# Internet Trends - Mary Meeker

> INTERACTIVE KEYNOTE | Speaker: Mary Meeker

- Interactive version: https://by.glocalpartners.com/e/internet-trends-mary-meeker-5d0a4f26c0d45
- Format: PDF document, 334 pages
- Published by: [Glocal Partners](https://by.glocalpartners.com/)
- Last updated: 2022-10-02
- More from this site: https://by.glocalpartners.com/llms.txt

## Page 1

Internet Trends
201
Mary Meeker
June 11 @ Code 2019

## Page 2

Internet Trends 2019
Users 1 E-Commerce + Advertising 2
7 pages 19 pages
Usage 3 Freemium Business Models 4
Growth
46 pages 18 pages
Data 5 Usage 6 Work 7 Education 8
Growth Concerns
31 pages 44 pages 18 pages 15 pages
Immigration + 9 Healthcare 10 China 11
USA Inc. (Provided by Hillhouse
Capital)
6 pages 23 pages 35 pages

## Page 3

Thanks
Bond Partners
Michael Brogan & Ansel Parikh helped steer ideas & did a lot of heavy lifting. Noah Knauf,
Collin Ebert, Jesse Ellingworth, Everett Randle, Nancy Xiao, Daegwon Chae, Paul Vronsky &
Juliet de Baubigny also dug in & were more than on call with help.
Hillhouse Capital
Liang Wu & colleagues’ contribution of the China section provides an overview of the world’s
largest market of Internet users.
Participants in Evolution of Internet Connectivity
From creators to consumers who keep us on our toes 24x7 & the people who directly help us
prepare the report. And, Kara & team, thanks for continuing to do what you do so well.
Internet Trends 3
2019

## Page 4

Context…
We use data to tell stories of business-related trends we focus on. We hope others take the ideas, build
on them & make them better.
At 3.8B, the number of Internet users comprises more than half the world’s population. When markets
reach mainstream, new growth is harder to find as evinced by declining new smartphone shipments in
2018. While E-Commerce continues to gain share vs. physical retail, growth rates are slowing. While
Internet advertising growth is solid & innovation is healthy, there are areas where customer acquisition
costs may be rising to unsustainable levels.
While Internet user growth is slowing, global innovation & competition continue to drive product
improvements, new types of usage & monetization – especially in areas of digital video, voice,
wearables, on-demand + local services & traditionally underserved markets. Outside of USA, we focus
on especially high growth & innovation in data-driven / direct fulfillment & financial services. We highlight
massive global usage changes related to the evolution of images & interactive gaming as
communications tools & the broad emergence of freemium businesses at scale.
The rapid rise of gathered / analyzed digital data is often core to the holistic success of the fastest
growing & most successful companies of our time around the world. Context-rich data can help
businesses provide consumers with increasingly personalized products & services that can often be
obtained at lower prices & delivered more efficiently. This, in turn, can drive higher customer satisfaction.
Better data-driven tools can improve the ability for consumers to communicate directly & indirectly with
businesses & regulators.
Core constituents (consumers / businesses / regulators) are increasingly drinking from a data firehose &
management challenges continue to rise for all parties. Broad awareness of challenges (& related
vigorous / heated debates) can be the first step in driving change.
Internet Trends 4
2019

## Page 5

…Context
Consumers are aware of concerns about Internet usage overload & are taking steps to reduce usage –
leading USA-based Internet platforms have rolled out tools to help monitor usage & social media usage
growth appears to be decelerating following a period of strong growth. Privacy & problematic content
concerns are also top-of-mind & are following similar patterns.
Owing to social media amplification, reveals / actions / reactions about events can occur quickly –
resulting in both good & bad outcomes. In markets where online real-time rating systems exist,
accountability can be improved vs. offline options as consumers & businesses interact directly while
regulators can also benefit.
Rapidly expanding connectivity has helped amplify voices of good & bad actors. This has brought new
focus to an age-old challenge for regulators around the world – finding the most effective ways to amplify
good & minimize bad, often resulting in different regional interpretations & strategies.
As Internet systems become increasingly sophisticated, data-rich & mission critical, so has the opportunity
for cyber attacks. We are in a new era of cyber security where technology issues are increasingly
intermixed with international diplomacy & defense.
We focus on the impact of the Internet on work (via on-demand services & remote options), education &
healthcare – the materiality of current trends imply inflections are occurring. We update USA trending
around government finances & the importance of immigration to the technology sector.
The Hillhouse Capital team provides insights into China – the largest market of Internet users & a leader
in innovation / scale.
Internet Trends 5
2019

## Page 6

INTERNET USERS =
@ >50% GLOBAL PENETRATION…
NEW GROWTH REMAINS HARDER TO FIND
Internet Trends 6
2019

## Page 7

Global Internet User Growth =
Solid But Slowing +6% vs. +7% Y/Y
Internet Users vs. Y/Y Growth
4B 18%
ar) )
B e
n
ue i
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B
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l 2B 9% th
, G w
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ers G

Us /Y
Y
ernet
Int
0 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /
Internet Trends InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia). 7
2019

## Page 8

Global New Smartphone Unit Shipments =
Declining -4% vs. 0% Y/Y
New Smartphone Unit Shipments vs. Y/Y Growth
1.6B 75%
al 1.2B 50%
ob
l
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ts ne
en Li
pm
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S 0.8B 25% (
th
ne ow
r
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artpho
m /Y
S Y
0.4B 0%
New 0%
0 -25%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Android iOS Other
Source: Katy Huberty @ Morgan Stanley (3/19), IDC.
Internet Trends 8
2019

## Page 9

Global Internet Users =
3.8B >50% of Population
Internet Penetration, 2018
70%
51%
al
ob
l
G
,
on
etrati35%
en
P
ernet 24%
Int
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /
Internet Trends InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia). 9
2019

## Page 10

Global Internet Users =
Asia Pacific Leads in Users + Potential
Internet Users by Region, 2018
Asia Pacific 53% of Global Internet Users
Asia Pacific 48%
48% Internet User Penetration in Region
15%
Europe 78%
Europe 78%
(15%)
13%
Africa & Middle East 32%
Africa & Middle East 32%
South America & 10%
Latin America & Caribbean 62%
Carribean 62%
9%
North America 89%
North America 89%
0 3B 6B
Population
Internet Users Non-Internet Users
Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /
Internet Trends InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia). 10
2019

## Page 11

Global Internet Users =
China @ 21% of Total...India @ 12%...USA @ 8%
Internet Users – Top Countries, 2018
China
India
United States
Indonesia
Brazil
Japan
Russia
Mexico
Germany
The Philippines
United Kingdom
Iran (I.R.)
Nigeria
France
Turkey
0 0.8B 1.6B
Internet Users Non-Internet Users
Internet user data is as of mid-year. Source: United Nations / International Telecommunications Union, USA Census
Bureau. Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency /
Internet Trends InternetWorldStats / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII (Indonesia). 11
2019

## Page 12

Global Internet Market Capitalization Leaders =
USA Stable @ 18 of 30…China Stable @ 7 of 30
Rank Market Cap Value ($B)
2019 Company Region 6/7/19B 6/7/16B % Change
1 Microsoft USA $1,007B $410B +146%
2 Amazon USA 888 343 +159%
3 Apple USA 875 540 +62%
4 Alphabet USA 741 497 +49%
5 Facebook USA 495 340 +46%
6 Alibaba China 402 195 +106%
7 Tencent China 398 206 +93%
8 Netflix USA 158 43 +266%
9 Adobe USA 136 50 +174%
10 PayPal USA 134 46 +190%
11 Salesforce USA 125 56 +123%
12 Booking.com USA 77 67 +15%
13 Uber USA 75 -- --
14 Recruit Holdings Japan 52 20 +167%
15 ServiceNow USA 51 12 +316%
16 Workday USA 48 16 +197%
17 Meituan Dianping China 44 -- --
18 JD.com China 39 32 +22%
19 Baidu China 38 60 (36%)
20 Activision Blizzard USA 35 28 +25%
21 Shopify Canada 34 2 +1,297%
22 NetEase China 33 23 +44%
23 eBay USA 33 28 +19%
24 Atlassian Australia 32 5 +509%
25 MercadoLibre Argentina 30 6 +388%
26 Twitter USA 29 11 +173%
27 Square USA 29 3 +808%
28 Electronic Arts USA 29 23 +25%
29 Xiaomi China 28 -- --
30 Spotify Sweden 25 -- --
Total $6,119 $3,064
USA stable at 18 of 30 refers to the fact that 19 USA companies were in the top 30 using same parameters in 2018. China in 2018 = 8 of 30. Source: CapitaIIQ data collected 6/7/19.
Note: % change only applies to companies that were publicly traded on 6/7/16, private valuations not taken into account. Reflects a global list of publicly traded companies, some companies
Internet Trends (e.g., Meituan Dianping) derive the majority of their revenue from one country. Companies selected are considered to be ‘pureplay’ Internet companies that do not derive a significant portion 12
2019 of revenues / profits from other business lines. Example companies that would be included otherwise = Reliance Industries (Refining), AT&T (Telecom), & Naspers (Television).

## Page 13

Global Market Capitalization Leaders =
USA Stable @ 23 of 30…Technology Stable @ 9 of 30
Rank Market Cap Value ($B)
2019 Company Sector Region 6/7/19B 6/7/16B % Change
1 Microsoft Technology USA $1,007B $410B +146%
2 Amazon Technology USA 888 343 +159%
3 Apple Technology USA 875 540 +62%
4 Alphabet Technology USA 741 497 +49%
5 Berkshire Hathaway Financial Services USA 505 350 +44%
6 Facebook Technology USA 495 340 +46%
7 Alibaba Technology China 402 195 +106%
8 Tencent Technology China 398 206 +93%
9 Visa Financial Services USA 372 192 +94%
10 Johnson & Johnson Healthcare USA 368 318 +16%
11 JPMorgan Financial Services USA 354 239 +48%
12 Exxon Mobil Energy USA 316 371 (15%)
13 Nestlé Food / Beverages Switzerland 306 230 +33%
14 Walmart Retail USA 303 221 +37%
15 ICBC Financial Services China 285 224 +27%
16 Procter & Gamble Home Goods USA 273 220 +24%
17 Mastercard Financial Services USA 271 106 +156%
18 Bank of America Financial Services USA 262 149 +76%
19 Royal Dutch Shell Energy Netherlands 259 198 +31%
20 Samsung Technology South Korea 249 166 +50%
21 Disney Media USA 248 160 +55%
22 Cisco Technology USA 239 146 +64%
23 Pfizer Pharmaceuticals USA 238 212 +12%
24 AT&T Telecom USA 237 242 (2%)
25 Verizon Telecom USA 237 207 +15%
26 UnitedHealth Healthcare USA 235 131 +79%
27 Roche Healthcare Switzerland 233 224 +4%
28 Chevron Energy USA 231 191 +21%
29 Coca-Cola Food / Beverages USA 220 196 +12%
30 Home Depot Retail USA 217 161 +35%
Total $11,264 $7,385
USA stable at 23 of 30 refers to the fact that 21 USA companies were in the top 30 using same parameters in 2018. Technology in 2018 = 10 of 30.
Source: CapitaIIQ data collected 6/7/19. Reflects a global list of publicly traded companies, some companies (e.g., ICBC) derive the majority of their revenue from one country.
Internet Trends 13
2019

## Page 14

Global Internet Market Capitalization Leader Revenue Growth =
Slowing +11% vs. +13% (Y/Y – Q1 vs. Q4)
Global Internet Leaders – Revenue vs. Y/Y Growth
$400B 30%
)
ar) ne
B Li

ue
l Red
B (
( $200B 15% th
ue ow
en r
G

Rev /Y
Y
$0 0%
Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19
Source: CapitaIIQ. Revenue from Microsoft / Amazon / Apple / Alphabet / Facebook / Tencent / Alibaba / Netflix / Adobe / PayPal / Salesforce.com / Booking.com /
Recruit Holdings / ServiceNow / Workday / JD.com / Baidu / Activision Blizzard / Shopify / NetEase / eBay / Atlassian / MercadoLibre / Electronic Arts / Twitter / Square.
Internet Trends Note: *Uber, Meituan Dianping, Xiaomi and Spotify which had recent IPOs that did not provide detailed financials from Q1:15-Q4:16 that are necessary 14
2019 to illustrate the Y/Y growth rate & are therefore excluded. Due to their revenue scale relative to the cumulative group, they have minimal impact on overall growth rate.

