Gabriel E. Levy B. y Sergio A. Urquijo Morales*/Colombia, March 2016.
Talking about Internet concentration (the concentration of services in the hands of a few suppliers) is easily confused with talking about the concentration of specific web services. That’s why it’s easy to imagine that the utopia of a broadly democratic internet is still thriving thanks to the millions of sites and blogs that are continuously being created by anonymous people.
The actual situation is much more complex, as the Internet does not work like an industry with a single line of action; rather it revolves around many indispensable phases and sectors. Content generation and publication is perhaps the most superficial, in the sense that it can be viewed more easily. However, the technological, logistical, commercial and infrastructure resources that make Internet possible extend across a variety of levels.
It is at these levels that we can observe how concentration powerfully affects the Internet and is almost a characteristic of telecommunications itself. In this field, huge investments are required to build the necessary infrastructure. Key aspects of the development of this sector include software development, independent advances and small business, which are usually captured by large conglomerates.
To better understand the processes and flows of the global network of computers, Kearney Analysis developed a value chain that groups the universe of services in five broad categories: content, online services, technologies that allow services, connectivity, and user interfaces. Although this categorization model allows for the efficient view of flows in the value chain in terms of “concentration of ownership,” “concentration of traffic” or the “concentration of users,” this model is not functional.
Given the above, we propose an alternative model that is not part of the value streams, but rather groups together services on the basis of concentration, whether of property, users or Internet traffic. Our model uses seven layers or categories. There are six main layers that can be evaluated, including a 0.0 layer corresponding to hosting and domains.
Layer 00 – Physical suppliers of Domain and Hosting
This layer consists of technological, conceptual and physical structures where the information for most websites is hosted, and where domain registration is concentrated. As such it represents the web, which is the structure for the location and interconnection of the Internet. The sheer volume and information that are housed and the constant need to efficiently update it generates technological and commercial requirements that are difficult to meet. Therefore, few companies are competitive enough to meet these requirements in the global environment.
The six major companies in this layer, which account for 49% of the entire global operation are as follows:
• Wilwest Domains – GoDaddy: This is the main provider of domain names in the world, with a market share of 35.8%, it is part of the WildWest Domains GoDaddy Group, with 25,373,796 domains.
• Enom: has a market share of 4.8069%, and hosts 3,405,217 domains.
• Network Solutions: has a market share of 4.01 percent, hosting 2,874,123 domains.
• 1 & 1: has a market share of 3.7%.
• Yahoo: has a market share of 2.9%, and hosts 2,082,750 domains.
Layer 01 – Service providers and content
Information generation is different from hosting, particularly in terms of content and services. We should also differentiate the hosting of such content from its actual generation, although the companies responsible for this layer always generate a significant percentage of related content, such as interfaces and metadata.
This is one of the most visible layers of the Internet, and in some ways the services provided in it are the most characteristic of the network: content search, queries, storage, sending, transfer and sharing of information and data.
The big brands of this layer have captured the great majority of users by geographic regions and are concentrated in clusters and business conglomerates:
• Alphabet: Google, YouTube, Gmail, Maps, Earth, Drive, Wase, Translator:
o This corporation demonstrates high levels of concentration and is one of the most important leaders in providing many of the network’s highest consumption services, as are: search engines, geo-referencing by maps, social network traffic, video, and translation services, among others.
• Facebook: social network Facebook, WhatsApp, Instagram.
o This corporation specializes in the social networks segment and is the leading brand in this sector.
• Microsoft: Skype, Bing, MSN, Hotmail.
o This corporation is only identified as a leader in the segment of voice communications and teleconferencing through Skype; in the other segments it has an important share of the respective markets.
Other players who are becoming increasingly more important in this layer are responsible for both commercial operations as well as to cover communication and interaction needs that are absolutely new, and have been developed by and for the Internet. This is the case of social media and instant messaging.
• E-commerce: eBay: Paypal – Alibaba – Amazon
• Audio: Spoty, Pandora, iTunes
• VOD: Netflix, Holu, Amazon, Claro
• Social Media: Twitter, Fosquare, Hi5, Snapchat, LastFM, LinkedIn, Pinterst
• Messaging: Telegram, Snapchat.
• Engines: Baidu, Yahoo
• Other: IMDB, WordPress, Ask, PornHub, Porntube.
Layer 02 – Platform providers
One of the most subtle layers, as many people think it is not related to internet but with computing in general, as are programming services and solutions. Even so, these services are specific and developed for the Internet at a level that no other IT development has operated, as they must ensure high levels of stability.
These technology platforms represent the means, interface and technological resource to access the web, thus they are often confused with the services of other layers, although they in fact represent a very specific area linked to access possibilities.
• Apple: IOS, iTunes, Apple Store, Safari
• Microsoft: Windows, Windows Mobile
• Alphabet: Android, Chrome
This layer represents a particular risk of high concentration, as the platforms operate as private and sometimes exclusive ecosystems, controlling access to the universe of services. Apple is a particularly notorious case, exercising through its iTunes store extensive control over content providers, the applications they upload to their platforms, the level of access for source code developers, distribution mechanisms and especially the monopoly on monetization and billing services.
This is also the case with Google Play, which forces both users and developers to exclusively use this platform for marketing products and services.
Additionally, this layer triggers other concentration levels, in terms of software and hardware; for example, people who buy an iPhone are obliged to use the hardware, IOS software and the iTunes platform, with no option to switch to other services.
Layer 03 – Creators and Content Producers
A third layer is constituted by a much more heterogeneous group, made up not only of companies but also individuals, organizations and public bodies. Content creators and producers generate the material that makes the Internet a cyberspace, abundant in all kinds of experiences, materials and resources, rather than just a space for just services.
