Decentralization

The technologies and platforms people use every day are interoperable and based on open standards. And people expect and demand systems that allow seamless flow and transfer of information and content.

For this issue we look at the concentration of power of companies in important sectors of the Internet, we focus on acquisition and IPO statistics in the tech industry (globally and/or US-specific), and we evaluate how different products handle data portability.

Limited by the scope of this issue we selected 6 relevant market segments/ products relating to the Internet: E-Commerce; Social Networks; Content Management Systems; Search Engines (Desktop & Mobile); Digital Display Ads; and Browsers (Desktop & Mobile). A further selection of the most relevant companies/products in these fields was made based on their marketshare.

Main findings:

  • Looking at the market share of various sectors on the Internet (publishing, social networks, search, and more), we can see that many of them have clear market leaders. 

  • In some cases, such as social networks, this can make switching to a competitor very difficult for social reasons (e.g. getting friends to join an alternative platform is hard)

  • Data portability differs greatly per sector. For example, switching browsers is very easy, switching content management systems is also possible with some effort, but switching social networks is being made very hard.



Datasets and notes:

Market Share Sources:

Data portability sources:

  • The support pages of all products mentioned

Acquisitions v IPOs sources:

Volume of US IPOs by sector

Page Title
Kind
Number of IPOs
Year
Internet - 1990Internet11990
Internet - 1991Internet01991
Internet - 1992Internet41992
Internet - 1993Internet31993
Internet - 1994Internet21994
Internet - 1995Internet101995
Internet - 1996Internet181996
Internet - 1997Internet151997
Internet - 1998Internet401998
Internet - 1999Internet2721999
Internet - 2000Internet1482000
Internet - 2001Internet62001
Internet - 2002Internet42002
Internet - 2003Internet52003
Internet - 2004Internet232004
Internet - 2005Internet132005
Internet - 2006Internet172006
Internet - 2007Internet212007
Internet - 2008Internet12008
Internet - 2009Internet62009
Internet - 2010Internet142010
Internet - 2011Internet162011
Internet - 2012Internet192012
Internet - 2013Internet192013
Other - 1980Other491980
Other - 1981Other1201981
Other - 1982Other351982
Other - 1983Other2781983
Other - 1984Other1221984
Other - 1985Other1501985
Other - 1986Other3161986
Other - 1987Other2271987
Other - 1988Other741988
Other - 1989Other781989
Other - 1990Other791990
Other - 1991Other2161991
Other - 1992Other2991992
Other - 1993Other3831993
Other - 1994Other2861994
Other - 1995Other2571995
Other - 1996Other4021996
Other - 1997Other3011997
Other - 1998Other1681998
Other - 1999Other1061999
Other - 2000Other1202000
Other - 2001Other562001
Other - 2002Other462002
Other - 2003Other452003
Other - 2004Other1122004
Other - 2005Other1142005
Other - 2006Other1092006
Other - 2007Other842007
Other - 2008Other152008
Other - 2009Other272009
Other - 2010Other582010
Other - 2011Other452011
Other - 2012Other542012
Other - 2013Other1142013
Other - 2014Other1542014
Other - 2015Other822015
Tech - 1980Tech221980
Tech - 1981Tech721981
Tech - 1982Tech421982
Tech - 1983Tech1731983
Tech - 1984Tech501984
Tech - 1985Tech371985
Tech - 1986Tech771986
Tech - 1987Tech581987
Tech - 1988Tech281988
Tech - 1989Tech351989
Tech - 1990Tech311990
Tech - 1991Tech701991
Tech - 1992Tech1131992
Tech - 1993Tech1261993
Tech - 1994Tech1171994
Tech - 1995Tech2041995
Tech - 1996Tech2741996
Tech - 1997Tech1731997
Tech - 1998Tech1131998
Tech - 1999Tech3711999
Tech - 2000Tech2612000
Tech - 2001Tech232001
Tech - 2002Tech202002
Tech - 2003Tech182003
Tech - 2004Tech612004
Tech - 2005Tech452005
Tech - 2006Tech482006
Tech - 2007Tech752007
Tech - 2008Tech62008
Tech - 2009Tech142009
Tech - 2010Tech332010
Tech - 2011Tech362011
Tech - 2012Tech392012
Tech - 2013Tech432013
Tech - 2014Tech532014
Tech - 2015Tech352015


