IT IS the world’s most titanic commercial fight. Facing off are the towering giants of American and Chinese tech, led by the FAANGs (Facebook, Amazon, Apple, Netflix and Google’s parent, Alphabet) on one side and the BATs (Baidu, Alibaba and Tencent) on the other. These are some of the planet’s biggest firms, with a combined stockmarket capitalisation of more than $4trn. At play are some of its most promising markets. Why, then, has the battle largely escaped attention?

One reason is where it is taking place. The titans have avoided each other in their home markets, and rising trade tensions make it ever less likely that a clash will happen there (see article). Except for Amazon and Apple, the FAANGs are already all but banned in China. America, meanwhile, is putting up barriers to Chinese firms. This week the Trump administration declared China Mobile, the world’s largest carrier, a potential threat to national security. Ant Financial, an affiliate of Alibaba, was stopped from buying an American payments firm earlier this year. Tighter investment restrictions are on the way. So the cream of America and China are taking each other on directly only in third countries, such as Brazil, India and Indonesia (see article).

Another reason for the battle’s low profile is that it is not being fought in the open. The American firms have, broadly, transplanted their services to other markets; Amazon has pledged over $5bn to replicate its offerings in India, for example. But the Chinese giants are taking a different tack, buying stakes in local firms and weaving them together into complex tapestries of services. The ecosystem of Tencent and Alibaba, with over 1,000 stakes in foreign firms, includes dozens in emerging markets. Along with Ant, they have backed 43% of all Asian unicorns, startups worth more than $1bn. Chinese tech firms pumped $5bn into Indian startups in 2017, a fivefold increase on the year before. America’s tech giants are wearing uniform abroad; China’s melt into the background.

The battle for emerging markets warrants closer attention—and not just because it has been below the radar. It has implications for the world’s tech giants. Over half of Google’s revenues come from outside America; eight of Facebook’s ten biggest territories by user numbers are emerging markets. Alibaba wants to raise the value of sales on its platform that are made abroad to 50% by 2025, implying stratospheric growth in places like India. Around half of the world’s population is online; that leaves an awful lot of new eyeballs to monetise.

In addition, a proper east-west tech rivalry promises to bring big economic benefits. At home, the tech giants prompt worries about their dominance. Abroad, they are scrapping for consumers and companies. Ant and Tencent, for instance, are introducing Germans to the blessings of Alipay and WeChat Pay, their mobile-payment systems. Amazon has helped bring big warehouses and other e-commerce infrastructure to India. Over time, many digital markets tend to become more concentrated, as size begets size and winners take most of the spoils. For now, in third countries, competition rages.

Bloc-heads

The last reason to watch this unfolding battle is geopolitical. America and China are vying for digital supremacy. The fight between their tech champions in other markets will inevitably have political overtones. Chinese technology is sold by firms that will work with the authorities. That may tip the scales in their favour in countries with less democratic regimes. Online data provide the fuel for artificial intelligence; deciding if they flow into Chinese computing clouds or American ones could have consequences for how dependent countries become on one superpower. The battle between the FAANGs and the BATs is a commercial one. But its outcome could put third countries in one camp or the other, increasing the risk that the world eventually splits into two techno-blocs.