## Page 15

Global Market Capitalization Leader Revenue Growth =
Slowing +2% vs. +7% (Y/Y – Q1 vs. Q4)
Global Leaders – Revenue vs. Y/Y Growth
$1,200B 16%
)
ar) ne
B Li

ue
l Red
B (
( $600B 0% th
ue 0% ow
en r
G

Rev /Y
Y
$0 -16%
Q1:16 Q2:16 Q3:16 Q4:16 Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19
Source: CapitaIIQ. Revenue from Microsoft / Amazon / Apple / Alphabet / Berkshire Hathaway / Facebook / Tencent / Alibaba / Visa / Johnson & Johnson
/ JPMorgan / Exxon Mobil / Walmart / ICBC / Procter & Gamble / Bank of America / Samsung / Disney / Cisco / Pfizer / AT&T / Verizon / UnitedHealth /
Internet Trends MasterCard / Chevron / Coca-Cola / Home Depot. Nestle & Royal Dutch Shell quarterly revenue excluded due to bi-annual earnings releases. 15
2019

## Page 16

E-COMMERCE + ONLINE ADVERTISING =
SOLID…
BUT SLOWING GROWTH
Internet Trends 16
2019

## Page 17

E-Commerce
Internet Trends 17
2019

## Page 18

E-Commerce Growth =
Solid +12.4% vs. +12.1% (Y/Y – Q1 vs. Q4)
E-Commerce Sales vs. Y/Y Growth, USA
$140B 20%
ar)
B )
ue e
l n
B i
( L
es d
Re
al (
S $70B 10%
e th
w
o
erc r
G
m
/Y
Com Y
-
E
$0 Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1 0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: St. Louis Federal Reserve FRED database. Note: Historic data (Pre-2016) adjusted / back-casted in 2017 by
USA Census Bureau to better align with Annual Retail Trade + Monthly Retail Trade Survey data. Seasonally adjusted.
Internet Trends 18
2019

## Page 19

Physical Retail Growth =
Solid +2.0% vs. +1.6% (Y/Y – Q1 vs. Q4)
Physical Retail Sales vs. Y/Y Growth, USA
$800B 10%
ar)
B
ue
l )
B
(
ne
A Li
, US Red
es $400B 0% (
al 0% th
S

l
i ow
r
G
Reta
/Y
al Y
c
i
s
hy
P
$0 Q1Q2Q3Q4Q1Q2Q3Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 -10%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Source: St. Louis Federal Reserve FRED Database. Note: Physical Retail includes
all retail sales excluding food services, motor vehicles / auto parts & fuel.
Internet Trends 19
2019

## Page 20

E-Commerce Share =
Gains Continue @ 15% of Retail vs. 14% Y/Y
E-Commerce as % of Retail Sales, USA
16%
e
r
ha
S
e
erc
m 8%
Com
-
E
0% Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20182019
Source: USA Census Bureau, St. Louis Federal Reserve FRED database. Note: 15% = Annualized share. Penetration calculated by dividing
E-Commerce sales by “Core” Retail Sales (excluding food services, motor vehicles / auto parts, gas stations & fuel). All figures are seasonally adjusted.
Internet Trends Per US Census Bureau, E-Commerce is ~10% of total retails sales in Q1:19, including out-of-scope channels such as gas stations, fuel dealers, etc. 20
2019

## Page 21

Online Advertising
Internet Trends 21
2019

## Page 22

Media Time vs. Advertising Spending =
Mobile @ Equilibrium (2018)…Desktop (2015)
% Time Spent in Media vs. % Advertising Spending
2010 2018
A 50% SA 50%
US U
0,
01 43% 43%
, 2
ng ng, 2018,
i
nd
pe 33%33%
S Spendi 34% 34%

ng ng
i i
s s
erti ti
dv 25% 27% 25% dver25%
/ A / A
a 19% a
di 18%18%
Me Medi
n n
i 16% i
nt
pe 12%
S 11% 8% Spent
e e
m 8% m 8%
i i 7%
T T

% of 0.5% of 3%
0% % 0%
Print Radio TV Desktop Mobile Print Radio TV Desktop Mobile
Print Radio TV Desktop Mobile Print Radio TV Desktop Mobile
Time Spent Ad Spend
Source: Internet & Mobile advertising spend based on IAB & PwC data for full year 2018 & 2010.
Print advertising spend based on Magna Global estimates for full year 2018 & 2010. Print includes newspaper & magazine.
Internet Trends Time spent share data based on eMarketer (10/18). Excludes out-of-home, video game & cinema advertising. 22
2019

## Page 23

Internet Ad Spending (Annual)=
Accelerated +22% vs. +21% Y/Y
Internet Advertising Spend
$120B 30%
)
ars
B
(

A )
US ne
, Li
nd $60B 15%
pe Red
S (
th
ng
i
s ow
r
erti G
dv
A /Y
Y
ernet
Int
0 0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Desktop Advertising Mobile Advertising Y/Y Growth
Source: IAB / PWC Internet 2018 Advertising Report (5/19).
Internet Trends 23
2019

## Page 24

Internet Ad Revenue (Quarterly – Leading USA Platforms) =
Decelerating +20% vs. +29% (Y/Y – Q1 vs. Q4)
Leading USA-Based Online Ad Platform Revenue, Global
$60B 40%
)
ne
ar) Li
B
Red
ue
l (
B $30B 20% th
(
ue ow
en r
G

Rev /Y
Y
$0 0%
Q1:17 Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19
Source: Company public releases & Morgan Stanley estimates. Note: Includes Google / Facebook / Twitter / Amazon / Snapchat / Pinterest.
Internet Trends 24
2019

## Page 25

Internet Ad Platforms =
Google + Facebook Lead But Others Gaining Share
Select USA-Based Advertising Platform Revenue, Global
$40B
Google
+1.4x
$20B Facebook
+1.9x
Amazon / Twitter /
Snap / Pinterest
+2.6x
$0
Source: Company public releases & Morgan Stanley estimates.
Internet Trends 25
2019

## Page 26

Internet Ad Buying = Programmatic Gains vs. Direct Continue…
Negatively Impacting Pricing
Programmatic Buying – % Digital Display Advertising, Global
80%
obal
l
G
, 62%
c
ati
m
am
ogr
Spend Pr40%
ng
i
s
ti
er
Adv

ay
pl 10%
Dis
%
0%
2012 2013 2014 2015 2016 2017 2018
Source: Publicis / Zenith 2018 Programmatic Marketing Forecast. Note: Programmatic refers to ads bought both via real-time bidding
& non real-time algorithmically-driven ad purchases. Does not include non-display advertising (e.g., Search)
Internet Trends 26
2019

## Page 27

Ad Share Gain Drivers =
Better Targeting + New Creative + Commerce + High-Relevance
Facebook YouTube Pinterest Twitter
Targeting Machine Learning Commerce High-Relevance
Audience Customization Automatically Time-Edited Clips Shoppable Catalogs Promoted Tweets
Source: Facebook / Google / Pinterest / Twitter
Internet Trends 27
2019

## Page 28

Customer Acquisition Cost (CAC) =
Rising in Highly Competitive / Capitalized Sectors
Cost Per User Activation – Mobile Finance Apps, Global per Liftoff
$60
al
ob
l
G
,
on
ati
v
ti
er Ac$30
er Us
t p
Cos
erage
v
A
$0
1/17 4/17 7/17 10/17 1/18 4/18 7/18 10/18 1/19
Source: Liftoff’s 2019 / 2018 Mobile Finance App Report. Note: Report draws from internal Liftoff Data from 2/1/17 to 3/31/19, spanning 19B+ ad impressions
across 5MM+ App installs, 270MM+ clicks & 3MM activations / registrations. Data focused on North America, Europe, Middle East, Africa & Asia Pacific.
Internet Trends Note: Activation = Adding & depositing funds to an account, activating a spending card, opening an equities position or starting a paid subscription. 28
2019

## Page 29

Reality =
CAC Can’t Exceed LTV for Very Long
CAC = Customer Acquisition Cost. LTV = Lifetime Value.
Internet Trends 29
2019

## Page 30

Effective + Efficient Marketing=
One’s Own Product +
Happy Customers + Recommendations
Internet Trends 30
2019

## Page 31

Effective + Efficient Marketing =
Can Be Free Trial / Tier
Online Streaming – Reasons For Trying New Service
Free Trial / Tier 42%
Free Trial 42%
Content Library 38%
Access to Exclusive Content 29%
Good User Experience 26%
0% 25% 50%
Source: 2BrightCove / YouGov survey of 10,502 adults in USA, UK, France, Australia, Germany, Canada & UAE, 9/18.
Internet Trends 31
2019

## Page 32

Happy Customers…
Spotify = Free User Conversion to Paid Subscribers…
Free Ad-Supported Product… …Rising LTV / Subscriber Acquisition Cost Ratio
Morgan Stanley LTV:CAC Estimate
g 4x
n
i
s t
rtios
e
v C

r Adon 3.0x
ti
fo i
s
d i
te qu
s Ac
u
j r
(Adbe
ri
rs c
e s
b
ri
c / Sub 2x
s )
Our freemium model accounts for b
Su ers
~60% of our gross added premium subscribers... s 1.5x
m U
u
the ad-supported service is a subsidy program i
m Free
that offsets costs of new subscriber acquisition. Pre
f m
o
fro
e
u
Developing a better user experience l ue
Va en
produces by far the most viral effect &
e ev
m R
impact when investing in growth. ti
fe
i
Engagement drives conversion from L
free consumption to paid subscription. 0x
2015 2016 2017 2018
Barry McCarthy – CFO, Spotify, 3/18
Source: Spotify releases & Morgan Stanley estimates of LTV & SAC. Barry McCarthy @ Spotify Investor Day (3/18). Note: Morgan Stanley estimates LTV by
calculating the value of a subscriber (including advertising revenue they generate before they upgrade to a paid user) accounting for gross margin & churn.
Internet Trends Subscriber acquisition cost calculated by dividing sales & marketing spend in a relevant period by the number of new subscribers in the same period. 32
2019

## Page 33

…Happy Customers…
Zoom = Free User Conversion to Paid Subscribers
Free to Join, When Paid User Hosts… …High LTV / CAC Ratio*
Goldman Sachs Investment Research LTV:CAC Estimate
6x
o
i
Rat
t
Cos

n
o 3.7x 3.7x
ti
i
s
..we really want to get customers to test our product… i
u
It’s really hard to get customers to q
Ac
try Zoom without a freemium product... r
e 3x
m
to
We make our freemium product work so well… Cus

If they like our product, very soon they are to

e
u
going to pay for the subscription. l
Va

e
The most important thing is to make sure the existing m
ti
fe
customer [is] happy rather than chasing after new prospects. i
L
Our NPS is in the 67-69 range vs. our peers in the 20’s… 0x
We do not want to spend money on [the] FQ1:19 FQ2:19 FQ3:19 FQ4:19 FQ1:20
marketing side to generate leads. FY = January
Eric Yuan – Founder / CEO, Zoom, 8/17
Source: Interview with SaaStr (8/17). Zoom S-1. Goldman Sachs Investment Research estimates of LTV & CAC. Note: *Goldman Sachs Investment Research calculated LTV as
the value of $1 of Annual Recurring Revenue, discounted for GAAP gross margin, Goldman Sachs Investment Research estimated Gross Churn & an 11% assumed discount rate.
Internet Trends 33
2019 CAC is calculated as the amount of Sales & Marketing expense in a relevant period, divided by the gross new Annual Recurring Revenue added in the same period.

