Global internet penetration has topped 52%, marking a seminal moment in the history of connectivity. With that being said a single blip or, worse yet, attack can affect tens of thousands of individual users—and yield an unprecedented heist in return. Human web traffic has been overtaken by automated program bots that in some cases act maliciously online. In his newest paper, Joseph Quinlan, Bank of America, U.S. Trust explores the proliferation of the internet across the world, the dangers that come from it but also its positive impact on the global world.
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- The global digital gap is narrowing. Asia and Africa most recently brought on an onslaught of new internet users.
- When low- and middle-income countries gain access to the internet, great benefits are derived in education, employment and health. This is bullish for local internet service providers and local online content platforms.
- 93% of all users now access the internet via mobile devices (phones or tablets). Almost half a billion (429 million) mobile devices and connections were added in 2016.
- Expanding internet use will boost global demand across many sectors but also accelerate the push toward new technological frontiers.
- The diffusion of the internet has caused the powerful expansion of the global middle class and rising per capita incomes in the developing nations; the rising empowerment of women; soaring global educational attainment levels; and elongated life expectancies around the world.
- The internet- related consumption and expenditure, if measured as a sector, accounts for 5.3% of GDP across the G-20 countries, contributing $4.2 trillion in global output.
- In the U.S., the internet’s contribution to 2016 GDP, producing both wealth and jobs, is bigger than sectors such as transportation or construction.
In the end, the global digital world can no longer police itself. However, the growth in global internet usage remains robust; the Internet of Things is exploding; and many U.S. firms have first-mover advantages that are hard to dislodge or overcome. The global web is truly one of the world’s last and largest frontiers.
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Such is the state of flux and dynamic growth of the global internet that modern-day Bonnie and Clyde would be better equipped with high-tech malware and botnets than their trove of weapons and a 1934 Ford sedan. A single blip or worse yet, attack, can drive a ferocity so overwhelming, so threatening, it can affect tens of thousands of individual users—and yield an unprecedented heist in return. Compounding matters is the ever- expanding internet universe, recently tracking a total number of netizens at 3.9 billion. Putting that number into perspective, for the first time in the short history of the internet, more of mankind is logging on than ever before—or 52% of the human population this year, leaving those who don’t log on to the internet increasingly in the minority.
At the start of the century, less than 7% of the world’s population used the internet, mostly for functions as basic as information acquisition. Following two decades of technological advancements and falling prices, the internet today is responsible not only for disseminating information, but also for electronic commerce, social networking and a host of other activities. The upshot: the digitalization of the global economy in the 21st century, adding $6.6 trillion to GDP, accounting for 7% of global output annually by 2020.1
The other 3.6 billion people in the world, unbeknownst to the internet, tend to be disproportionately poorer, rural, elderly, less educated and female. However, the global digital gap is narrowing. Asia and Africa most recently brought on an onslaught of new internet users, and in a three-month span introduced 64 million and 35 million newbies, respectively, owing to expanding mobile applications, rising computing power and falling supply costs.
Asia’s pace of proliferation shows no signs of abating, responsible for 60% of the total growth in global internet users in 2016. And while Asia houses half of the global total of all internet users, this leaves 50% still offline. Digital in parts of Africa grew at some of the fastest clips in the world last year, albeit from a low base. Internet is accessible to almost one in three people in Africa with current growth trends suggesting not until well into 2020 will internet penetration levels across the continent breach the 50% mark. And of the global total today, emerging world internet users account for roughly 71%, having overtaken those in the developed world in 2008.2 If emerging world penetration rates were to converge with those of the developed nations, closer to 70- 80% of their populations, an additional 2.8 billion internet users would come online.
Devices serve as the gateway tool to the internet for the developing world, with 93% of all users now accessing the internet via mobile devices (phones or tablets)—an overwhelming majority of new internet users now ‘phone first’, leapfrogging the PCs of the developed world. Almost half a billion (429 million) mobile devices and connections were added in 2016. As more people in the emerging markets become connected, low-cost device manufacturers, component suppliers and chipmakers should be key beneficiaries.
- Boston Consulting Group (BCG) Perspectives.
- ITU World Telecommunications/ICT Indicators database.
When low- and middle-income countries gain access to the internet, great benefits are derived in such areas as education, employment and health, whether through public access venues or personal mobile devices. This is bullish for local internet service providers and local online content platforms, particularly within less saturated regions in Asia and Africa.
