Politics

Elizabeth Warren is out of the race. Her views on big tech aren't.

Warren's campaign may be dead, but her call to break up big tech lives on.

Elizabeth Warren announcing that she's dropping out of the race

Elizabeth Warren announced she was dropping out of the race in front of her home in Cambridge on Thursday.

Photo: Scott Eisen/Getty Images

Elizabeth Warren's decision to end her campaign means she won't get to implement any of her many plans as president. But her radical-at-the-time call to break up big tech changed the parameters of the national debate over technology — and set a standard that other candidates will either have to clear or reject.

Warren was the first politician with a national platform to call for breaking up big tech. And of all the sound bites to emerge from the protracted Democratic primary, "break up big tech" may be the most persistent. Before she said it, sweeping antitrust regulation of the big tech companies was far from mainstream. Though regulators and some lawmakers were investigating antitrust issues in tech, nothing as bold as Warren's plan to break up past mergers and prevent companies from selling their own goods had been seriously proposed. It was radical.

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But when she laid out the plan, in a March 2019 Medium post titled "Here's how we can break up Big Tech," it was immediately pace-setting.

Fast forward to March 2020 and the Federal Trade Commission is taking the idea very, very seriously. It's examining all past acquisitions by big tech companies over the past decade, a move that's inspiring the big five to change their businesses to try and wriggle out of the tractor beam of the FTC's attention.

It might be too late. Unlikely and extreme as it sounded when Warren first proposed it, the idea has caught on.

There are a few reasons why the idea was so sticky. It neatly captured the anxiety that society and government have felt since 2016 about the impacts of tech on our lives — the sense that the power of big tech companies is growing exponentially and out of anyone's control or even true understanding.

It was also the first real tech platform of any of the presidential hopefuls. And so it set the terms of discussion on the topic.

By announcing her plan, Warren forced the rest of the field to weigh in.

Joe Biden has stopped short of calling for the likes of Amazon, Google and Facebook to be broken up, but he told The AP in May 2019 that it's "something we should take a really hard look at." Bernie Sanders has gone on the record as agreeing with Warren, saying that if he's elected president, he will "reinvigorate the FTC and appoint an attorney general who will aggressively investigate and break up these tech giants and other conglomerates that have monopolized nearly every sector of our economy."

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Though none of the other Democratic candidates endorsed Warren's plan exactly, they all took the basic premise — that the big tech companies had grown too big and too anticompetitive — as given.

So did much of the media. At the fourth Democratic debate in October, New York Times national editor Marc Lacey didn't ask the candidates to discuss whether big tech was too big; he simply assumed the problem and asked for the solution: "Sen. Warren is calling for companies like Facebook, Amazon and Google to be broken up. Is she right? Does that need to happen?"

The answers showed just how much Warren's position had framed the debate. Everyone on stage agreed that something had to be done; the only difference was what. That big tech was too big wasn't up for debate. Warren did that. And even with her out of the game, she's set the ground rules by which the remaining candidates are going to have to play.

Image: Yuanxin

Yuanxin Technology doesn't hide its ambition. In the first line of its prospectus, the company says its mission is to be the "first choice for patients' healthcare and medication needs in China." But the road to winning the crowded China health tech race is a long one for this Tencent- and Sequoia-backed startup, even with a recent valuation of $4 billion, according to Chinese publication Lieyunwang. Here's everything you need to know about Yuanxin Technology's forthcoming IPO on the Hong Kong Stock Exchange.

What does Yuanxin do?

There are many ways startups can crack open the health care market in China, and Yuanxin has focused on one: prescription drugs. According to its prospectus, sales of prescription drugs outside hospitals account for only 23% of the total healthcare market in China, whereas that number is 70.2% in the United States.

Yuanxin started with physical stores. Since 2015, it has opened 217 pharmacies immediately outside Chinese hospitals. "A pharmacy has to be on the main road where a patient exits the hospital. It needs to be highly accessible," Yuanxin founder He Tao told Chinese media in August. Then, patients are encouraged to refill their prescriptions on Yuanxin's online platforms and to follow up with telehealth services instead of returning to a hospital.