## Page 34

Effective + Efficient Marketing =
Can Be Recommendations
E-Commerce –Reasons for Trying New Subscription Box
Recommended by Someone
Reccomended by Someone 23%
23%
Try Something New 22%
Financial Incentive 22%
Like the Product 12%
Like Subscription Model 11%
Flexibility to Cancel 10%
0% 15% 30%
Source: McKinsey Research on E-Commerce Consumers (2/18). Note: Based on online survey from November 8 to 12, 2017, with responses
from more than 5,093 participants in the United States. Of those, 4,057 (80 percent) were online shoppers, defined as people who had spent at
Internet Trends least $25 online in the past month. Of those, 607 (15 percent) had subscribed to at least one service over the past 12 months. 34
2019

## Page 35

Happy Customers…
Stitch Fix = Recommendations Drive Growth
Data-Driven / Personalized Recommendations… …Stitch Fix Active Clients
3.0MM
ts
en
i
Cl
The better way to [sell clothing] is through e
v
ti
personalization – get to know product, get to know c 1.5MM
A
people & generate really good recommendations… x
i
What's really special about Stitch Fix is that F
h
100% of what we sell is based on recommendations. tc
ti
S
We have over 4,000 stylists…what makes them
successful is listening, empathy & delivering
what the client wants & doing that without
judgment…Our business is about helping
people feel their best, not necessarily
selling the big high-end fashion trends.
Katrina Lake – Founder / CEO, Stitch Fix, 6/18 0
1/14 1/15 1/16 1/17 1/18 1/19
Source: Katrina Lake interview @ JPMorgan Technology, Media & Communications Conference (6/18). Stitch Fix SEC Filings.
Note: Active Client refers to a client who has checked out at least 1 recommended ‘Fix’ in the past 12 months.
Internet Trends 35
2019

## Page 36

Advertising TBDs
TBD = To Be Determined
Internet Trends 36
2019

## Page 37

TBD = Impact on Ad Targeting…
Privacy Changes
…privacy [concerns] are a headwind for [Facebook] in 2019.
It's one of the factors that's contributing to our expected
deceleration of revenue growth throughout the year.
You've got regulatory – which was GDPR in 2018…
the regulatory arc will be longer-term in playing out…
Platforms like iOS are making bigger
pushes in privacy & that has the potential impact…
then changes that we're making ourselves…
we've elected to rollout GDPR-type controls globally…
later this year, we'll be launching Clear History,
which will also affect our ability to do third-party targeting.
David Wehner – CFO, Facebook, 2/19
Source: David Wehner speaking at Morgan Stanley’s Technology, Media, Telecom Conference, 2/26/2019.
TBD = To be Determined
Internet Trends 37
2019

## Page 38

TBD = Impact on Ad Targeting…
Digital TV-Based Ads (Aided by In-Hand Mobiles)
Multi-Platform Data Improves Relevancy… …Creating Opportunities for Better Ad Experiences
Xandr Revenue vs. Growth Y/Y
$600MM 60%
) )
ars
B ne
ue Li
l
B
( Red
Nielsen Audience Report (USA) ue$300MM 30% (
en th
ow
Rev r
G
88% = Use a Second Digital Device
dr /Y
While Watching TV an Y
X
71% = Look Up Content Related To
Content They Are Watching
41% = Message Friends / Family About $0 0%
Content They Are Watching Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Source: AT&T / Xandr Releases. Nielsen Q2:18 Total Audience Report (12/18). Note: Survey based on Nielsen National USA
Panel data. Note: 2018 USA Mid-term elections drove above-average television advertising spend on Xandr platform.
Internet Trends 38
2019

## Page 39

INTERNET USAGE =
SOLID GROWTH…
DRIVEN BY INVESTMENT + INNOVATION
Internet Trends 39
2019

## Page 40

Usage
Internet Trends 40
2019

## Page 41

Digital Media Usage =
Accelerating +7% vs. +5% Y/Y
Daily Hours Spent with Digital Media per Adult User, USA
8
6.3
5.6 5.9
5.4
A 4.9 5.1
US
, 4.3 3.6
Day 3.3
3.1
r 4 3.7 2.6 2.8
pe 3.2 1.6 2.3
nt 3.0 0.8
pe 2.7 0.3 0.4
S 0.3
Hours 2.0
2.2 2.3 2.4 2.6 2.5 2.3 2.2 2.2 2.2 2.1
0.2 0.3 0.4 0.3 0.3 0.3 0.3 0.4 0.4 0.6 0.7
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Other Connected Devices Desktop / Laptop Mobile
Source: eMarketer 9/14 (2008-2010), eMarketer 4/15 (2011-2013), eMarketer 4/17 (2014-2015), eMarketer 10/18 (2016-2018).
Note: Other connected devices include OTT & game consoles. Mobile includes smartphone & tablet. Usage includes both home &
Internet Trends work for consumers 18+. Non deduped defined as time spent with each medium individually, regardless of multitasking. 41
2019

## Page 42

Usage Drivers
Internet Trends 42
2019

## Page 43

Global Internet / Technology Businesses =
Investment Remains Robust
Internet Trends 43
2019

## Page 44

Investment (Public + Private) Into Technology Companies =
High for Two Decades
Global USA-Listed Technology IPO Issuance &
Global Technology Venture Capital Financing
l $200B 9,000
a
b
Glo
,
cing
n site
a o
Fin p
te Com
a $100B 4,500
v
ri
P
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&
O NAS
IP

y
g
lo
o
n
ch
e
T $0 0
1990 1996 2002 2008 2014** 2019YTD*
Technology Private Financing Technology IPO NASDAQ
Source: Morgan Stanley Equity Capital Markets, *2019YTD figure as of 6/7/19, Thomson ONE. All global USA-listed technology IPOs
over $30MM, data per Dealogic, Bloomberg, & CapitalIQ. 2012: Facebook ($16B IPO) = 75% of 2012 IPO $ value. 2014: Alibaba ($25B
Internet Trends IPO) = 69% of 2014 IPO $ value. 2017: Snap ($4B IPO) = 34% of 2017 $ value. 2019: Uber ($8B IPO) = 56% of 2019YTD $ value. 44
2019

## Page 45

Internet / Technology Businesses =
USA-Based
Innovation Remains Robust…
Internet Trends 45
2019

## Page 46

Device Time =
Mobile > TV
Television & Mobile Daily Time Spent (Non-Deduped), USA
300
) 266
tes 226
nu
Mi
( 216
nt
pe
S
e 150
m
i
T

y
l
Dai
erage
v
A
0 20
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019E
Mobile Television
Source: eMarketer (10/18). Usage includes both home & work for consumers 18+.
Non-deduped defined as time spent with each medium individually, regardless of multitasking. Updated from original 4/18 release in 10/18 by eMarketer
Internet Trends 46
2019

## Page 47

Online Platform Time =
YouTube + Instagram Gaining Most
% Internet Users Using Select Platforms > 1x per Day, Global*
32% 31% 30%
Facebook
27% YouTube
25% 25% WhatsApp
23% 23% WeChat
22% 19% Instagram
14% 15% Facebook
Messenger
13%
9% 11% Twitter
4% 5% Snapchat
3% 4% Pinterest
1% 2% Twitch
0%
Q2:17 Q3:17 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18
Source: Global Web Index Survey of 50K+ Global Internet users aged 16-64 (3/2017-12/2018). Note: WeChat is displayed as "Weixin" in China. *Countries surveyed include major Internet
populations – Argentina, Australia, Austria, Belgium, Brazil, Canada, China, Colombia, Denmark, Egypt, France, Germany, Hong Kong, India, Indonesia, Ireland, Italy, Japan, Malaysia, Mexico,
Internet Trends Netherlands, New Zealand, Philippines, Poland, Portugal, Romania, Russia, Saudi Arabia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, UK, 47
2019 USA, United Arab Emirates, Vietnam. Toutiao estimate = ~4% of Internet users using Douyin in 2018….Not included owing to lack of trend data & regulatory action in period.

## Page 48

Video Time =
Digital +2x in Five Years @ 28% of Total (vs. TV)
Video Watching Daily Minutes – Digital vs. TV, USA
400
A
US
,
)
tes
nu
Mi
(
nt
pe 200
S
e
m
i
T

y
l
Dai
erage
v
A
20% 23% 25% 28%
11% 14% 17%
0 4% 7%
4%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Digital Video Television
Source: eMarketer (10/18). Usage includes both home & work for consumers 18+. Non de-duplicated defined as time spent with each medium individually, regardless of multitasking.
Internet Trends 48
2019

## Page 49

Video Time (Short-Form – Facebook Platform) =
1.5B DAUs + ~2x in One Year
Facebook Stories Daily Active Users, Global*
1.6B
obal
l
G

sers,0.8B
U
e
v
i
ct
A

y
l
ai
D
0
4/17 10/17 4/18 10/18 4/19
Instagram Stories WhatsApp Status
Facebook / Messenger Stories
Source: Facebook (8/18,12/18). Daily Active Users (DAU) = Users that interact with a Story daily.
Vertical segments of chart = owing to first reported DAU metric for each product. *Not de-duped across platforms.
Internet Trends 49
2019

## Page 50

Voice =
70MM Podcast Listener MAUs + ~2x in Four Years…
Podcast Listener MAUs, USA Podcasts – Most Downloaded
Apple Podcasts, 2018, USA
s 80MM 1) The Daily The New York Times
on
i 70MM
l 2) The Joe Rogan Experience Joe Rogan
l
i
M
A 3) Stuff You Should Know iHeartMedia
, US 4) Fresh Air National Public Radio
ers
ten
s
Li 5) The Dave Ramsey Show Dave Ramsey
t 40MM
as
c 6) My Favorite Murder Exactly Right
od
P

y
l
nth 7) TED Talks Daily TED
Mo 22MM
8) Up First National Public Radio
9) The Ben Shapiro Show The Daily Wire
0
2008 2010 2012 2014 2016 2018 10) Pod Save America Crooked Media
Source: The Infinite Dial 2019 by Edison Research & Triton (2/19). National survey of 1,500 people ages 12+. The estimated share of
Internet Trends USA respondents is the n multiplied by USA population over the age 13, per USA Census Bureau. Apple. 50
2019

