Internet Trends 2019 Mary Meeker Report
Shows China’s short-form video and super apps are more evolved.
Meeker, once dubbed by Barron’s as Queen of the Net, releases an annual report that I’ve been enjoying for at least the last three or four years. She highlights digital trends and has tons of useful infographics.
The funny thing is it’s no longer about Western apps anymore. Chinese apps are the ones that are innovating and showing the future of what young people are into.
So who is Mary Meeker? Well, she is the inventor of The Internet Trends Report, which is the ultimately fun slide deck. She’s the Bond Capital founder and a former Kleiner Perkins general partner.
Mary Meeker made her presentation onstage at Vox/Recode’s Code Conference in Scottsdale, Ariz. on Tuesday, June 11th, 2019. Kind of sad to see Kara Swisher on a pin though, no offense to CNBC.
This is a presentation meant to be read, not presented, but I find the digital trends are worthy of our attention.
Meeker first crafted a report of this kind, which underlines the most important statistics and technology trends on the internet, in 1995. So she’s been doing this for a while.
Mary Meeker is Awesome
The “Queen of the Internet” made references to some of our favorite digital companies like Canva, Slack, Stripe, Spotify, Dropbox, Discord, Twitch, Zoom, and Stitch Fix. Now I’m not sure the detail she goes into for Chinese firms and apps but from 2019 onwards, that’s pretty much the story.
Full disclosure, what follows are more my own ideas as a futurist on digital trends, though I do link to her slides throughout. (You don’t have to agree with me).
We live in an era of:
TikTok > Instagram
ByteDance > Facebook
YouTube < All other long-form video
With mobile gaming, E-commerce and influencer marketing are scaling better in China than in the West.
There’s something to be said about Mary Meeker coming into her own though. Since releasing the 2018 internet trends report and leaving Kleiner Perkins, she went on to raise more than $1 billion (TechCrunch) for her debut growth fund, Bond ($1.25 Billion, to be exact).
This year the slide deck is 333 slides.
The Internet at a Crossroads
I sort of believe and agree with Ev Williams here that the Western internet has amplified a lot of bad aspects of humanity and, while Williams seems to think America can create a better internet, I don’t see it that way. I see China out innovating America in creating a better internet.
America has hacked the 3.8 billion internet users with Advertising at the center. That’s just dysfunctional, letting loose algorithms that have corrupted the internet. China has so much more competition in apps that they are able to find much better digital products and consumer experiences. Super apps like WeChat connect thousands of businesses and actual utilities for consumers. What does Facebook do? Just Chat, fluff and Ads (for the most part).
With greater global penetration of this beast called the internet, global digital growth is beginning to slow.
Social media amplification without regulation by America has resulted in a global internet that’s biased, amplifies the wrong things and is basically unable to regulate itself, leading to a toxic internet, I’d argue.
Just try going on Twitter, Facebook or YouTube and see where it leads you. I get trolled (Reddit style, but by women too) even on Medium, supposedly to be part of the solution, rather than just another part of the problem.
Mary Meeker’s report shows (slide 10) that most of internet growth is occurring in Asia, namely the Asia-Pacific region.
China, India and Indonesia will soon have by far the most internet users. America currently sits 3rd, but not for long. Places like Brazil, Mexico and the Philippines are on the rise by internet users.
So America’s impact by actual users on the global internet and the bifurcation of the internet is on a steep decline as the new internet users from the developing world start to emerge. This sets up a Tech cold war scenario where China’s internet will likely gain marketshare — as we are seeing with ByteDance’s top apps.
An increasing number of market cap Internet firm leaders are from China (slide 12). FAANG companies should however maintain dominance at least until 2025, my insight. But essentially China is building a tech dynasty of companies that will challenge American ones in the years ahead.
Advertising on the Internet is the American Dream
If America champions an advertising-first approach to the internet, China does much better with mobile technologies, E-Commerce and services to humans that are more useful to the average consumer and not just to private firms and a monopoly-like influence of Tech companies.
America’s influence and dominance of mobile advertising is striking. But it won’t likely last forever. Keeping the internet in an advertising prism means a surveillance capitalism manifesting is inevitable. The is because Advertising needs the data on consumers and their preferences for personalization to take place.
While China’s motivations for surveillance are different, their net of data harvesting is becoming more sophisticated with CCTV and facial recognition interoperability with social credit mechanisms.
As we can see on slide 25, there’s some sense Amazon’s growth in advertising could one day challenge the America duopoly of Ads, Facebook and Google. This is even truer if the DOJ goes after them with probes that seem more likely than ever before for their unfair advantage with anti-trust violations.
This would give upstarts like Twitter, Amazon, Snapchat and Pinterest some hope that they too could scale.
The trend of free conversion to paid subscribers as a model on digital platforms is also seeing maturation with Shopify, Zoom, Slack, among others. (Slide 33).
Smart Phone Addiction is Rising
The Average American spends 3.6 hours on digital media a day — just on mobile. In total it’s now over 6 hours (Slide 41). For Millennials and GenZ this is likely much higher.
What’s striking to me is the time spent on digital media has increased tremendously even in the last five years. So we’re not just getting more into apps, we’re getting more addicted to our phones.
- We spend one hour more each day on mobile devices than we did in 2014, just five years ago.
