Insolvency resolution of "systemically important technological institutions": uncharted territory

Abstract

The rapid evolution of Big Tech companies such as Meta, Amazon, Microsoft, Apple, Alphabet Inc, Alibaba, Tencent, Baidu, etc, has posed a host of regulatory concerns to numerous countries and the world at large. The business model of most Big techs is characterised by three features: Data Analytics, Network Externalities and Interwoven Activities (DNA). The services of Big Techs generate large amounts of Data (D) from its user base that allow them to provide new services that take advantage of the natural network effects (N) of Big Techs and create more activity (A) among users of the Big Tech which once again generates large amounts of Data. The endless loop has been characterised as a DNA loop that plays a key role in the expansion of Big Techs. The DNA loop was a key factor that enabled Big Tech to grow in size rapidly and become deeply interconnected with the global economy, particularly the financial systems, thereby becoming systemically important. The Bank for International Settlements (BIS) has noted that the growing systemic importance of Big Techs has presently led to regulatory concerns in areas covering: (1) competition; (2) data privacy and sharing; (3) conduct of business; (4) operational resilience; and (5) financial stability. These Big Tech Companies have come to be known as Systemically Important Technological Institutions (SITIs).