## Page 51

…Voice =
47MM Amazon Echo Base + ~2x in One Year
Amazon Echo Installed Base Amazon Echo Skills
60MM 100K
A s
l
US l
i
e, k
as 30MM S
of
B 50K
r
ed be
l
tal Num
Ins
0
Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4 0
2015 2016 2017 2018 2015 2016 2017 2018 2019YTD
Source: Consumer Intelligence Research Partners LLC (Echo install base, 2/18), Various
media outlets including Geekwire, TechCrunch, & Wired (Echo skills, 4/19)
Internet Trends 51
2019

## Page 52

Wearables =
52MM Users + ~2x in Four Years
Wearable Users, USA
60MM
52MM
A
S
U

sers,
U
e 30MM
earabl 25MM
W
0
2014 2015 2016 2017 2018
Source: eMarketer (11/18). Users = Monthly Active adults 18+ years old who wear accessories or clothing embedded
with electronics, software, or sensors that have the ability to connect to the Internet (via built-in connectivity or tethering),
Internet Trends which in turn collects & exchanges data with a manufacturer, operator, or other connected devices. 52
2019

## Page 53

On-Demand =
56MM Consumers + ~2x in Two Years
On-Demand Consumers, USA On-Demand Products / Services –
Consumer Spend, 2017, USA
60MM 56MM
Online Marketplaces
A Transportation
US
,
ers Housing
um
ns30MM
d Co 25MM Food Delivery
an
Dem
- Health & Beauty
On
Other
0 $0 $15B $30B
2016 2017 2018
Consumer Spend, 2017, USA
Source: National Technology Readiness Survey (4/18). Note: authored by Rockbridge Associates, Inc. & A. Parasuraman, & is co-
sponsored by the Center for Excellence in Service, Robert H. Smith School of Business, University of Maryland. The study is conducted
Internet Trends online among a representative sample of consumers in a national panel, & represents the views of U.S. adults ages 18 & older. The 53
2019 sample size was 1,032 in 2016 & 1,004 in 2017. The margin of error is +/- 3 percentage points. 2018 figures are estimates.

## Page 54

Local =
236K Nextdoor Active Neighborhoods + ~2x in Two Years
Local Business Recommendations = Active Neighborhoods, Global
29MM, +71% Y/Y
250K
al
ob
l
G
,
s
od
ho125K
r
bo
gh
Nei
e
v
ti
c
A
0
2011 2013 2015 2017 2019
Source: Nextdoor (5/19). 29MM = Cumulative local business recommendations on the platform, up 71% Y/Y vs. 17MM in 5/18.
Internet Trends 54
2019

## Page 55

Underserved Population = Square Seller Base Growing…
28% Points Faster in Lowest vs. Highest Income MSAs, USA*
Square Capital Data Growth in Number of Active Square Sellers
Difference Between 25 Lowest Income &
25 Highest Income USA MSAs*
30%
Rate
th
ow
r
G
n
i
e 15%
$4.5B = Loans (2014-Q1:19) erenc
f
f
Di
nt
58% = Women-Owned Businesses i
% Po
35% = Minority-Owned Businesses
$6K = Average Loan Size 0%
(~18x Smaller Than Average Small Business Administration Loans)* 2015 2016 2017 2018
Source: Square (5/19). * Per Federal Reserve’s “Survey of Terms of Business Lending”, Aug 2017 Note: MSA = Metropolitan Statistical Areas. Active sellers are
defined as those who have accepted five or more payments within the last 12 months. Square Capital Loans only available to Active Square Sellers. Data sourced
Internet Trends from the Bureau of Economic Analysis’s 2017 report on “Annual Personal Income by Metropolitan Statistical Areas”. From 2014-2018, the adoption growth rate of 55
2019 the bottom 25 MSAs was on average 1.22x that of the top, demonstrating the utility & relevance of payment technology in less traditional areas.

## Page 56

…Internet / Technology Businesses =
Non-USA-Based
Innovation Remains Robust…
Data-Driven / Direct
Fulfillment
Growing Rapidly…
Internet Trends 56
2019

## Page 57

China (Pinduoduo) = Connecting Consumer Preferences & Manufacturers…
443MM Buyers + ~2x in Five Quarters
Pinduoduo
Group Discovery / Buying Active Buyers, China
500MM

a
n
i
Ch
,
s
r
e
y
u
B
We call it consumer-to-manufacturer, where we
e 250MM
v
understand the users' needs first & enable upstream ti
providers, be it farmers, manufacturers, etc. to c
A
o
produce appropriate products for our users. u
d
This is different from how the current system works, o
u
d
where upstream producers design, manufacture & n
i
sell without necessarily being in tune with the P
changing needs of their targeted users.
As we add more users to the network & also gain more data
points through their increasing interaction with our platform,
we can further refine our engine to deliver an even better user 0
experience that keeps up with our users' evolving preferences. Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
Pinduoduo – Q4:18 Earnings Call, 3/19 2017 2018 2019
Source: Pinduoduo SEC filings (2018), Q4:18 Earnings Call (3/19) & Morgan Stanley.
Note: An active buyer is a buyer who has completed at least one transaction in the past 12 months.
Internet Trends 57
2019

## Page 58

China (Meituan Dianping) = Connecting Consumers & Local Businesses…
~6MM Merchants + ~2x in Two Years
Meituan Dianping
Fulfillment Active Merchants, China
ds6MM
an
us
ho
T
ts
n
a
h
c
r
e
M

e
v
ti
c
A
Traditionally, local merchants in China – mostly micro & small 3MM
g
n
businesses – have very few marketing channels available to i
p
n
them. We have become the go-to platform for a
Di
local search & consumer service discovery.
n
a
tu
i
Based on our data analytics, we leveraged user search e
queries to connect them with high-quality local merchants M
who match their preference. We are able to help merchants
reach a vast quantity of potential consumers with
a low upfront cost & high conversion rates.
Xing Wang – Co-Founder, Chairman & CEO, Meituan Dianping, 3/19 0
2015 2016 2017 2018
Source: Meituan Dianping Releases (2018-2019) Note: An active merchant is a merchant who has completed at least one transaction, purchased online marketing services,
processed a payment through Meituan Dianping’s service, or generated an order through Meituan Dianping’s ERP system.
Internet Trends 58
2019

## Page 59

Latin America (Rappi) = Digitizing Delivery…
8MM Orders + ~2x in Four Months
Rappi
Digital Delivery Platform Monthly Orders, Latin America
s10MM
on
i
l
l
i
a M
eric
m
n A
ti
La
,
s
r
de 5MM
r
O
i
Rapp

y
l
Latin America has a great delivery culture. nth
Cities are chaotic, delivery was super manual & Mo
not all stores offered it — there was plenty
of inefficiency & high costs.
We thought: what if we digitized this ecosystem
& started to deliver anything in under 0
30 minutes for less than a dollar? 5/15 5/16 5/17 5/18 5/19
Simon Borrero, Sebastian Meija, Felipe Villanmarin, Andres Bilbao, Guillermo Plaza –
Co-Founders, 6/19
Source: Rappi (6/19).
Internet Trends 59
2019

## Page 60

Indonesia (Tokopedia) = Improving Product Delivery Across 17K Islands…
~6MM Merchants + ~2x in One Year
Tokopedia
Same-Day Delivery Merchants vs. Same / Next Day Deliveries, Indonesia
6MM 70% )
ne
ar) Li
B Red
ue (

l
a (Bl ota
i T
es
on of
%

Ind s
, erie
nts v
ha 3MM 35% i
Del
erc
When we look at sales data... t Day
people from [one island] sometimes don’t want to tered M Nex
buy products from sellers on [other islands]. s /
Regi e
We thought – what if we can [give] every business that am
joins us…a warehouse everywhere in Indonesia – S
every product bought on Tokopedia
[could] be delivered same-day.
William Tanuwijaya – Co-Founder & CEO, Tokopedia, 2/19 0 0%
2019YTD*
2015 2016 2017 2018 2019
Source: Nikkei Asian Review (2/19). Tokopedia (4/19). *2019YTD = As of 4/19. Note: A registered
merchant defined as an enterprise with listing on Tokopedia. 2
Internet Trends 60
2019

## Page 61

Southeast Asia (Shopee) = Mobile-First Social Commerce…
$10B in Gross Merchandise Value + ~2x in One Year
Sea Limited / Shopee
Mobile / Social Shopping Gross Merchandise Value, Southeast Asia
$12B

ue
al
V
e
s
i
nd
ha
c
r
Me
e $6B
erc
m
Shopee's ability to grow rapidly over a short period Com
-
of time is a testament to its focus on building a E

mobile-centric, socially engaging marketplace s
os
with emphasis on high margin products from a r
G
highly diverse seller base.
…Shopee has combined its marketplace offering
with integrated payments, logistics infrastructure & $0
a comprehensive set of services. 2016 2017 2018
Forrest Li – CEO, SEA Limited, 2/19
Source: Sea Limited Q1:19 Earnings (2/19). Goldman Sachs Investment Research . Sea Limited operates commerce in Malaysia, Singapore, The Philippines, Thailand, Taiwan, Indonesia & Vietnam.
Internet Trends 61
2019

## Page 62

India (Reliance Jio) = Expanding Offline Access to E-Commerce…
307MM Subscribers + ~2x in One Year…
Reliance Jio
Connectivity + Retail Wireless Subscribers + Offline Stores, India
500MM 12K ds
an
ar) us
B )ho
neT
ue
l Li
B
(

s
r Red
(
be
i s
r
c on
s ati
ub c
S 250MM 6K Lo

l
ernet i
We are creating a hybrid, online-to-offline commerce platform by Int Reta
integrating Reliance Retail's physical marketplace
s al
c
with Jio's digital infrastructure & services. es i
el s
r hy
i P
This platform will bring together 350MM customer footfalls at o W
Reliance Retail stores, 307MM Jio connectivity customers & i
J
30MM small merchants all over India who provide the
last-mile physical market connectivity.
Mukesh Ambani –Chairman, Reliance, 7/18 0 0
FY17 FY18 FY19
FY = March
Source: Reliance Annual Report & Shareholder Meeting (7/18)
Internet Trends 62
2019

## Page 63

…India (Reliance Jio) = Broad Base of Jio Services for Consumers…
Data Usage + ~2x in One Year
Reliance Jio
Full Suite Apps Data Usage, India
ds18EB
)an
tesus
yho
abT
x
E
(

ork
tw
o Ne
i
J
9EB
f
e o
ag
Us
Data
l
ua
nn
A
Music…Movies…Television…News… 0
FY14 FY15 FY16 FY17 FY18
Chat…Finance…Fashion...Security… FY = March
Storage…Data Transfer
Source: Jio Releases & Morgan Stanley. Note: 1 petabyte = 1MM gigabytes. 1 Exabyte = 1,000 Petabytes.
Internet Trends 63
2019

## Page 64

…Internet / Technology Businesses =
Non-USA-Based
Innovation Remains Robust…
Data-Driven / Direct
Financial Services
Growing Rapidly
Internet Trends 64
2019