- Since 2014, Podcast listening has also been increasing considerably (Slide 50).
- Alipay in China is showing the kind of growth that shows how dominant China will become in E-commerce and Payments and retail overall in the Asia Pacific region. (Slide 65).
- Social commerce (Slide 79) on Instagram is also changing, due to the rapid change in how consumers interact with Instagram. The sharing platform is becoming more of a shopping platform now, in 2019.
- Mary Meeker’s report states Instagram's constant feedback systems creates better communicators. She obviously doesn’t get what micro video is really doing to how young people communicate.
With young people mobile, interactive and streaming of gaming is really taking off. Tech companies tethered to Gaming like Tencent or Microsoft therefore can do pretty well, in addition to game streaming platforms like Twitch (owned by Amazon).
The way the internet and data capture is occurring will mature greatly in the 2020s.
In the 2030s AI’s increase overtakes human adaptability exponentially; by the 2040s the world is even more immersed in data flow. Clearly human beings will need to adapt, a lot.
Digital Natives or Digital Zombies
As of 2019, about 40% of young people are online pretty much constantly.
These aren’t just digital natives, these are digital addicts who are having less sex, interacting less with each other face to face and will in some sense be more isolated because of it.
You can therefore make a case that social media has actually made us less social. You’ve hardwired the brains of young people to be more like drones (or bots, the terminology doesn’t matter) than human beings.
These young people have higher engaged drives for self-expression and are trading sleep literally to do so. A lack of sleep can easily lead to mental health issues. Infect the zombies with your products, hijack their dopamine reward systems and see what happens (Engineers at Instagram).
The push-back? Social media usage is actually decelerating. People don’t just want to be digital zombies, really. Sometimes though with apps, they just cannot help themselves. They’ve been hacked. Silicon Valley is laughing all the way to the bank.
With misinformation and problematic content, Facebook is actually doing more than YouTube to try to fix their problems. This means Google isn’t being responsible to the algorithm’s issues on YouTube. And as a result brands are leaving them for Amazon. Amazon vs. Google in the future of advertising looks interesting.
- Nearly half a billion people were impacted by cybersecurity breaches of sensitive data in 2018.
- In the U.S. Capitalism is less trusted, with moral decline and financial and political corruption concerning its citizens in 2019.
- On-demand and gig economy workers are increasing in the U.S., showing the part-time economy could deteriorate the middle class further, thanks to companies like Uber. This is a scary trend to me. Even if some of these were just in between jobs or unemployed. Mostly these “gigs” just are not valid career paths.
Zoom by Day, Fornite by Night
- Remote workers, freelancers and self-employed people see a lot of benefits in the lifestyle. Being free, increased flexibility (work-life balance) and having more time for family and travel are often cited. The remote work perks are real.
- We all know that student loans are a crisis for many young professionals and could destabilize consumerism if it goes unchecked. This means more young Americans are churning from the middle class than are rising above it in 2019.
- Immigrant founders and 1st and 2nd gen founders still are a powerful driver for innovation in America, historically speaking. Considering the present climate of America, it’s only natural to suppose these factors that foster innovation are in a decline. Coupled with all the monopolies, the internet boom is officially over for startups in America.
- The U.S. is also more or less failing at healthcare for the average consumer or citizen, and ballooning health care costs with aging populations will be a pressing concern in the 2020s.
- BigTech is also going after Healthcare, because they want your data. So they will attack it in the FAANG-pronged way which, they tell you, will enhance your well-being. So Tech companies getting into healthcare, banking and the more intimate sphere of the smart home is well under way and will only scale naturally in the 2020s.
China’s Macro Trends
China’s macro trends are really interesting to me, personally:
- China’s share of world exports is increasing.
- China’s short-form video is leading the world into a new era. China’s mobile natives are more advanced basically than your American Instagram or Snapchat users.
- If YouTube is ubiquitous to long-form video, apps like TikTok are becoming the same for short micro videos, entertaining memes and so forth. Even as Instagram “stories” takes over from legacy (thumb scrolling) feeds.
- China, in my opinion, is creating better apps than America, which is having trouble keeping its users.
- China’s explosion of mobile short-form video (mSFV) means their internet will take more market share in the 2020s.
China Leads in Digital Innovation and Apps
- The most valuable startup in the world, ByteDance (also creator of Toutiao and several other incredible apps), is leading the charge in how this works.
- China’s E-commerce industry has a 3rd horseman in Pinduoduo, which is making rapid progress, with Alibaba and JD.com already well established.
- Meituan and other super apps employing “Mini-programs” display the kind of innovation that’s occurring in China that America cannot replicate.
- China in the area of E-commerce at the intersection of live streaming and influencer marketing are years ahead of the West, which will never actually even keep up in this domain.
- Alibaba’s “new retail” model dwarfs anything Amazon is doing in brick-and-mortar retail and AI. (AmazonGo non-withstanding is slow to roll out).
- China is also poised to dominate EdTech and BioTech globally eventually, likely in the 2040s. That will be a time when China’s dominance of the internet is not just sure, it’s a certainty.
The Mary Meeker report was all over the place this year, not always talking about things you’d consider digital trends. Still it was a useful walk-through of some global trends we are noticing in how the internet is maturing and how the world is interconnected in new ways.
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