Global Internet Report 2019 - Internet Society

In the 2017 Global Internet Report, our global community identified a concern that a lack of competition and increased market concentration could have severe implications for the Internet’s technical evolution and use. Our goal for the 2019 report was therefore to explore trends of consolidation in the Internet economy, guided by the central question: Are there trends of consolidation in the Internet economy, and if so, how will consolidation impact the Internet’s technical evolution and use?

In the 2019 report, the Internet Society asks whether the Internet economy is consolidating and, if it is, what the implications might be. From the dominance of Facebook in social messaging, Google in search and Amazon in online shopping, the largest Internet platforms are capturing fundamental human interactions. This dominance, and the finances and reach that accompany it, enable the platforms to extend their influence and reach into new market spaces, from autonomous vehicles, to AI, to cloud services and beyond. This leverage is built on unprecedented network effects, vast troves of user data, business agility, and regulatory freedom that few other companies enjoy.

In this report, we recognise the incredible convenience these platforms provide the Internet user. At the same time, we also recognise the concerns that are being voiced about this dominance, and about the responsibility these companies have to society and economy. The 2019 report explores these issues by examining five key trends and themes that emerged from extensive engagement with the Internet Society community, and surveys and interviews with experts, thought leaders and influencers.

What Is Consolidation in the Internet Economy?

Consolidation trends include growing forces of concentration, vertical and horizontal integration, and fewer opportunities for market entry and competition.

illustration in the share of triangle having Internet Economy in the centre and Internet Applications, Access Provision and Service Infrastructure in the corners

The Internet economy, as understood in this report, is broadly defined as the economic activities that either support the Internet or are fundamentally dependent on the Internet’s existence. Organised around three separate but closely linked economic domains-Internet Applications, Access Provision, and Service Infrastructure-this section is intended to provide a snapshot of various markets, and to describe how they relate to the Internet as a whole. As such, it is not intended to provide an in-depth economic analysis, nor is it exhaustive in terms of encompassing all relevant markets and services. Rather, it provides a starting point for further discussion.

Key Features of the Consolidation of the Internet Economy

Total Service Environments

– Many Internet platforms are expanding into new service and content areas, both to retain customers and to continue to grow revenues.
– Total service environments for business and innovators operate at a scale that will allow entrepreneurs to do things they couldn’t otherwise. This includes accessing a much larger customer base, as well as resources and expertise that no small business could tap on its own with limited resources or time.
– Platform environments unleash huge opportunities, but because innovation and entrepreneurship remain within the platform, competition to the dominant players will effectively be neutered.

Interoperability as a Function of Scale

– The nature of an open, collaborative, and interoperable Internet is influenced by a small number of large companies, where organisational scale and market share play a significant role in the development and deployment of the open technical standards on which the Internet depends.
– Large organisations can accelerate the adoption of existing but under-deployed standards like IPv6 and push the development and testing of new standards, benefitting the Internet as a whole.
– The growing use of APIs puts more of the Internet’s innovation, functionality, and interoperability into the hands of the dominant Internet platforms, whose interests may not always align with those of the broader technical community and other players.
– Future innovation, services, and applications may depend on the availability of a small set of proprietary platforms and services, rendering those applications less resilient, reliable, and capable of supporting further innovation.

A Changing Internet Topology

– The ability of a small number of content and cloud services to invest in their own networks and deploy their servers close to the broadband network edge is amplifying the existing trend of a flattening Internet, where access networks are increasingly interconnected and have less need for international transit.
– Access networks are evolving rapidly, driven by the Internet of Things (IoT) deployments and other demands for processing on a range of user devices, including evolving technologies such as autonomous vehicles.
– Big cloud providers like Amazon, Alibaba, Google, and Microsoft are well-placed to dominate the new era of IoT and edge computing, further driving a changed Internet topology with less international transit and more complex, private, specialised networks and services. This could come at the cost of the general-purpose Internet.

Deep Dependencies

– Central to the Internet’s success has been its ability to evolve, as captured by the characteristic of “no permanent favorites” where no specific company or technology is above disruption, evolution and competition. This characteristic could be challenged as dependencies continue to grow.
– The development of new applications, services, and businesses across the global economy is increasingly dependent on a small number of private platforms owned by the largest Internet companies. While the risk of catastrophic failure may be very low, consequences of failure could create a domino effect for other parts of the global economy.
– As platform environments expand further, entering and often dominating more sectors and markets, combined with an exceptional economic power, there is a risk of growing societal dependencies on a handful of powerful economic actors.

Responses to Consolidation

– Responses to the negative effects of consolidation have been distributed across the applications, services, and access domains of the Internet economy; in different sectors, regions, and by different institutions.
– Countries have adopted different strategies. Some have a higher tolerance for the risk of dominance if it also delivers Internet access and services, and they may have a traditionally lower tendency to regulate. Others, such as those in the European Union, are mobilizing more concerted, cross-agency responses (often spanning competition, consumer protection, and data protection regulators).
– Similarly, different stakeholder groups have also focused on different issues as far as dominance is concerned.

The Internet Society recognises that the impact of consolidation and concentration on the Internet economy as well as on the open, interoperable, and global Internet are difficult to gauge. As noted already, there are benefits to operating at scale. Consolidation and concentration can also greatly benefit the user by providing platforms that offer seamless Internet experiences. At the same time, it’s unclear what the impact is on innovation, entrepreneurship and, importantly, competition. It’s unclear what concentration and consolidation may mean for user choice, including choice of content, services, and provider.

Report Highlights

Executive Summary
How We See the Internet (pg.12-16)
What Is Consolidation? (pg. 17-32)
Takeaways and Observations (pg. 33-57)
Impact Analysis (pg. 58-61)
Conclusions and Questions for the Future (pg.62-64)
Community Survey: Questions and Results (pg.72-74)

Global Internet Report 2019: Consolidation in the Internet Economy

What Is Consolidation in the Internet Economy?

Key Features of the Consolidation of the Internet Economy

Total Service Environments

Interoperability as a Function of Scale

A Changing Internet Topology

Deep Dependencies

Responses to Consolidation

Report Highlights

Related Resources

2025 Action Plan

2030 Strategy

Path to 2025