## Page 65

China (Alipay) = Broad Online / Offline Financial Services...
1B Users + ~2x in Two Years
Alipay
Payments / Financial Services Annual Active Users, Global
1,200MM

ers
Us
e
v
ti
c
A

l
ua
nn 600MM
A
t
en
Alibaba has the most comprehensive ecosystem of m
commerce platforms, logistics & payment to support the ay
P

digital transformation of the retail sector. y
pa
i
l
Ant Financial / Alipay is not only China's #1 mobile payments A
platform, but it is also a provider of financial services such as
loans, wealth management & insurance products to hundreds of
millions of consumers & millions of small businesses on the
Alibaba platform. 0
2/16 2/17 2/18 2/19
Joe Tsai – Executive Vice Chairman, Alibaba, 2/18
Source: Alibaba Releases. Alibaba Earnings Call transcript (2/18)
Internet Trends 65
2019

## Page 66

South Korea (Toss) = Digital Payments / Financial Services…
~12MM Users + ~2x in One Year
Toss
Payments / Financial Services Users, South Korea
12MM
orea
K
th
ou
, S 6MM
ers
A persistent problem in Korea has been the lack Us

of mid-level interest-rate loans. s
os
The reason for this is because there hasn’t been T
adequate credit evaluation on filers with mid-level
credit scores or small business owners.
Data from the Toss mobile payment platform & its
partners will help make better credit judgments on
those filers when they are seeking loans. 0
SG Lee – Co-Founder & CEO, Toss, 3/19 2/17 8/17 2/18 8/18 2/19
Source: Toss. Korea JoongAng Daily Interview with SG Lee (3/19)
Internet Trends 66
2019

## Page 67

Europe (Revolut) = Personalized Banking…
4MM Users + ~2x in Ten Months
Revolut
Money Transfer / Banking Users, Global
ds5.0MM
an
us
ho
T

al
ob
l
, G
ers2.5MM
Us
ut
ol
Rev
Personalization with the help of data / technology
will allow people to have all their [financial]
needs covered & what’s more – they will be
able to choose all those setting themselves.
We’re also heavily investing in data science &
engineering to automate, accelerate & 0
increase the quality of these decisions. 10/15 4/16 10/16 4/17 10/17 4/18 10/18 4/19
Nikolay Storonsky – Co-Founder & CEO, Revolut, 11/18
Source: Revolut Releases (2015-2019). Mobile Industry Eye Interview (7/18)
Internet Trends 67
2019

## Page 68

Brazil (Nubank) = Banking / Consumer Credit…
~9MM Unique Customers + ~2x in One Year
Nubank
Banking / Credit Total Unique Customers, Brazil
10MM
l
i
az
r
B
,
ers
tom
Cus5MM
e
qu
Nubank is the largest purely digital bank offering Uni
financial services for Brazil, including no fee credit
nk
cards, savings accounts (NuConta), P2P money Nuba
transfer, bill payment, debit cards, salary account
portability & a rewards program with real-time benefits.
Nubank also offers highly personalized loans at low
prices owing to Nubank’s data-driven direct
customer relationship. 0
Nubank–5/19 4/15 4/16 4/17 4/18 4/19
Source: Nubank (5/19)
Internet Trends 68
2019

## Page 69

Latin America (MercadoLibre) = E-Commerce-Driven Digital Payments…
389MM Transactions + ~2x in Two Years
MercadoLibre
Marketplace / MercadoPago Payments Annual Transactions, Latin America
400MM
a
eric
m
A
n
ati
, L
s
on
ti
ac
We continue to grow strongly & see tremendous potential s 200MM
an
in MercadoPago. Off-marketplace transactions r
T
already surpassed marketplace transactions. o
ag
This trend is compounded by our strong offline initiatives: oP
ad
building out our mobile POS network & c
MercadoPago’s wallet-enabled payments services. r
Me
Beyond payments, we are also seeing great adoption
of our Asset Management & Credits products.
These products facilitate access to financial 0
services to millions of Latin Americans 2010 2012 2014 2016 2018
who are either unbanked or underbanked.
Pedro Arnt – CFO, MercadoLibre, 5/19
Source: MercadoLibre (5/19), Goldman Sachs Investment Research.
Internet Trends 69
2019

## Page 70

Southeast Asia (Grab) = Ride Share-Driven Digital Payments…
Transaction Value + ~4x in One Year
Grab
GrabPay GrabPay Transaction Value, Southeast Asia
a 4.0x
i
s
A
t
as
the
ou
S
8,
1:1
Q
to

ed
ex
Ind 2.5x

Only 27% of adults in Southeast Asia ue
have bank accounts. al
V
on
Not having a banking history means that a consumer is ti
ac
invisible to traditional financial institutions - no access to s
an
capital to grow businesses or pay for houses. r
T

ay
By launching GrabPay on top of Grab’s ride-sharing P
ab
platform, Grab’s millions of users have access to r
financial services that they could not access via G
traditional banks & lenders.
1.0x
Reuben Lai – Senior Managing Director, Grab Financial Group, 5/19 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19
Source: Grab Financial Group (3/18-5/19).
Internet Trends 70
2019

## Page 71

Usage =
Images…
Increasingly Relevant Way to Communicate
Internet Trends 71
2019

## Page 72

Images =
Oldest Form of Transportable Communication
40K Years Ago = 5K Years Ago = 131 Years Ago =
Oldest Known Image… Oldest Known Text… Oldest Known Moving Image…
Painting, Indonesia Cuneiform, Mesopotamia Video, United Kingdom
Source: Maxime Aubert, Griffith University, Wikimedia, National Science Museum, London.
Internet Trends 72
2019

## Page 73

For Centuries…
People Have Learned to
Write & Share Words…
Offline & One-to-One / Some…
Internet Trends 73
2019

## Page 74

Communication via Text (+ Numbers) =
Foundational
Makes Ideas …Simplifies …Enables
Transportable… Concepts… Learning
Martin Luther’s Robert Recorde’s Modern ‘Public’
95 Theses invention of ‘=’ Primary Schools
(1500s) (1500s) (1800s – Present)
Source: Wikimedia Commons, Google For Education, Boston City Archives
Note: 1800s chosen as date of ’Modern Public Schools’ based on Byrk et al.’s ‘Catholic Schools in the Common Good.’ Though public funds had been previously used to fund primary
Internet Trends education, reforms in USA cities during the 1800s were the first to establish open, secular education, similar to contemporary ‘public schools’ 74
2019

## Page 75

…For Two Decades…
People Ramping
Image + Video Creation / Sharing…
Online & Often One-to-Many
Internet Trends 75
2019

## Page 76

Image Creation =
Foundations Continue to Ramp
Smartphone / Camera Base… …Smartphone Power…
al Active Smartphones Flagship iPhone Power / Storage
ob 4B 6,000 600GB
l XS
G ng
i
e, s ark X
as es
B torage
oc hm
l r c 7 S
tal 2B P en3,000 300GB
h B 6S um
Ins c
m
en er i
ne B 5S 6 x
k ow 5 Ma
ee P 4S
artpho0 G 0 0
m
S 2010 2014 2018 2010 2014 2018
Processing Power Storage
…Cellular Data Use… …WiFi Reach
on Cellular Data Traffic WiFi Networks
nk s30EB 600MM
i s
nl c l
i a
r b
E o
Dow l
er G
+ ,
nk , P s
i k
al15EB r 300MM
Upl ob o
l tw
y G
l , Ne
c
i
nth f Fi
af i
Mo r W
T 0 0
2014 2016 2018 2000 2009 2018
Source: Smartphone Installed Base Per Morgan Stanley (3/19). iPhone Power / Storage Per. GeekBench Browser, Apple. Note: Geekbench is a multi-platform benchmarking tool intended
to compare the power of computer processors across generation, platform & workload. Maximum storage refers to largest storage capacity offered, as advertised. WiFi Data = WiGLE.net
Internet Trends as of 5/29/18. Note: WiGLE.net is a submission-based catalog of wireless networks that has collected >6B data points since launch in 2001. Submissions are not paired with actual people, 76
2019 rather name / password identities which people use to associate their data. Ericsson Q4:18 Mobility Report.

## Page 77

Image Sharing =
Foundations Continue to Ramp
Image Creation Image Sharing
Annual New Photos Taken, Global Instagram Monthly Active Users, Global
1.4T 1.0B
al al
lob
G lob
en, 0.7T G 0.5B
ak Us,
s T A
o M
t
o
h
P
0 0
2013 2015 2017 2010 2014 2018
Source: Photo Creation Per InfoTrends Digital Imaging Reporter’s State of the Industry 2018. Instagram releases.
Internet Trends 77
2019

## Page 78

Image Creation + Sharing =
Engagement Continues to Ramp…
Twitter (2006) = Text-Only
Twitter (2019) = Text + Images + Video
>50% of Tweet Impressions =
Images / Video / Other Media
Source: Twitter. Note: Other media includes GIFs, Audio & other non image / video media types
Internet Trends 78
2019

## Page 79

…Image Creation + Sharing =
Platform Functionality + Usage Continues to Ramp…
Instagram Image Sharing Enhancement Evolution
Image Editing / Data-Driven Image + Video Commerce
Sharing Discovery Stories
2011 2015 2016 2019
Source: Instagram Releases (2011 / 2015 / 2016 / 2019)
Internet Trends 79
2019

## Page 80

…Image Creation + Sharing =
Platform Functionality + Usage Continues to Ramp
Pinterest Image Sharing Enhancement Evolution
Image Video Image- Image-Driven
Organization / Organization / Powered Discovery /
Sharing Sharing Search Commerce
2011 2012 2015 2019
Source: Pinterest Releases (2011 / 2012 / 2015 / 2019)
Internet Trends 80
2019

## Page 81

Image-Based Communication =
Enabled by Computer Vision + Artificial Intelligence
Google Lens + AR Image Analysis / Communication Evolution
Visual Text Image Contextual Real-Time
Identification / Identification / Augmented Visual Text
Processing Context Reality Translation
2017 2017 2018 2019
Source: Google (2017-2019)
Internet Trends 81
2019

## Page 82

People =
Increasingly Telling Stories via
Edited Images / Videos
Internet Trends 82
2019

## Page 83

Edited Images =
Growing Rapidly
Snap Lens Studio Snap Community Lens Views
User Generated / Custom Augmented Reality
40B
s
se
n
e
L

d
rate
e
n
e 20B
User G

f
s o
iew
V
0
12/17 3/18 6/18 9/18 12/18 3/19
Source: Snap Inc. Q4:17 Earnings Call (2/18), Snapchat Blog Post (7/18), Adweek (11/18), Engadget (2/19)
Internet Trends 83
2019

## Page 84

Image-Based Design Fluency + Story-Telling =
Increasingly Self-Taught + Collaborative…
Still Early Innings
Internet Trends 84
2019

## Page 85

Design Fluency + Story-Telling (Canva) =
Simple / Collaborative / Feedback-Driven Design
Choose Template
Publish Anywhere
Customize Design
Collaborate in Teams
Source: Canva (6/19)
Internet Trends 85
2019