US IPO Timeline

When the dot-com bubble burst, around the turn of the century, at least one thing changed decisively in the tech industry: the taste for IPOs has soured. Between the 1980s and the peak in 1999, an average of 116 annual IPOs were performed. Between 2000 and last year there were 36 tech IPOs per year on average -- barely a quarter of the average before the burst. While the 2007 financial crisis brought with it another strong dip, the number of tech and Internet IPOs has been slowly recovering, but they fall far behind the number of IPOs by non-tech companies.

Global Tech and Internet IPOs

The most recent view on global IPOs shows a similar trend: relatively low numbers but an unsure uptick in the last few years. Global Internet IPOs rose from 26 deals in 2011 to 40 deals in 2015, a 54% increase.

Proceeds of global IPOs (in US$bn)

When we look at the proceeds (the cash raised) from the Internet IPOs in the last 5 years, we see a steeper increase. A low year with less than US$5 billion in Internet IPO proceeds, 2013 was followed up with a seven-fold increase the next year, when over US$33 billion was collected.

Market shares of different sectors

Most 'sectors' on the internet (social networks, digital ads, content management systems) show a clear market leader. This can be problematic if people can't easily transfer their data between these products, or if social pressure pushes them to the market leader.

Market share of Social Networks

Statista, Experian, (US, 2016)

These numbers are in visits, so a lot of people probably visit more than one of these social networks, but the dominance of Youtube and Facebook is clear.

Market share of Display Ads (Desktop & Mobile)

Digital display ads: Emarketer (Desktop & Mobile, US, 2016)

We can see Google and Facebook making up 30% of the display ads business in the US. This field sees quite a lot of competition: the top 7 companies only make up 55% of the whole market.

Market share of Content Management Systems

Of all websites with a CMS, almost 6 out of 10 runs on Wordpress. Joomla comes in a distant second. The CMS market is dominated by Wordpress, with a lot of smaller other players.

Market share of E-retailers

Statista, based on Internet Retailer (US, 2015 data)

Amazon is the largest e-retailer in terms of sales in the US by a very wide margin.

Market share of Search Engines (Desktop)

Search Engine Land (2015, US)

As a primary search engine for people in the US, Google has a market share dominance in the US by the largest margin of all sectors we've looked into.

Market share of Search Engines (Mobile)

Search Engine Land (2015, US)

On mobile Google is even a clearer winner. Google is the default search engine on all Android and iOS devices, which might be an explanation for this.

Market share of Desktop Browsers

Source: Statcounter (Global, 2016)

As we can see, Chrome takes a strong lead in browser usage, with over half of all users worldwide using either Chrome on the desktop or on their smartphone.

Market share of Mobile Browsers

Source: Statcounter (Global, 2016)

Mobile browser show another picture: Chrome only takes a small lead here, with Safari and UC browser coming right behind it.

Data Portability

For some of the sectors of the last section, data portability can ensure that people can move freely between the products. Think about the ability to transfer your bookmarks and settings between browsers, or the ability to change blogs without loosing too much posts. 

Since e-retailing and display ad products don't benefit from data portability, we didn't include these sectors in this section.

Market share of Desktop Browsers

Source: Statcounter (Global, 2016)



Desktop Browsers: 
Excellent portability

Almost all browser makers ensure that people can move their bookmarks freely between browsers of competitors. Except for Microsoft IE, they also all offer a 'sync' option, which lets you sync your history and settings (but only between instances of the same kind of browser).


Market share of Mobile Browsers

Source: Statcounter (Global, 2016)



Mobile Browsers: Sync only

Mobile browsers don't offer native export and import of bookmarks like their desktop counterparts. They do however all support syncing of settings (and sometimes open tabs) between the mobile and desktop version of the browser.


