How Concentration Kills Innovation: A Round Table on Investing and Innovating in the Age of Big Tech
We are at the cusp of pivotal technological transformation – driven by rapid advancements in Artificial Intelligence, computing, robotics, biotechnology, and digital infrastructure, including the next generation of communication technologies. India aspires to be one of the leaders in this technological age, with ambitions of achieving a US$1 trillion digital economy in the near future, and domestic startups are anticipated to be a major driving force behind achieving this milestone and as such have been instrumental in ushering investments from state and market actors, alike.
At the same time, AI continues to ride a wave of popularity fuelled by a surge in corporate investment, an increase in M&A activity, and aggressive hiring strategy. Over the past three years, AI has emerged as the most hyped popular ‘innovation’ of our times, driven largely by the emergence and rapid adoption of Large Language Models (LLMs) such as Open AI’s GPT and Meta’s Llama. Even though, at first glance, AI was touted to disrupt the Big Tech dominance and create a vibrant competitive landscape, it is hard to imagine current AI systems without the Big Tech.
These phenomena of market consolidation and Big Tech dependence raises some important concerns for all involved, but most pertinently for entrepreneurs and investors – who form the core constituency of today’s digital revolution. Some of these concerns reflect the funders’ sectoral interests, and how their choices are affected by the Big Tech’s market consolidation. Other issues relate to the outcomes of these choices, and whether the current arc of innovation excludes, or even harms, certain stakeholders.
To this end, Abhineet Nayyar and Isha Suri – with research assistance from Girish Chandra and Ayush Menon – conducted an analysis of the three seasons of Shark Tank India, and organised an online roundtable discussion with entrepreneurs, investors, and market researchers. Their analysis, and the subsequent roundtable, aimed to answer the following key questions
- How does the startup ecosystem’s dependence on Big Tech affect i) how entrepreneurs think about innovation, and ii) how investors think about funding?
- How can regulation be channelled to facilitate innovation in this context?
- What role do mergers, acquisitions, and investments play in killing market competition?
- Since ‘innovativeness’ remains a subjective concept, what kinds of metrics (proxy or otherwise) does the startup ecosystem usually rely on to identify innovative ideas?
You can read through their findings and key learnings from the roundtable here.
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