00:00Summer, good to have you with us.
00:01Talk to us about the catalyst for this massive growth we're seeing in Southeast Asia.
00:07Yeah, we are seeing tremendous growth.
00:08We're three years ahead of where we thought we were going to be at $300 billion, 1.5x what we were expecting.
00:15And this is driven on the back of many things.
00:17Once we've seen extreme digitization, we've added over 200 million users in this last 10 years.
00:24You have macro fundamentals of this region, which are looking great.
00:27The competitive economy with payments and super apps are leading to innovation and creativity and drive like we haven't seen before.
00:38And this has led to what I would say what's most interesting in terms of inflection is really the profitability of the businesses that we're seeing.
00:45This shift to profitability, businesses are showing the returns, and this has led to investors investing more.
00:53And we've proven this in the report by really shifting just from tracking GMV to also revenue.
00:58And revenue has grown 11x.
01:01And so the business fundamentals are really what is driving this catalyzation right now.
01:07A lot also has to do with AI.
01:10I'm just wondering where the most transformative AI opportunities link to Southeast Asia.
01:15Well, I think what we're seeing is that this region is one of the most AI-curious regions in the world.
01:22So it really starts with the consumer.
01:24We're seeing almost 3x what we're seeing in other parts of the world in terms of AI curiosity.
01:30On everything from multimodal AI to agentic AI, this region is intensely curious.
01:36But that's also leading to real impact in businesses.
01:39You know, our investor portfolios, as we've shown in the report, many of them, 86% of them, are seeing returns on the investment that they're making in terms of cost savings.
01:50And 70% are seeing revenue uplift.
01:52So you see this, the efficiency on the expense side.
01:56You see top-line growth on the revenue side, which is leading to more confidence from the investor ecosystem.
02:02That, in turn, is leading into upskilling that's happening in the region.
02:07We are seeing this pull where users are saying that 8 out of 10 of them are saying that they're using AI.
02:14Half of them are saying it's essential in their daily lives.
02:18And that is creating this pull on talent, on upskilling.
02:21And it's creating this flywheel, right, that we, I don't think any of us ever expected would be so profound, especially so quickly.
02:29We've seen changes in history.
02:31We've seen, obviously, when mobile started, when the Internet started.
02:35But what we're seeing here is things are happening faster than we expected, and the returns are also faster than anyone expected.
02:43We focus a lot on the consumers, but we have to take a look at the small businesses.
02:48SMEs represent something like 700 million, right, in this region alone.
02:53I'm just wondering how they're adopting AI, how effective has it been for them?
02:59Yeah.
02:59No, you raise a really good point.
03:02One of the areas I'd point to is commerce, right?
03:05So commerce has been, you know, on the back of large players.
03:08But what we're seeing is a shift to video commerce.
03:1125% of e-commerce now is video.
03:14And this is on the back of growth from sellers who are small businesses, who are merchants, also creators, who are tapping into this ecosystem.
03:23Southeast Asia has one of the most video-engaged populations, and small businesses are taking advantage of this moment.
03:30So we're seeing growth in live commerce and all forms of video commerce.
03:34And this is leading to, you know, transactions growing faster than we're expected.
03:40Transaction price or average order value is lower.
03:43But we're seeing that overall transaction volume is going up.
03:46And this is where the small businesses are using a lot of AI tools, right?
03:51We're seeing this adoption on our YouTube products.
03:54But across the board, platforms are seeing adoption of AI tools by small businesses and merchants really take off.
04:01And this, in turn, is then leading into the growth of the economy because commerce is still the undisputed champion of the digital economy.
04:09Are there funding gaps currently as the 11 nations in Southeast Asia, you know, embrace the AI digital economy?
04:19Yeah, we have lots of data in the report.
04:24I think what we're seeing is definitely a stabilization.
04:27We have seen growth in private funding of 15% in the last year or so, positive signs.
04:32I mean, the expectations are clear, right?
04:34The expectation is we want to see profitable growth.
04:38We want to see great fundamentals.
04:40And businesses are responding.
04:42And so it's leading to that stabilization.
04:43We're optimistic when we look at the IPO pipeline of what's in play at this time on where this could go.
04:51And we're also seeing that the funding has moved to more late stage, right?
04:56So I think in the earlier, previous years, you would have seen rapid expansion in early stage funding.
05:02Now we're seeing that's moving to late stage.
05:04We're also seeing certain categories get more attention.
05:07They're the ones that are delivering, like digital financial services.
05:11So funding is improving.
05:12We're optimistic as we go forward.
05:14And I think we've taken these last few years to really get the fundamentals in place, which will create that optimism.
05:21We often talk about how Southeast Asia is a great space for digital consumers.
05:28How about Southeast Asia as an innovation hub, an AI hub?
05:33Where are we with that?
05:35And what's the potential of that pivot?
05:36Yeah, well, I would say, I think if you want to look at an area that is getting more attention is really in the infrastructure.
05:45And this is where private meets public partnership, right?
05:48I think we're seeing governments leaning in and investing in data centers.
05:52I think that's one really good measure for us to look at.
05:55Data center growth is expected to be 180%.
05:59We're seeing billions of dollars flow into this region.
06:01And we, as Google, have invested in our infrastructure in this region.
06:06Last year, we committed $2 billion in Malaysia.
06:08We've committed in Thailand.
06:10We're continuing to commit to this region because of Southeast Asia's potential and the opportunity that it has to play in this next decade in terms of this AI moment.
06:22And so what we're seeing is that we're going to have an outpaced versus the rest of Asia in terms of data center capacity.
06:304,600 megawatts are planned for next year, right?
06:34So this is higher than we expected.
06:36And I think what's leading to this is a few things.
06:38One, you have Singapore, which has traditionally been a focus area, has become more capacity constrained, which is leading to us investing in the rest of the region.
06:48Also, data localization requirements from Indonesia and Thailand are also creating more urgency for us to do this.
06:56But again, it comes back to this demand that we do see from the customer, which is meeting the needs of the consumers and their rapid adoption.
07:04And so we're going to continue to see a growth in this area.
07:07And what's key is the public-private partnership.
07:09The grid has improved.
07:115G has improved.
07:13And so this is leading to the growth.
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