From there, Yuanxin has built a large product portfolio that offers online doctor visits, pharmacies and private insurance plans. It also works with enterprise clients, designing office automation and prescription management systems for hospitals and selling digital ads for big pharma.

Yuanxin's Financials

Yuanxin's annual revenues have been steadily growing from $127 million in 2018 to $365 million in 2019 and $561 million in 2020. In each of those three years, over 97% of revenue came from "out-of-hospital comprehensive patient services," which include the company's physical pharmacies and telehealth services. More specifically, approximately 83% of its retail sales derived from prescription drugs.

But the company hasn't made a profit. Yuanxin's annual losses grew from $17 million in 2018 to $26 million in 2019 and $48 million in 2020. The losses are moderate considering the ever-growing revenues, but cast doubt on whether the company can become profitable any time soon. Apart from the cost of drug supplies, the biggest spend is marketing and sales.

What's next for Yuanxin

There are still abundant opportunities in the prescription drug market. In 2020, China's National Medical Products Administration started to explore lifting the ban on selling prescription drugs online. Although it's unclear when the change will take place, it looks like more purely-online platforms will be able to write prescriptions in the future. With its established market presence, Yuanxin is likely one of the players that can benefit greatly from such a policy change.

The enterprise and health insurance businesses of Yuanxin are still fairly small (accounting for less than 3% of annual revenue), but this is where the company sees an opportunity for future growth. Yuanxin is particularly hoping to power its growth with data and artificial intelligence. It boasts a database of 14 million prescriptions accumulated over years, and the company says the data can be used in many ways: designing private insurance plans, training doctors and offering chronic disease management services. The company says it currently employs 509 people on its R&D team, including 437 software engineers and 22 data engineers and scientists.

What Could Go Wrong?

The COVID-19 pandemic has helped sell the story of digital health care, but Yuanxin isn't the only company benefiting from this opportunity. 2020 has seen a slew of Chinese health tech companies rise. They either completed their IPO process before Yuanxin (like JD, Alibaba and Ping An's healthcare subsidiaries) or are close to it (WeDoctor and DXY). In this crowded sector, Yuanxin faces competition from both companies with Big Tech parent companies behind them and startups that have their own specialized advantages.

Like each of its competitors, Yuanxin needs to be careful with how it processes patient data — some of the most sensitive personal data online. Recent Chinese legislation around personal data has made it clear that it will be increasingly difficult to monetize user data. In the prospectus, Yuanxin elaborately explained how it anonymizes data and prevents data from being leaked or hacked, but it also admitted that it cannot foresee what future policies will be introduced.

Who Gets Rich

  • Yuanxin's founder and CEO He Tao and SVP He Weizhuang own 29.82% of the company's shares through a jointly controlled company. (It's unclear whether He Tao and He Weizhuang are related.)
  • Tencent owns 19.55% of the shares.
  • Sequoia owns 16.21% of the shares.
  • Other major investors include Qiming, Starquest Capital and Kunling, which respectively own 7.12%, 6.51% and 5.32% of the shares.

What People Are Saying

  • "The demands of patients, hospitals, insurance companies, pharmacies and pharmaceutical companies are all different. How to meet each individual demand and find a core profit model is the key to Yuanxin Technology's future growth." — Xu Yuchen, insurance industry analyst and member of China Association of Actuaries, in Chinese publication Lanjinger.
  • "The window of opportunity caused by the pandemic, as well as the high valuations of those companies that have gone public, brings hope to other medical services companies…[But] the window of opportunity is closing and the potential of Internet healthcare is yet to be explored with new ideas. Therefore, traditional, asset-heavy healthcare companies need to take this opportunity and go public as soon as possible." —Wang Hang, founder and CEO of online healthcare platform Haodf, in state media China.com.

Zeyi Yang
Zeyi Yang is a reporter with Protocol | China. Previously, he worked as a reporting fellow for the digital magazine Rest of World, covering the intersection of technology and culture in China and neighboring countries. He has also contributed to the South China Morning Post, Nikkei Asia, Columbia Journalism Review, among other publications. In his spare time, Zeyi co-founded a Mandarin podcast that tells LGBTQ stories in China. He has been playing Pokemon for 14 years and has a weird favorite pick.

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