In this layer we find one of the most revolutionary phenomena in the whole Internet: the emergence of global digital prosumption, that is to say, consumers of web content who in turn produce and publish their own content, often without any profit motive or promotional intention, although they do sometimes set up profitable financial strategies such as crowdfunding.
This third layer is the one that allows the Internet to be perceived as an area in which services and content are not concentrated, as there are millions of people creating content such as bloggers and youtubers. In this area a conflict can be observed between traditional content producers (companies such as Universal, BBC, DW, Sony) and prosumers. This competition often find increasingly common points of articulation, such as that obtained by the big media companies when they distribute and promote on their web platforms content generated by non-professionals and prosumers: news content created by “community reporters,” all kinds of amateur videos, including comedy, homemade pornography, music and cover versions of songs, etc.
In this layer, “traditional” industries or specialized companies generate 35% of the content, while 65% is produced by bloggers and other prosumers.
The aforementioned advantage that many companies gain from prosumption is evident in the case of YouTube, where 95% of content is created by users themselves, and the company shares some of the profits generated from advertising sales or the OTT Youtube Network with the same prosumers.
Layer 04 – CDN Intermediaries
This layer consists of data centers that locally store the bulk of international content on focal servers, so making access and data traffic accessible. These intermediaries generate a kind of mirror of certain web content, thus data moves between a secondary node and the end user. This prevents the information from traveling along the most congested routes from the central servers of the companies to the user.
Consequently, this layer is of increasing importance for the efficiency of the network, given the low profile of these companies (which leads to deficient regulation and control in almost every country in the world). This represents a dangerous form of concentration, which affects all content and data, generated both by companies and by prosumers.
Some of the providers of this service are also the owners of the most basic global internet infrastructure: underwater fiber optic cables and large interconnecting nodes. The transnational and surreptitious nature of this infrastructure makes it even more complex to monitor, track and regulate.
The large corporations that account for 90% of the traffic stored in this layer are as follows:
• Level 3
• Google Cache,
• China Cache
• Amazon Cloud.
Layer 05 – Connectivity Providers with a large international capacity
As part of the connectivity providers, but more in the area of commercial rather than infrastructure services, are the companies that provide international telecommunications services. Among these companies are the following:
• Deutsche Telekom
• News Corporation (SKY)
• C&W Networks,
• Telefónica (Movistar)
• America Movil (Telmex-Claro)
• Level 3
Many of these companies began operating in traditional telecommunications some decades ago. By the time the Internet arrived, they already had an infrastructure and a large market niche which was almost always transnational. This feature gave them a head start, which was combined with strong political ties, brand recognition by users, financial strength and diversity (as they are not dependent only on the Internet).
Other companies were created specifically for Internet, diversifying into other areas of telecommunications. Both circumstances generate a strong risk of concentration, as many of these companies run businesses that converged in many areas, but in turn are the most regulated as they are the most visible.
Layer 06 – Last Mile Providers – ISP
In some ways, this layer shares elements of continuity with the previous one, as it provides the same interconnection and data arrival services to the end user, only on a more precise and closer scale. These suppliers are those that allow users to receive Internet in their homes or offices: they are responsible for cabling avenues, streets, buildings, homes, and thus have the greatest commercial contact with the end users.
They are much more visible and may be subject to greater control by government agencies and the users themselves through competition and a varied choice.
We find in this layer a paradoxical form of concentration, as companies that should have more proximity and operate more locally end up being part of large concentrated multinationals which apply undifferentiated approaches and strategies in highly diverse territories.
These large companies, such as Telefonica (Movistar), Millicom (Tigo), Telmex (Claro), ATT (Direct TV), Telecom France (Personal), Comcast and TWC, have acquired many smaller companies, many of which still use brands recognized by users, and even identified as “national companies”, when in fact their assets and control boards are already concentrated in just a few hands; they respond more to transnational interests, and may even have an impact on issues of national sovereignty.
Finally, there are many companies that have interests in multiple layers, creating a phenomenon of greater concentration which is more complex to evaluate and diagnose. This is the case of Amazon, which is in the e-commerce business, but also in storage, and even content generation. A company like Alphabet has extended its interests across many layers, both to ensure its autonomy with respect to intermediate service providers, as well as to establish its own mark on the entire Internet. This could be witnessed when the same company that holds the power of Gmail and YouTube, also possesses Google Cache.
Other companies with a presence in multiple layers are Time Warner, Yahoo, America Movil, Telefonica, and News Corporation.
The mystery of the deep web
Finally, a provocative question: Is there concentration in the deep web? That is to say, could we also talk about concentration in the dark world of hackers? Everything indicates that it is possible, as there is evidence of large international networks of hackers.
It is also clear that many of the services and goods offered in such spaces, especially those that are illegal such as prostitution, weapons and drugs, are handled by the same international mafias that control these movements on the surface. Therefore, it would not be surprising that the networks and services that enable these activities in the Deep Web are also controlled in part by the same networks and organized crime.
*Gabriel E. Levy B. ICT Advisor and Consultant;
Sergio Andrés Urquijo, Academic and Scientific Disclosure Expert
Akamai. Global market figures Datacenter, 2012.
Loreto Corredoira, Alfonso. Paradoxes Internet. Editorial Complutense, 2001.
Baker, Edwin. Media Concentration and Democracy: Why Ownership Matters. Cambridge University Press, 2006.
Noam, Eli. Media Ownership and Concentration in America. Oxford University Press, 2009.
Digital Trends. The Latin American Internet market, 2014.
Webhostinggeeks.com. Annual report on Internet domain registration, 2014.
Karney Analysys: Internet value chain