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Who Is Going to Dominate the Internet?

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Paul Budde

While the internet has brought about the transformation of whole industry sectors and generated thousands of business models, as well as changing social behaviour, it is at the same time creating its own giants and dominant players.

Does this mean that while certain vested interests are demolished, and others transform themselves into smaller sectors and organisations, new conglomerates will surface? Only time will tell.

There is no doubt that the internet has established a much larger and more level playing field, and that it has made it possible for others to take market share and revenue away from traditional players. It seems unlikely that there will be a return to the days before the internet; and so in general terms the outlook for a much more open and competitive market place remains optimistic.

It was interesting to see how, a decade or so ago, some of those vested interests in the telecoms and media world tried to copy their traditional business models over to the online environment. They simply tried to create another walled garden business for their businesses, this time on the Net. Most of the telcos set up their internet shopping malls and later on the mobile operators did the same with their portals; we saw media companies set up their e-magazines with shopping malls. However these walled gardens were not popular with their customers and most simply jumped over the wall onto the free and open internet.

As predicted in the late 1990s, a more successful model would be to establish vertical portals, with very deep content. Several of these highly specialised sites are still operating around the world, some based on language differences; others on niche markets, unique products and services, special interests, etc; and the number of such 'long tail' sites continue to grow.

Based on this vertical portal concept we saw very interesting further developments led by Amazon — perhaps the single best shopping experience on the Net, now with a vast range of products.

Google took a similar approach. Originally just a search engine it moved vertically into maps, social networking and mail.

Apple's iTunes is by far the largest music store anywhere in the world. It dominates the music industry and, like Amazon, is now venturing into a range of other online products.

Facebook is another online giant dominating the social media scene, from where it also is venturing into a whole new range of advertising-based applications.

These companies have finetuned customer interaction on very user-friendly open systems and due to their sheer size they are able to attract new products and services to their platforms, forever increasing their reach, size and power and thus further consolidating companies and services on the internet.

Obviously the hundreds of thousands of other internet-based services are not going to go away, but at least for the moment it looks as though a handful of giants are dominating a significant percentage of internet activity.

At the same time the enormous volume of services plays into the hands of the larger ones, as they are able to offer a one-stop experience, with easy to find products, services and applications, based on user-friendly platforms that customers are familiar with. There is no doubt that these companies will continue to make it as easy as possible for customers to use more and more services. And as the internet adds its next billion users, so will these giants grow alongside it.

The power of these companies becomes even more apparent when looking at Google. Their future depends heavily on people having access to very high-quality broadband, and in order to stimulate the development of infrastructure for such services Google even moved into investing in submarine cables, FttH networks and WiFi networks. For a similar reason it bought Motorola, simply to get access to patents that would allow it to improve its online businesses and to ensure that mobile devices will be able to access its services seamlessly.

Another sign of the power of these companies is linked to so-called 'big data'. By having access to as much data as possible in relation to customers, their behaviour, interests, jobs and so on, these companies are able to offer unique advertising products. While in general there is nothing inherently wrong with this, these companies do need to be very careful with that data as it borders on areas such as privacy and security and could therefore easily become a target for government regulations. In particular, the massive amount of data on literally hundreds of millions of customers makes these companies very powerful indeed — to put this into perspective, all of these companies individually know more about the citizens than the governments of the countries where the people live.

I have been arguing for over a decade that these companies, as well as everybody else collecting and storing personal data, should only be able to do so on a permission basis. The person whose data they collect should ultimately 'own' their own data, giving companies permission to use that data for certain purposes. While this will not necessarily change the overall nature of 'big data' it will place the control of it in the hands of the user, not the company.

By Paul Budde, Managing Director of Paul Budde Communication. Paul is also a contributor of the Paul Budde Communication blog located here.

Related topics: Internet Governance, Web



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