## Page 86

People have always been visual – our brains are
wired for images. Writing was a hack, a detour.
Pictorial languages are how we all started to
communicate –we are coming full circle.
We are reverting to what is most natural.
Instagram has always been a
communication platform, not an image sharing tool.
Instagram challenges the notion that beauty
comes in a traditional, artsy form…
it’s not about beauty, it’s about the story you tell.
Instagram’s inherent feedback systems help users
continuously improve communication skills.
Kevin Systrom – Instagram Co-Founder, 5/19
Internet Trends 86
2019

## Page 87

Picture or 1,000 Words?
Mallard Duckling making a running leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common &
recognizable wild ducks in the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes)
where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater for
food—head down, feet and tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake,
sports a glossy green head, a white ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because of
an oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching,
ducklings can run, swim, and foragefor food on their own. They stay in the nest for less than a month. A group of ducklings is called a brood. Outside the
nest, the brood sticks close by the mother for safety, often following behind her in a neat, single-file line. Mallard Duckling making a running leap into the
water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in the Northern
Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants, invertebrates,
fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and tail in the air—
rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake, sports a glossy green head, a white ring
around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from a gland near
the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, and forage for
food on their own. They stay in the nest for less than a month. A group of ducklings is called a brood. Outside the nest, the brood sticks close by the
mother for safety, often following behind her in a neat, single-file line. Mallard Duckling making a running leap into the water from the rock ledge at Argyle
Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in the Northern Hemisphere. They spend most of their time
near natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or
surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and tail in the air—rather than diving. Mallards also forage and
graze for food on land. The male mallard duck, called a drake, sports a glossy green head, a white ring around its neck and a rich, chestnut-brown
breast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called
ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, and forage for food on their own. They stay in the nest for
less than a month. A group of ducklings is called a brood. Outside the nest, the brood sticks close by the mother for safety, often following behind her in a
neat, single-file line. Mallard Duckling making a running leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are
the most common & recognizable wild ducks in the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes,
streams, & lakes) where they feed on plants, invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by
tipping underwater for food—head down, feet and tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard
duck, called a drake, sports a glossy green head, a white ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are
waterproof, because of an oil that’s secreted from a gland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than
a day after hatching, ducklings can run, swim, and forage for food on their own. They stay in the nest for less than a month. A group of ducklings is called
a brood. Outside the nest, the brood sticks close by the mother for safety, often following behind her in a neat, single-file line. Mallard Duckling making a
running leap into the water from the rock ledge at Argyle Lake, Babylon, Long Island. Mallard ducks are the most common & recognizable wild ducks in
the Northern Hemisphere. They spend most of their time near natural bodies of water (ponds, marshes, streams, & lakes) where they feed on plants,
invertebrates, fish, and insects. Mallards are dabbling, or surface-feeding, ducks because they eat by tipping underwater for food—head down, feet and
tail in the air—rather than diving. Mallards also forage and graze for food on land. The male mallard duck, called a drake, sports a glossy green head, a
white ring around its neck and a rich, chestnut-brown breast. The mallard duck's outer feathers are waterproof, because of an oil that’s secreted from a
gland near the tail. Soon after birth, baby ducks, called ducklings, open their eyes. A little more than a day after hatching, ducklings can run, swim, and
foragefor foodon their own. They stay in the nest for less than a month.A group of ducklingsis called a brood. Outsidethe nest, the brood sticksclose
Source: Photo Credit = Beth A Keiser, AP
Internet Trends 87
2019

## Page 88

Usage =
Interactive Gaming…
Increasingly Relevant Way to Communicate
Internet Trends 88
2019

## Page 89

Interactive Gaming Players =
Accelerating @ 2.4B +6% vs. +5% Y/Y
Interactive Game Players, Global
3.0B
obal
l
G

ers,
ay
l
P
e 1.5B
am
G
e
v
i
eract
nt
I
0
2014 2015 2016 2017 2018
Source: Newzoo Global Games Market Reports (2016-2018).
Interactive Game Players = People who have played a game across console / PC / mobile platforms in the past year.
Internet Trends 89
2019

## Page 90

Interactive Gaming Innovation =
Rising…Across Platforms
Game Engine Innovation… ...Frequent Major Updates To Fortnite
100
~1 Major Update
te per Week
ortni
F
to

tes
Unreal Engine 4.21 continues our relentless pursuit Upda50
of greater efficiency, performance & stability
ed
for every project on any platform. r
We made it easier to create faster… be
Num
We are always looking for ways to streamline everyday /

tasks so developers can focus on creating meaningful, ed
exciting & engaging experiences...Iterate faster Nam
thanks to optimizations, run automated tests to
find issues using the new Gauntlet automation framework,
& speed up your day-to-day workflows...
0
Jeff Wilson – Unreal Engine Release Notes, Epic Games, 11/18 9/17 7/18 5/19
Source: Epic Games. (11/18). Note: Major update = named / numbered update to Fortnite.
Internet Trends 90
2019

## Page 91

Interactive Gaming =
Real-Time
Play + Talk / Text + Watch…
Social in Nearly All Ways
Internet Trends 91
2019

## Page 92

Interactive Gaming (Play) =
Fortnite @ 250MM+ Users + ~2x Y/Y Across Seven Platforms
Epic Fortnite Cross-Platform Evolution vs. Registered Users
1 2 3 4 5
September 2017 March 2018 April 2018 June 2018 October 2018
Fortnite Battle Royale V3.4 Patch is Fortnite Launches to Fortnite Launches on Fortnite for Android
Launches on PC / Released Allowing Public in iOS App Nintendo Switch… Launches to Public
Mac / PS4 / Xbox One Users to Send & Store, Allowing Cross- Available on All Major
With Limited Cross Receive Squad Platform Mobile Play Current Generation
Platform Support Invites Cross-Platform Consoles
300MM
l
a
b
o
l
G 5
,
Users150MM
d 4
e
r
te
s
i 3
g
Re 2
0 1
10/17 4/18 10/18 4/19
Source: Epic Games (9/17-3/19)
Internet Trends 92
2019

## Page 93

Interactive Gaming (Text / Talk) =
Discord @ 250MM Users + ~2x Y/Y
Discord Text / Voice Chat Discord Registered Users
300MM

al
ob
l
G
,
ers150MM
tered Us
s
Regi
0
5/17 5/18 5/19
Source: Discord (5/17-4/19).
Internet Trends 93
2019

## Page 94

Interactive Gaming (Watch) =
Twitch…Time + Viewers + ~2x in Two Years
Twitch
Daily Streaming Hours Active Broadcasters* Peak Concurrent Viewers**
30MM 120% 4.2MM 80% 1.2MM 80%
)
r
a
B
)
r lue
) a B
B (
ar l
B a
lue b
B
lue (
B l Glo
( a
l b ,
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ine , L U L
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, d E e il e
s e - a
r r R R
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15MM 60% 2.1MM 40% h t 0.6MM 40% h
H h t n t
t Ye e
w r w
w t o r o
ing o a
u
m s Gr c Gr
Gr r n
a e Y o Y
e Y t / /
r / s C Y
t Y a Y
S c k
d a
y a e
il o P
a
D Br e
g
e e a
g g r
a a e
r r v
e e A
v
A Av
0 0% 0 0% 0 0%
2012 2013 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Source: TwitchTracker (4/19). Note: *Active broadcasters at year end refers to the number of broadcasters who have streamed in the month of
December for a given year. **Average concurrent users refers to the average daily peak of users viewing content on Twitch across a year.
Internet Trends 94
2019

## Page 95

Fortnite = Battle Royale…
Game Environment Capped @ 100 Person Groups…
Multiplayer / Cross-Platform Battle Royale Consoles – Multiplayer Subscribers*
ar)100MM 60% )
B ne
Li
ue
l 51%
B
( Red
(
s
r e
be as
i
r B
c
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ub tal
100 Players in Shared World S ns
er e I
ay ol
pl 50MM 30%
ti
l Cons

Mu 26% l
ota
ne
i T

nl f
O
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on r
i ha
tat S
s
s
ay r
l be
i
/ P r
c
x s
bo 0 0% ub
X 2014 2015 2016 2017 S
Players Win via Discovering Items & Outlasting Others
Source: Morgan Stanley Research (10/18) Brian Nowak / IDC. Note: *For game consoles only (i.e. Xbox Live & Playstation Plus).
Internet Trends Subscription required to play online multiplayer Fortnite games on Xbox platform, but not Playstation (Fortnite is available even to non-subscribers). 95
2019

## Page 96

…Fortnite = Events…
Shared Experiences Capped @ 100 Person Groups…
In-Game Events / Experiences SurveyMonkey / Common Sense Media
Teen Fortnite Player Survey
Has Fortnite Helped You _______?
50% = Learn Teamwork Skills
Marshmello Concert (2/19)
11MM Player-Viewers 44% = Make a Friend Online
40% = Improve Communication Skills
39% = Bond with Siblings
Cube Opening (11/18)
8MM Player-Viewers
Source: Fortnite. Common Sense Media / SurveyMonkey Survey of 766 USA Teens (13-19) who play Fortnite.
Internet Trends Survey conducted online via SurveyMonkey Survey portal (10/18). 96
2019

## Page 97

…Fortnite = Voice Chat…
Collaborative Communication Capped @ 16 Squadmates
To truly see the future of collaborative gameplay & social experiences,
you need a large-scale community to help that happen.
We work really, really hard on Fortnite to maintain a safe experience online –
for example, there's only chat between you & your squadmates.
There's no proximity-based chat, so it's not possible for
one person to grief another person they don't know.
Kim Libreri – CTO, Epic Games, 3/19
Strategize / Bond With Team in Real-Time In-Game Collaboration With
Pre-Game Lobby via Voice Team via Voice
Source: Wired (3/19). Epic Games.
Internet Trends 97
2019

## Page 98

Interactive Gaming…
Shared Environments
With Collective Purpose / Goals =
The New Social / Friend Networks?
Recreating Reality Around
Play + Problem Solving
Internet Trends 98
2019

## Page 99

FREEMIUM BUSINESS MODELS =
GROWING & SCALING…
STILL EARLY DAYS IN ENTERPRISE / CONSUMER
’Freemium’ coined by Fred Wilson (Union Square Ventures) & Jarid Lukin in 2006
Internet Trends 99
2019

## Page 100

Freemium Businesses =
Free User Experience Enables
More Usage / Engagement /
Social Sharing / Network Effects…
…Premium User Experience Drives
Monetization / Product Innovation
Internet Trends 100
2019

## Page 101

Freemium Business Model Evolution =
Gaming → Enterprise → Consumer
Internet Trends 101
2019

## Page 102

Freemium Gaming (2001) =
Runescape…
Free Premium
Play With Others… …Improve User Experience
Paid Users + Share of Total
s 1.6MM 12%
on
i
l
l
i )
M ne
Li
Red
ar) (

B l
I launched [Runescape] in 2001. ota
ue T
l
The basic plan was to run it for free, but to pay for my B
(
hobby through advertising.However, when the dot 0.8MM 6% of
com bubble began to collapse, advertising dried up & ers er %
Us Us
there was no way to pay for the game's server. d
ai d
This is how the member [subscription] came about... P ai
P
once we had people paying, we were able to reinvest
back into the game.
The more we invested, the faster it grew.
Andrew Gower–Runescape / Jagex, Creator, 5/07 0 0%
2003 2005 2007
Source: Jagex releases, as compiled by The Guardian (12/03), Gameindustry.biz (2/05),
Runescape Blog (5/07) & GigaOM (6/07). Andrew Gower Interview first appeared on gamasutra.com (5/07).
Internet Trends Note: Users refer to monthly active users. Total Users refers to active users (free + paid) in relevant period. 102
2019