Market share of Content Management Systems



CMSes: switching is possible


Almost all big CMS systems offer a way to export and import blogposts, so switching is always possible. However, it's not always possible to migrate the URL structure, and usually a lot of manual adjustments need to be made. There's a lot of room for improvement, but the basics are there.

Market share of Search Engines (Desktop)

Comscore Search rankings (US, 2015)

Search: Only Google provides downloadable user behaviour


Data portability between search engines is not offered anywhere yet. Google is the only one who lets users export their search history, but offers no kind of import for search history.

Data portability features are the same on Mobile and Desktop


Market share of Search Engines (Mobile)

Comscore Search rankings (US, 2015)

Market share of Social Networks

Statista, Experian, (US, 2016)



More data is being made available, but no real portability yet


Facebook, Youtube and Twitter all let users download their posted content and some user behaviour (like favourites or likes). This is more than users could do a few years ago, but without the ability to also import this data, or to reliably crosspost between social networks without restrictions, there is no real data portability yet.

Acquisitions in the US Tech industry


With quarter by quarter data, collected by PriceWaterhouseCooper (PWC), we can have a look at recent trends in the US tech industry's appetite for acquisitions. In short, there is a big and increasing appetite for acquisitions in the tech industry as a whole: the number of deals each quarter has been steadily rising since early 2013, almost doubling in the past 3 years. The value of all of these deals per quarter is equally showing sharp increases. Most big value acquisitions tend to get closed in the last quarter of the year so just comparing the 4th quarters of the past 3 years shows the most relevant trend: from $US50 billion in the 2013 last quarter to $US75 billion the next two years last quarters.

Volume of closed US acquisition deals

Value of closed US acquisition deals

There are sharp differences within the various tech sectors however. For instance, while the hardware sector had a big peak late 2013 but a steady decline in acquisition value since, the IT services and Semiconductor sectors both saw highly valuable acquisition deals in late 2015.


Closed deals per sector


Zooming in on these sectors shows the following annual trends:

1) the Hardware sector's decline is mostly expressed in the value of deals, not so much in the number of deals each year. 

2) The IT services and Semiconductor sectors both show similar trends in the value of acquisitions deals (both saw the money involved in closed deals quadruple between 2013 and 2015). For the Semiconductor sector however this huge bump in money involved originated from the same number of deals as usual; in the IT services sector, the increase in the volume of deals actually closely resembles the increase in the value of deals

3) Both the Internet and the Software sector had a very active year in 2014, with acquisitions numbering 77 and 90 respectively, and the associated value of these deals hovering around US$45 and US$50 billion respectively. 2015 has been a slower year, in particular for the Internet sector, where both the number and the value of new acquisitions more than halved relative to the year before. 

Hardware sector declining


IT services & Semiconductor sectors show big increase


Internet & Software sector up and down


Hardware sector: volume of closed deals


IT services & Semiconductor sector: volume of closed deals


Internet & Software sector: volume of closed deals


Volume of acquisitions by a selection of tech giants

Crunchbase acquisition information.

Zooming in: Internet Giants' Acquisitions


Taking a longer view back, for a selection of some the biggest tech companies, shows a similar taste for and rise in acquiring other companies in the past decade. The timeline since 2000 shows a clear crescent up until 2007, with particularly Google, Microsoft and Yahoo splurging on acquiring new companies. After a financial crisis dip in 2008, when only a handful of new acquisitions was made by any of the tech giants, new deals ballooned again. The most recent trend, between 2014 and 2016, however shows another drop, at least in the number of new deals.

An important caveat in the data on these individual companies' acquisitions that it only shows the number of deals, not the value associated with these deals. While Microsoft 'only' acquired 8 companies in 2016 (as opposed to 20 the year before) one of those 2016 acquisitions was of Linkedin and  with a value of over US$26 billion it was one of the biggest acquisitions in history.