The big business in small business

Large tech players are increasingly looking to small businesses as a viable growth market: three of the world’s biggest digital companies — Alibaba, Meta, and Microsoft — announced new initiatives for small enterprises just in the last few weeks. They seem to experiment with offerings that lie somewhere between what they have traditionally offered to consumers and large corporate customers, using various forms of partnerships to gain ground with the small business segment. We take a look at what this trend reveals about how big tech is making small business more central to their strategies.

What happened

Several big tech companies announced new initiatives and partnerships directed at small businesses.

• Alibaba announced a new partnership with the International Trade Centre (ITC). The goal is to build micro, small, and medium enterprises’ capacity and connect them to international markets. The initiative will target a diverse set of countries, covering Bolivia, Colombia, Ethiopia, Mozambique, and Myanmar.
• Meta (formerly Facebook) launched its Grow Your Business Hub in India and the Facebook Business Coach for small businesses in English-speaking African countries.
• Vodafone and Microsoft announced an innovation partnership through which they want to develop high-tech connectivity products targeted at European SMEs in areas like edge computing, 5G, and IoT.

What we learned

In their efforts to reach small businesses, big tech companies pursue drastically different approaches that mirror the companies’ tech stack and larger strategy. The choice of partners and the set of technologies are key differentiators.

• By working with ITC, Alibaba chooses an established development partner to make inroads into Global South countries with strong donor presence. Alibaba’s note was sparse on the details and there hasn’t yet been an announcement by ITC, but the initiative is likely to expand ITC’s existing work on upskilling micro and small enterprises through a suite of more traditional instruments, like online courses, training videos, guides, articles, and one-on-one training. While Alibaba argues that the ITC partnership will eventually serve its SME ecosystem, this initiative follows a more development-led approach, likely to boost its reputation and standing.
• In contrast, Meta’s two initiatives are more directly focused on growing its own ecosystem. The new services are geared towards enabling small businesses to use Meta’s products, like setting up a Facebook Business page, increasing their ad spending on Facebook, or using WhatsApp and Instagram for their business. The approach appears to rely more heavily on a light touch approach of profile-based sets of standardized content or chatbots rather than one to one support. Meta works through partnerships only in the sense that partner offers by providers like Shopify and digital marketing apps are promoted within the Grow Your Business Hub. It seems to pursue a similar approach as with its earlier partnership with Indifi in India: Indifi provides loans to small businesses that have been active advertisers on Facebook for at least six months, while Meta does not financially contribute to these loans.
• Vodafone and Microsoft have not yet specified which actual products they will offer to small businesses. Yet, it’s clear that the two corporations are looking to use their mutual technological advantages and innovate at the cutting edge. They will design high-tech products that will (at least initially) only appeal to specialized small businesses.

The bigger picture

Big tech is increasingly looking at small business as a viable growth market. Tech corporations are experimenting with products and services that lie somewhere between what they have traditionally offered to consumers and to large corporate customers.

• Big tech companies are realizing that small business can be big business for them, but also that they have to develop enabling services or entirely new product suites.
• Platform-led upskilling is turning from an exception to the norm. It is also intensifying and becoming more specific, for example, with both Meta and Alibaba seeking to advance MSMEs’ abilities to export.
• Different tech frontiers across the globe mean that small businesses’ demands can be catered to through wholly different sets of technology. The word is still out on whether Meta’s attempt to keep costs down (through chatbots and standardized content) can be effective, or whether one-on-one, digital/analog approaches to upskilling will prevail.
• It will also be interesting to see if and how big tech and development partners are able to work together.

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Small Business Spotlight is a roundup of recent trends and insights about small enterprise in the digital age, by Dr Nicolas Friederici