## Page 103

…Freemium Gaming (2017) =
Epic Fortnite
Free Premium
Play With Others… …Improve User Experience
Epic Fortnite Revenue Growth, per Nielsen Superdata*
20x
)
1x

=

I think it’s a very positive trend that people are 17
20
spending time in social experiences. That’s the thing you have (
to appreciate with Fortnite. Most people are playing together in th 10x
ow
squads with their friends, they’re on voice chat. r
G
They’re playing a video game, but what they’re really doing ue
is spending time with their friends & chatting all night. en
Rev
It can last as long as the developers can
keep games fresh & fun – we’re at that point where we’re
able to do it & there’s a business model with free-to-play.
Tim Sweeney-Epic Games, Founder / CEO, 3/19 0
2017 2018
Source: Epic Games Releases (2017-2019) The Hollywood Reporter (3/19). Nielsen Superdata (6/18 +1/19)
rd
Note: *Revenue growth estimate based on Superdata’s 3 party estimate of ~$150MM in Epic Fortnite Revenue in
Internet Trends 2017 & $2.4B in 2018 revenue. Fortnite launched in September 2017. 103
2019

## Page 104

Freemium Gaming =
Social / Often Mobile / Can Be Transient
Nexon ) HearthStone )
10MM 20% ine 6MM 30% ine
) L
L r
) a d
d e
ar e B
B R R
(
(
lue lue
B
(
B
( s Total
5MM 10% Total r 3MM 15%
s e f
f s o
er o
U %
Us %
id r
r a e
e s
aid s P U
P U
id
0 0% id 0 0% a
a P
2015 2016 2017 2018 P 2015 2016 2017 2018
Zynga ) Rovio )
2MM 3.0% ine 1.0MM 2% ine
L L
) )
r d r d
a e a e
B R B
( R
(
lue lue
B B
( (
Total
s 1MM 1.5% s Total
r f r 0.5MM 1%
e o e f
s o
s % U
U %
r
id e id r
a s a e
P U P s
U
id
0 0.0% a id
P 0 0% a
2015 2016 2017 2018 2015 2016 2017 2018 P
Paid Users Paid % of Total Users
Source: Nexon = Annual Company Filings. HearthStone = Activision Blizzard Filings + Morgan Stanley estimates. Zynga = Zynga Annual Filings.
Rovio = Rovio Annual Reporting. Note Paid users refers to users who upgrade to unlock premium features such as ad-free game play.
Internet Trends Paid Users % of Total = share of payers in a period divided by total active users in the same period. 104
2019

## Page 105

Freemium Business Model Evolution =
Gaming→ Enterprise → Consumer
Internet Trends 105
2019

## Page 106

Freemium Enterprise (2006) =
Google G Suite…
Free Premium
Communicate With Others… …Enterprise User Experience
Paid Customers*
6MM
*

Google’s many successful products deliver magical ers
user experiences [for free] & when I joined Google, tom
I was inspired to bring that same magic to the Cus3MM
workplace with G Suite... te
ui
S
Building [free] products that are loved by billions of
G
users has driven a discipline in the G Suite team for
simplicity of design & we are bringing that billion-
user experience to the workplace…you’re actually
seeing that workplace users are demanding it.
Prabhakar Raghavan – Google, SVP of Engineering, 7/18 0
2007 2009 2011 2013 2015 2017 2019
Source: Google Cloud Disclosures (2019) for G Suite Users. Google Next Conference for quote (7/18). Note: *Customers
refers to the number of paying businesses using G Suite, not the number of paid users (e.g., one company with 10K
Internet Trends employees would be counted as one customer. Google does not disclose the average G Suite customer size.) 106
2019

## Page 107

…Freemium Enterprise (2013) =
Zoom
Free Paid
Communicate With Others… …Enterprise User Experience
Paid Customers*
300K

*
ers
tom150K
Our rapid adoption is driven by a virtuous cycle of Cus
positive user experiences. d
ai
Individuals typically begin using our platform P
when a colleague or associate invites them to a
Zoom meeting.
When attendees experience our platform & realize the
benefits, they often become paying customers to
unlock additional functionality.
0
Zoom–S-1 Filing, 3/19 FQ1 FQ2 FQ3 FQ4 FQ1 FQ2 FQ3 FQ4 FQ1
FY18 FY19 FY20
FY = January 31
Source: Zoom. Note: *Goldman Sachs Investment Research estimate of Zoom Customers with 1-10 employees plus Zoom annual disclosure of customers with 11+ employees (5/19).
Internet Trends 107
2019

## Page 108

Freemium Enterprise =
Collaborative / Business-Critical / Annuity-Like
Dropbox ) Slack )
18MM 3.0% ine 4MM 50% ine
L
L
) ) d
r d r e
a e a R
B R B (
(
lue lue
B B
(
( Total
9MM 1.5% Total s 2MM 25%
s r f
r f e o
e o
s s %
U % U
r
r id e
id e a s
a s P U
P U
id
0 0% id a
a 0 0% P
2016 2017 2018 P 2015 2016 2017
Wix ) SurveyMonkey )
4MM 4% ine 0.8MM 4% ine
L L
) )
r d r d
a e a e
B R B R
( (
lue lue
B B
( (
2MM 2% Total 0.4MM 2% Total
s s
r f r f
e o e o
s s
U % U %

id r id r
e e
a s a s
P U P U

0 0% id 0 0% id
a a
2016 2017 2018 P 2016 2017 2018 P
Paid Users Paid % of Total Users
Source: Dropbox = Public releases & Goldman Sachs Investment Research estimates. Slack = Public press release (05/18), SurveyMonkey =
Company releases. Wix = Company presentation (3/19). Wix total users represent those with an account. Note: Paid users refers to subscribers to
Internet Trends premium products. Paid user % of total = share of payers in a period divided by total active users in the same period. 108
2019

## Page 109

Freemium Business Model Evolution =
Gaming→ Enterprise → Consumer
Internet Trends 109
2019

## Page 110

Freemium Consumer (2008) =
Spotify…
Free Paid
Share Music / Playlists With Others… …Premium User Experience
Paid Users + Share of Total
100MM 50%
)
ne
Li
ar) Red
B (

ue l
l ota
[Spotify] worked because we recognized… B T
( 50MM 25%
fans wanted all the world's music for free, immediately. of
ers
Our users share with their friends the Us er %
d Us
joy of exploring music through Spotify, ai
which creates incredible word-of-mouth for our business. P d
ai
P
…Our free product drives premium subscription growth,
that leads to better personalization & drives use among
younger demographics with greater potential lifetime value.
0 0%
Daniel Ek – Spotify, Founder / CEO, 3/18 2015 2016 2017 2018
Source: Spotify Analyst Day Presentation (3/18). Spotify.
Internet Trends 110
2019

## Page 111

…Freemium Consumer (2015) =
Canva
Free Paid
Design With Others… …Premium User Experience
Monthly Active Users + Designs Created
20MM 120MM s
on
i
l
)l
nei
ar) LiM
B
Red
(
ue
l
B ted
( ea
ers Cr

We want everyone in the world to be able to design, whether you are Us s
e 10MM 60MM gn
v i
in marketing, sales, a teacher or student - design has become a ti
c
critical part of most professions to communicate ideas. A Des

y y
l l
Rather than being stuck with complicated desktop based tools, we nth nth
want everyone in the world to be able to create incredible designs Mo Mo
that look professional and make them proud.
Giving people legitimate value before asking them to pay can be a
really useful strategy for any company wanting widespread adoption.
Melanie Perkins – Canva, Co-Founder / CEO, 6/19 0 0
5/16 5/17 5/18 5/19
Source: Canva (6/19).
Internet Trends 111
2019

## Page 112

Freemium Consumer =
Personalized / Efficient / Often Social / Annuity-Like
Amazon Prime Twitch
)
140MM 40% e 4MM 40%
in
L
) )
Red
Bar Bar
(
e l e
a
t
Blu o Blu
( T (

s 70MM 20% f s
r o r 2MM 20%

%
Use Use
r
id id
a Use a
P P
g
in
y
0 0% a
P 0 0%
2015 2016 2017 2018 2015 2016 2017 2018
Paid Users Paid % of Total Users
Chegg ) Cash App )
4MM 30% e ) e
in $400MM $4B in
L L
Bar

) Red e Red
(
Bar ( Blu
l ( d
e a n
t p e
o p p
Blu T A
( S
2MM 15% f h
s o $200MM $2B d
r
%
Cas Car
Use r
in h
id
a Use s
d Cas
P g n
in u d
y F
a ze
0 0% P d $0 $0 li
e a
2016 2017 2018 r u
o Q4:16 Q2:17 Q4:17 Q2:18 Q4:18 n
t n
S A
Paid Users Paid % of Total Users Stored Funds Annualized Card Spend
Source: Amazon Prime = Morgan Stanley estimates. Twitch = Morgan Stanley estimates. Chegg = Goldman Sachs Investment Research
estimates. Cash App = Square public disclosures. Note: Paying users = subscribers for Amazon Prime / Twitch / Chegg. For Cash App, stored
Internet Trends funds represent aggregate customer balances in the app as of the last day of the quarter. For all except Cash App, paid user % of total = share 112
2019 of payers in a period divided by total active users in the same period. Active users for Amazon = Active Paid accounts per MS estimates.

## Page 113

Freemium Business Evolution =
Started in Gaming
Evolving / Emerging in
Enterprise + Consumer…
All In…Just Getting Started
Internet Trends 113
2019

## Page 114

Freemium Business Models =
All In…Just Getting Started
Select Publicly Traded Pure-Play Freemium Businesses*
>10MM Paid Subscribers (3/19) >$1B Annual Revenue (2018)
$1B+ Primary
Revenue Monetization
1st Year Drivers
Gaming Nexon 2011 Paid Items / Ads /
Gaming Epic Games 27MM** Subscriptions
(Private Company) King Digital 2013 Paid Items / Ads /
Subscriptions
Supercell 2014 Paid Items /
Enterprise Dropbox 13MM** Subscriptions
Mixi 2015 Paid Items
Netmarble 2016 Paid Items
Consumer Spotify 100MM** Epic Games 2018 Paid Items /
Subscriptions
(Private Company)
Enterprise Dropbox 2017 Subscriptions
Consumer Spotify 2014 Subscription /
Ads
Pandora 2015 Subscription /
Ads
MatchGroup 2016 Subscription /
Ads
*Excluding China companies where Freemium business models are more mature owing to higher maturity of digital payments, particularly microtransactions / Excludes diversified
companies (such as Apple / Amazon / Microsoft ) owing to significant revenue contribution from non-freemium businesses / Includes private company Epic owing to scale.
Internet Trends **Epic = Midpoint of 23-31MM estimate for Battle Pass subscribers per Timothy O’Shea @ Jeffries (3/19)…not confirmed by Epic Games. Source: CapitalIQ (including currency 114
2019 conversion) = Nexon / King (2018 Revenue as part of Activision) / Pandora / Mixi / Match Group / Dropbox / Netmarble. Spotify = Wall Street Journal / Company reports. Supercell =
Venture Beat.

