become even more pronounced, making the designing and targeting of audiences as well as the customization of creative and content more complex, yet more important than ever before.
The bigger challenge, however, is going to be the management of data and the connectivity of audiences across these different platforms, especially with the sunsetting of cookies.
In a post-cookie ecosystem, brands must be able to share their datasets with their own sub-brands and agency partners to onboard onto digital platforms.
Without third-party cookies, there will be a need to reach audiences based on personally identifiable information and leverage digital tools that are built on privacy-by-design principles, in order to establish higher standards for personalization and pseudonymization.
There will also be a need to navigate a myriad of legislation and the differing regulatory requirements of the markets in APAC require a high level of local knowledge and likely some form of global ownership to ensure adherence.
For instance, China mandates all data must be stored within the borders and no data can leave whilst Japan follows the EU’s GDPR and has what is termed as ‘adequacy’ agreements which allow the transfer of data between markets such that there is equal and adequate protection in place with the other country.
On the flip side, markets such as Indonesia, Cambodia, and to a certain degree even India, are operating more like the “wild west” and the development of data protection that are likely to come will need careful monitoring.
Brands will need to update their technology stacks and strategic data partnerships to develop and activate more of their owned data based on personally identifiable information. In a post-cookie ecosystem, brands must be able to share their datasets with their own sub-brands and agency partners to onboard onto digital platforms.
This will enable the establishment of strategic partnerships that support targeting solutions based on first-party data, while driving consolidation of a currently fragmented and cookie-dependent data landscape, thus rebooting the next phases of digital marketing.