As internet-connected devices proliferate, the potential number of devices to draw upon is dramatically swelling. Gartner’s most recent estimate places the number of all connected things globally (smartphones, tablets, cameras, drones, embedded sensors, radar systems—everything) at 8.4 billion. The consumer segment is the largest user of connected things with 5.2 billion units in 2017, representing 62% of the overall number of applications in use. Additionally, businesses are on pace to employ 3.2 billion connected things by the end of this year. Gartner projects the global device total will exceed 20.4 billion by 2020 (Exhibit 1).
Put another way, the global population of connected things has already eclipsed the world’s human population. This trend is set to increase with the population growing at a 1% compound annual growth rate (CAGR) from 2016–2020, internet users at a 7% CAGR and, yet, devices and connections growing fastest at a 10% CAGR. Estimates suggest that the number of devices connected to networks will be more than two-and-a-half times the global population by 2020.
From Exabytes to Zettabytes
The size of the digital universe is operating at zettabyte level—running on more than a trillion gigabytes of traffic per year. In 1992, global Internet networks carried 100 gigabytes (GB) of traffic per day. Ten years later, in 2002, traffic amounted to 100 gigabytes per second (GBps). In 2016, this number accelerated 200-fold to 20,000 GBps, amounting to 1.2 zettabytes (ZB) per year.
A key component contributing to this mind-numbing rise in traffic pivots on robots. Bots of all kinds, both the good and the bad, are now responsible for 52% of web traffic, according to a report by the security firm Imperva. This means human traffic has been overtaken by automated programs—worker bees of the internet, assistants, data-extracting spiders; bots that perfectly mirror human behavior, impersonate, and in some cases, act maliciously online. Facebook’s helper bot “feed fetcher,” responsible for refreshing a profile’s feed, in and of itself accounts for 4.4% of all website traffic. Across all platforms, feed fetchers accounted for more than 12% of total web traffic last year—a reality of the rise of the behemoth platform economy.
The expanding global use of the internet will not only boost demand across many sectors but also accelerate the push to new technological frontiers. The diffusion of the internet has caused the powerful expansion of the global middle class and rising per capita incomes in the developing nations; the rising empowerment of women; soaring global educational attainment levels; and elongated life expectancies around the world. The internet- related consumption and expenditure, if measured as a sector, accounts for 5.3% of GDP across the G-20 countries, contributing $4.2 trillion in global output (Exhibit 2). In the U.S., for example, the internet’s contribution to 2016 GDP, producing both wealth and jobs, is bigger than sectors such as transportation or construction.
Multiple benefits such as job creation and employment growth will continue to prove fundamental in changing the ways in which consumers learn, work, save and socialize thus leading to a greater output and growth. The proliferation of the internet has helped reduce divergent living standards between rural and urban areas in many nations and has gone as far as helping to reduce global climate change.
Scary, but true, the world hasn’t even come close to harnessing the full potential of the internet. On a global basis, more effort and energy will be collectively allocated to fields like advanced 3D printing, robotics, virtual reality, geoengineering, bioprinting, biological computing, block chain and many other cutting-edge activities. Namely, in just two subsets of advancements, there is tremendous upside in virtual reality and augmented reality, with traffic set to increase 20-fold between 2016 and 2021 globally, a CAGR of 82 percent.3
In the end, the spread of the digital economy, while making life more convenient for consumers and businesses, has in many ways been a double-edge sword, disrupting the fundamentals of many sectors and destroying jobs in many cases. With digital sophistication such as advanced Artificial Intelligence, deep learning capabilities of neural networks perfectly mimicking the human brain, cars that drive themselves, or machinery and armory that wage their own wars, the global digital world can no longer police itself. No military, firm or country is readily equipped for the rising digital tide with borderless potential made conceivable through the proliferation of the internet. And while it’s taken nearly four decades of global innovation and digital expansion to reach the zettabyte, it won’t be long until trailing the yottabyte.
Even with the continued outperformance of the U.S. tech sector, we remain overweight technology. Growth in global internet usage remains robust; the Internet of Things is exploding; and many U.S. firms have first-mover advantages that are hard to dislodge or overcome. The global web is truly one of the world’s last and largest frontiers. Today, it’s the modern version of the wild, wild West—or Web.
3 Cisco, Cisco Visual Networking Index: 2016-2021, June 7, 2017
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