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Takeaways from Internet Trends, Part 2

The internet is neither the root cause of the world’s problems nor is it a skeleton key solution. It is merely a tool. That said, we should never conclude without prior examination that a tool cannot affect its user. We influence and are influenced in ways we do not understand. We gain access to exotic faraway worlds if we are resourceful, but we lose access to the world in front of us if we are not careful. Time will tell what role information technology will play in the grand scheme of history, but as of now, it is center stage.

In Part I, I shared the most impactful ideas from the first 150 pages or so of Mary Meeker’s 2019 Internet Trends report. In this article, I’ll talk about a few more from the report’s second half. The theme of this section is the perils and privileges that come from access to the internet.

  1. We think we care about privacy, but we care more about buying new things. Meeker highlights a survey of 8,000 consumers throughout the U.S. and Europe, which suggests that most consumers would gladly trade personal data for personalized offers and recommendations from retailers. In fact, 91% of consumers prefer brands that provide personalized offers and recommendations to those who do not. More to the point 83% of consumers said they would passively share, and 74% said they would actively share data in exchange for personalized offers. Mark Zuckerberg, in his March testimony before congress, suggested that regulation should enable consumers to choose how their data is shared, rather than uniformly curtail sharing.

  2. Nearly all of the world’s digital data has been created in the past 10 years, but only 13% of it is easily searchable. The world has gone from capturing 0 ZB per year (zeta bytes = 1MM petabytes) to nearly 25 ZB in 2018. A mere 13% of the 25 ZB created in 2018 was “structured,” according to IDC, a technology research firm, meaning categorized such that it is easily searchable. Two major enablers of this phenomenon come to mind: (1) sensor technology investment being rampant over the past few decades, and (2) the growth of “the cloud,” which has surpassed both consumers and enterprises for data storage. Most people can access storage capacity for data instantly and in an infinitely scalable format. Data capture and storage has been commoditized – real value is in making it functional. Once achieved, the world will always be “on” – always recording, capturing, and delivering insights.

  3. Humans may not be able to keep up with all the technological development. Just watch footage of Mark Zuckerberg explaining how Facebook works to congress. Cringeworthy. This technology is not simple and understanding it requires an understanding of computers, software, and sometimes mathematics, statistics, and other hard sciences. If consumers and regulators do not have the technical backgrounds to understand the technology that is rapidly scaling in our culture (revisit point #1 with this perspective), can anyone be held accountable in this realm? Can the technology itself become too intelligent to be held accountable? It seems the key is not mere regulation, but rather better cultural adaptation to the technical knowledge required. Meeker gives no real insight into the path forward here, and I certainly do not possess it.

  4. While privacy is a major internet usage concern, content is another. Content itself may not be as large an issue as the amplitude and frequency with which it is consumed. With 51% of the world now online, and the average user spending 16% of his/her time online, news and information are constant. What used to be a once-per-day interaction with the news-cycle became a 24-hour interaction with cable news. Now, one can curate a certain narrative in social media, creating a constant echo chamber. This news is less filtered and more amplified than ever. It is perhaps no coincidence that both democrats and republicans have both drifted from the center and become further entrenched in their respective ideologies.

  5. The internet is also a tool in the hands of authoritarian governments to censor, empower and surveil parts of their populations. 67% of the world lives in nations where content on the internet is at least heavily regulated by the government. In fact, 47% of the world lives under governments that have used the internet to increase its surveillance powers and 42% live under governments that have disconnected internet service to parts of its population for political reasons. Some have suggested a discrete internet “bill of rights.” Whether this could ever be practicable, who knows. Perhaps some form of distributed ledger that enables or restricts access based on compliance to this independently regulated bill of rights could make this achievable.

  6. On a lighter note, the internet has enabled a new class of workforce: the on-demand worker. Uber, DoorDash, Etsy, and Airbnb all have one thing in common: they give consumers and users direct access to resources that were previously hard to find. Now average people can become Uber drivers, craftspeople on Etsy, and property managers on Airbnb. Meeker shows that there are now 6.6 million U.S. based on-demand workers, and 47% of those were previously unemployed.

  7. Education is slowly moving online. Offline-only post-secondary school enrollments have dropped from 74% to 67% since 2012. Solutions like Coursera have made it easy and efficient for top universities to offer courses online. For example, University of Pennsylvania’s Wharton School of Business now offers a Masters of Information Technology online. The cost of an online education is also lower. Take Arizona State University for example. A four-year education for non-residents is $145,000 offline. Online, it is $65,000. It’s possible that this trend could drive education costs down over time. As for informal education, YouTube “How To” viewer subscriptions have gone from 3MM in 2013 to 9MM in 2018.

  8. Immigration is a value add to the U.S. technology industry. Of the top 25% most highly valued tech companies in the U.S., 60% were founded by first or second-generation Americans.

  9. The USA’s income statement does not necessarily align with the economy. Imagine that the U.S. ran at a nearly balanced budget and someone told you it would grow tax revenue by 5% per year for the next 30 years. You would at least be optimistic that the government would be well-positioned to deliver a balanced budget. Well, the U.S. government has grown revenue by 5% on an average year over year (Y/Y) basis since 1988, when it ran at a loss of $155 billion. But, in 2018 it posted a loss of $779 billion. In 1998, the U.S. managed to squeak out a $69 billion profit, but otherwise, the government has continued to incinerate cash. The largest cost center by far is “Entitlement/Mandatory” expense, which is comprised of Social Security, Medicare, Medicaid, and Income Security. The average payout per household has gone from 15% of the average household’s income in 1988 to 28% in 2018.

  10. What is driving these high Entitlements? Healthcare costs. Healthcare costs have gone from 10% of government spending in 1987 to over 20% in 2017. The U.S. spends nearly 150% more per dollar of GDP than any other country. The U.S. has the world’s highest administrative spend and incidence of preventable deaths among peers. Is help on the way? With digital technologies emerging that allow providers to track drug compliance and treatment/recovery plans, one can hopefully expect prescription drug costs and hospital re-admissions to decline.

Time will tell how history unfolds in our society. It will be especially interesting to observe the role each of these subjects plays in the upcoming election.

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