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Internet giants, the big winners from the Covid-19 crisis

Internet giants, the big winners from the Covid-19 crisis

January 3, 2021 in Telecom

The coronavirus epidemic has affected revenues of all multinational companies, negatively or positively. During this pandemic, the internet giants (GAFAM) in particular have made themselves especially useful; their products and services have become essential in our daily lives. As a result, their turnover grew positively and they were among the biggest winners in this time of crisis. They thus saw their market capitalization and their turnover improving during the Covid19 pandemic, as shown in the tables below.

Box N°1: Over the top (OTT) services are a headack for telecom operators.

“OTT” is the acronym for Over-The-Top. There are new actors who provides voice, data and other services that we use through networks of our telecom operators and which are provided by other players who have no agreement of any kind whatsoever with those operators and who nevertheless use their infrastructures. This is a new type of telecommunications player, which uses the Internet to provide services to subscribers. They are therefore new players, who don’t have any license and don’t pay any royalties or termination fees to traditional operators, although they use telecom operators’ networks.

Example: Amazon recorded a revenue increase of over 30% from year to year in the first six months of 2020. The Electronic industry has also benefited from the crisis. Indeed, electronic companies benefit from the acceleration of digital transformation, with the development of certain services such as cloud computing and with the increase in demand for data centers, computer networks and telecoms networks such as 5G and FTTH (fiber to home). The turnover of the electronic sector increased by 6% during the first six months of the Covid-19 crisis.

Revenues growth of OTT players compared to the one of telecom operators

Box N°2: Internet giants engage heavily in submarine cables

In recent years, telecom operators are no longer the only ones to invest in submarine cables. The internet giants dream of controlling this invisible connectivity, made up of submarine cables. Orders of the Internet giants currently represent 40% of total orders for these cables, against barely 10% in 2013. Google has already invested in Faster, a 12,000 km cable that connects the west coast of the United States to Japan. Among risks raised by the control of the internet giants over these global arteries, is to observ them tracing the routing of intercontinental communications depending on the location of their Datacenters. In 2018, the 6,600 km fiber optic submarine cable, called “Marea”, held by Microsoft and Facebook came into service, connecting Virginia Beach in the United States to Bilbao in Spain, with a power of 160 terabits (10 to the power 12 bits per second). These internet giants are also making two submarine cables around Africa, namely the Africa2 submarine cable where Facebook is a major shareholder, and Google’s submarine cable. These two cables will be operational in 2022. Therefore, we understand better the concerns of operators which would be probably amplified by the arrival of Google, Facebook, and even Microsoft, in the underwater cabling activities.

Technological development and connectivity are the two main factors which enabled the emergence of internet giants such as GAFA. As for OTTs, consumers all over the world cannot do without their services today. But the emergence of these giants has had significant impacts on the economies of countries and on telecom operators in particular. The international organizations concerned, as well as telecoms regulators, at the global level, are worried by this progress and are called upon to establish new rules, in order to better protect the interests of all the actors operating in the telecoms’ value chain. Thus, while faced with the expansion of GAFA digital platforms, the European Union is discussing two digital policies to regulate platforms like Google, Amazon, Facebook and Apple namely The Digital Services Act (DSA) and The Digital Market Act (DMA).

These two policies aim to impose obligations, particularly economic ones, on the giants of the net. The Digital Services Act (DSA) aims to provide accountability for the largest platforms, which must have the means to regulate content and cooperate with the authorities concerned. As for the regulation on digital markets (“Digital Markets Act” or DMA), it imposes specific constraints on GAFAM, which appear to distort free competition. Through these two acts, Google is probably the most concerned because it captures alone more than 90% of Internet searches. Furthermore, its Android operating system equips more than 75% of smartphones in the world. Moreover, in addition to Facebook, leader in social networks, Brussels is also targeting Apple for its iOS system, a must-have store for applications on smartphones. The DMA foresees the possibility for the European Commission to review a case concerning GAFA before one or many of those companies lodge a complaint. Of course, the GAFA are opposed to these new regulations which they believe could restrict the innovation and allow Chinese platforms to take over! According to the newspaper Le Monde on December 8^th, and in the name of competition, the Commission intends to counteract the dominant position acquired by the digital giants in their sector. The GAFA are preparing to oppose these regulations by emphasizing on their contribution to technological innovation and their strategic weight in the face of Chinese expansionism.

By Alan Smith, Telecom and ITC consultant

In the metaverse world, designed using several technologies, each user will have their own avatar, a kind of digital "self", that is to say, an imaginary character they will choose to represent them in this virtual place. Let us recall in passing that the word "metaverse" is made up of "meta" which means transcendent and "vers" which implies "to turn" that has produced several words such as universe, conversation and many more... The metaverse or web 3.0 revolution comes down to the fact that we will not be content, as usual, to look at the screen of our computers, but we will also be completely immersed in the Internet via headsets. Even if the real metaverse networks are, for the moment, at the development stage, several sectors are already rushing to invest in them because, they believe, the metaverse constitutes a new Eldorado to conquer. Thus, brands are already there, such as the “Carrefour” chain, which recently organized virtual job interviews via the Sandbox platform. All the major American firms in the ICT industry crave these new metaverse markets; the GAFAMs (Google, Apple, Facebook, Amazon, Microsoft) as well as their Chinese counterparts, the BATXs (Baidu, Alibaba, Tencent, Xiaomi) are working hard to conquer a market that is barely emerging. Each giant, American or Chinese, wants to grab a good share of this great and very promising business, since the Bloomberg Intelligence forecasts, that this brand-new activity will attain a turnover of over 800 billion dollars by 2024. For metaverse to function properly at the global level, it is necessary to implement a standardization of the various processes. The metaverse will also require powerful computer processing and sophisticated electronic hardware. Intel, for example, estimates that metaverse requires a 1000-fold increase in the computing power of current computers. Is it already in quantum computing? Metaverse will have, among other advantages, the possibility of offering distance training of such quality that it will be difficult to distinguish the virtual from face-to-face. On the other hand, because of their helmets, metaverse users will have to master the geometric space where they operate. This will be the great challenge for the "metaversers" not to increase the number of accidents as the statistics are beginning to point to serious and real risks. Without neglecting some psychological aspects of this new revolution, such as attachment to one's digital "self" and preferring the virtual world to the detriment of reality and living in society. Several studies have already raised the possibility of users becoming irrationally attached to their avatars, as what it happened to a journalist from the British Times, who spent several hours on a metaverse platform, thus, concluded that the metaverse seems to encourage anti-social behavior. The other drawback, which is not negligible and which will be the subject of Lte magazine next publication, is the environmental impact of the metaverse. In short, metaverse technology seems to be well engaged on the right path, unless the supply of the electronic elements necessary for the metaverse networks is also, being impacted by the current crisis in the global supply chain of electronic components. This file will therefore be simple and complete, starting with this first article which deals with the metaverse in seven points and which will help to better understand everything related to this new technology, and will also propose some expected applications of the metaverse. Furthermore, the legal aspect will be presented as a necessity for the regulation of the metaverse world, and finally, this file will be closed by an interview carried out with Guillaume, an expert in the field of metaverse at Digitevent in France. In the free forum, Ata-ilah Khaouja will review the burning energy news around "Textual sobriety, energetic intoxication". In the telecom section, we will offer you an exceptionally rich article on the history of telecoms, which will retrace, more precisely, the emergence of Moroccan telecoms within the medina of Rabat. And as always, other relevant reading awaits you in the other sections, notably in “events” and “media library”. Ahmed Khaouja ITU expert and director Lte magazine.

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