## Page 115

Freemium Business Model
Enabler =
Cloud Deployment…
Internet Trends 115
2019

## Page 116

Cloud Deployment =
Revenue +58% Y/Y…
Cloud Service Revenue –Amazon + Microsoft + Google
$14B 100%
e )
u ine
L
n
e d
e
Rev$7B 50% (R
l th
a w
b
Glo Gro

/Y
Y
$0 0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2015 2016 2017 2018 2019
Amazon AWS Microsoft Azure Google Cloud
Source: Amazon AWS = Company filings, Microsoft Azure = Keith Weiss @ Morgan Stanley (4/18), Google Cloud = Brian Nowak @
Internet Trends Morgan Stanley (5/18). Note: Google Cloud revenue based on MS annual estimate, applied to quarters using the seasonality trends 116
2019 on 2018. Google only included in 2019 growth rates owing to lack of estimates before 2018.

## Page 117

…Cloud Deployment =
22% of Workloads +2x vs. Five Years Ago
Technology Adoption Rates, Global per Morgan Stanley
100%
%)
(
on
pti
do
/ A
on50%
etrati
en
P

y 22%
og
ol
hn
ec
T
0%
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Cloud (% of Workloads) Laptop (% of PC Sales)
Cloud (% of Enterprise Workloads)
Smartphone (% of Handset Sales) Online Music (% of Total Sales)
Source: Morgan Stanley (5/18-3/19). Note: Estimate of Cloud workload
Internet Trends penetration based on Morgan Stanley CIO survey in Q4 of each year. 117
2019

## Page 118

…Cloud Deployment =
Interest Continues to Rise
Cloud Usage – CIO Survey, USA / EU per Morgan Stanley
50% 49%
37% 39%

ts
n
e 27%
d
n
o 25%
p
s
% Re
0% Platform as a Service
PaaS Iaas
Infrastructure as a Service
(PaaS) (IaaS)
Q1:18 Q1:19
Source: Morgan Stanley Q1:19 CIO Survey. N= 100 USA / EU CIOs of major companies. Infrastructure as a service defined as
Internet Trends cloud computing that uses virtualized resources in the cloud (i.e. processing, storage, etc.), but not software or other value add 118
2019 services. Platform as a service defined as cloud based hardware / software platforms, such as managed middleware.

## Page 119

…Freemium / Subscription Business Model
Enabler =
Efficient Digital Payments
Internet Trends 119
2019

## Page 120

Digital Payments =
>50% of Day-to-Day Transactions
Transactions by Payment Channel
Thinking of your past 10 everyday transactions, how many were made in each of the following ways?
In-Store 41%
In-Store
Other Online 14%
Buy Buttons 9%
Other Mobile Payments 8%
59% = P2P Transfer 7%
Digital Mobile Messenger Apps 7%
Other In-App Payments 4%
QR Codes 5%
Smart Home Device 2%
Wearables / Contactless 2%
Other 2%
0% 25% 50%
% of Global Responses (6/18)
Source: Visa Global Commerce Unbound 2018 (2/19). Note: Full question was ‘Please think about the payments you make for everyday transactions (excluding rent,
mortgage, or other larger, infrequent payments). Thinking of your past 10 everyday transactions, how many were made in each of the following ways?’, GfK Research
Internet Trends conducted the survey with n = 8,127 across 20 countries (USA, Canada, UK, France, Poland, Germany, Sweden, Mexico, Brazil, Argentina, Colombia, Australia, China, 120
2019 India, Japan, South Korea, Russia, UAE, Kenya), between 5/31/18 – 6/29/18. All respondents do not work in Financial Services, Marketing, Marketing Research,
Advertising, or Public Relations, own & currently use a smartphone, have a savings or checking account; own/use a computer or tablet, & own a credit or debit card.

## Page 121

DATA GROWTH =
CHANGING WAYS THINGS WORK…
RAPIDLY & GLOBALLY
Internet Trends 121
2019

## Page 122

Data
Collection + Analysis + Utilization =
Evolving From
Humans to Humans / Computers
Internet Trends 122
2019

## Page 123

Pre-1995
Winning Businesses =
Use HumanData / Insights
To Improve Customer Experiences…
Internet Trends 123
2019

## Page 124

Product Development (1890s-1950s)…
IBM = Feet-on-Street Customer Input
Sales Force + Customers IBM
Annual Revenue
$2B
ue
IBM developed a sales force that became deeply en $1B
knowledgeable about their customers’ operations & could Rev
explain benefits specific to each organization.
Customers became highly engaged with IBM
employees to explain what product innovations they
needed to better use these [tabulation machines] that had
become so essential to their operations.
Research & development at IBM depended on this
interaction between engineers & customers.
James Cortada – Change & Continuity at IBM, 3/18 $0
1910 1935 1960
Source: IBM Revenue per IBM Online History Archives (Collected 2019). James W. Cortada’s ‘Change & Continuity’ at IBM: Key Themes in Histories of
IBM (Cambridge Press, Spring 2018 edition). Cimarron City Library Digital Archives. Note: Image contains a mixture of IBM sales people, engineers &
Internet Trends customers gathered @ IBM Corporation School for collaborative working sessions. Photo taken 1951. 124
2019

## Page 125

Product Development (1970s)…
Nike = Employee / User Input
Employee / User Nike
Annual Revenue
$500MM
ue
All our employees were runners, en $250MM
we understood the consumer very well… Rev
We & the consumer were one & the same.
We got to know the players at the top of the game & did
everything we could to understand what they needed,
both from a technological & a design perspective.
Our engineers & designers spent a lot of time
talking to the athletes about what they needed
both functionally & aesthetically. $0
1977 1979 1981
Phil Knight – Nike, Founder, 7/92
Source: Nike revenue from 1981 Nike Annual Report Quote: High-Performance Marketing: An Interview with Nike’s Phil Knight (HBR July/August 1992 issue)
Image: Nike. Note: Image Depicts Oregon Track Coach / Trainer Using Nike Shoes in Training & Improving New Models Using His Learnings.
Internet Trends 125
2019

## Page 126

Product Development (1980s)…
Chrysler = Focus Group Research
Focus Groups Chrysler
Annual Revenue
$28B
e
u
n
e $14B
1978 clinics in Atlanta, Denver & San Diego v
showed that customers wanted – Re
1984: Chrysler
The ability to park in a standard garage, Launches Dodge
a side door opening at least 30 inches wide… Caravan & Plymouth
seating for 3 people across, a flat interior floor, Voyager Minivans
removable seats & the ability to
walk from one end of the van to another.
David Zatz – Hemmings Magazine / ‘Mopar Minivans,’ 2/19 $0
1981 1984 1987
Source: Chrysler revenue as reported in The New York Times in each year. Data does not include pro-forma revenue from
acquisition of American Motors Corp. Quote: David Zatz’s ‘Mopar Minivans: Creating the first 20 years of Dodge, Chrysler, &
Internet Trends Plymouth “magic wagons’ as excerpted in Hemming’s Magazine (2019) Image: New York Times Digital Archives (1984) 126
2019

## Page 127

Product Development (1980s)…
Intuit = All-In Focus on Customer Testing
User / Usability Testing Intuit
Annual Revenue
$300MM
Kwik-Chek User Testing @ Palo Alto Junior League
(Inside Intuit, Taken 1984) ue
We recruited people off the streets & timed their en $150MM
Kwik-Chek (Quicken) usage with a stopwatch. Rev
After every test, programmers worked
to improve the program.
We did usability testing in 1984, five years before
anyone else, there’s a big difference between doing
it & having marketing people doing it as part of their
design…a very big difference between doing it &
having it be the core of what engineers focus on.
$0
Scott Cook – Intuit, Co-Founder, 9/03 1984 1989 1994
Source: Inside Intuit, Suzanne Taylor, 2003 Photo courtesy of Virginia Boyd as presented by Inside Intuit. Revenue as reported in ‘Inside
Intuit’ for 1988-1990 & as reported to the SEC for 1993/1994. Intuit released its first revenue-generating product, Kwik-Chek in 1984.
Internet Trends 127
2019

## Page 128

…1990s-2000s…
Internet + Mobile Device + Cloud
Netscape Web Browser – 1994
Amazon Web Services (AWS) – 2006
Apple iPhone – 2007
Apple App Store – 2008
Internet Trends 128
2019

## Page 129

…Post-1995
Winning Businesses =
Use Digital Data / Insights
To Improve Customer Experiences…
Internet Trends 129
2019

## Page 130

Marketing Optimization (Post-1995)…
Capital One = Customer Data
Digital Information Capture Capital One
Annual Revenue
$4B
ue
…the technology & information revolution had en $2B
transformed the credit card business into an Rev
information business…allowing the capture of
information on every customer
interaction & transaction.
With this information, we can conduct scientific tests;
build actuarially-based models of consumer behavior &
tailor products, pricing, credit lines & account management
to meet the individual needs & wants of each customer.
By exploiting this insight, we have transformed the $0
one-size-fits-all credit card industry & created 1991 1994 1997 2000
one of the fastest growing companies in America.
Capital One Annual Report – 1996
Source: Capital One Revenue From CapitalIQ (Collected 2019) Quote: 1996 Capital One Annual Report Image: 1998 Capital One Annual Report
Internet Trends 130
2019

## Page 131

User Experience + Sales Optimization (Post-1995)…
Amazon = Customer Data
Real-Time Amazon
Digital Information Capture Annual Revenue
$250B
ue
This is Day 1 for The Internet – en $125B
& if we execute well – for Amazon.com. Rev
Today, online commerce saves customers money &
precious time. Tomorrow, through personalization, online
commerce will accelerate the very process of discovery.
Amazon.com uses the Internet to create
real value for its customers &, by doing so,
hopes to create an enduring franchise.
This year, we maintained a dogged focus on improving the
shopping experience…we now offer...vastly more reviews, $0
content, browsing options & recommendation features. 1994 2006 2018
Amazon Annual Report – 1997
Source: Amazon Revenue from CapitalIQ (Collected 2019) Quote: 1997 Amazon Annual Report Image: Amazon.com (2019)
Internet Trends 131
2019

## Page 132

…2000s
Winning Businesses =
Build / Use
Data Plumbing Tools
To Use Digital Data / Insights
To Improve Customer Experiences
Internet Trends 132
2019

## Page 133

Data Plumbing Tools =
Helping Businesses Real-Time…
Collect Data…
Understand Customer Wants & Improve Business Processes
Increase Customer Input / Improve Products
Manage Direct Customer / Subscriber Relationships
Improve Consumer Decision Making
…Manage Connections…
Organize Internal + External Communication
Communicate with Customers via Multiple Channels
Organize Customer Data Across IT Systems
…Optimize Data
Improve Analytics / Recommendations / Personalization
Respond To Customer Events at Scale
Discover Business Insights + Optimize Fulfillment
Manage Data Growth & Eliminate Inefficiencies
Internet Trends 133
2019

## Page 134

Qualtrics + FabFitFun = Collect Data to…
Understand Customer Wants & Improve Business Processes
Qualtrics = Experience Management Qualtrics
Revenue
Every organization in the world needs to collect $500MM
experience data to close the massive gaps between the
experiences they think they are delivering & what is really
happening, both internally & externally. e
u
Collecting experience data through Qualtrics allows n
e
companies to make adjustments in real time & adapt v$250MM
to fast-paced, changing circumstances. This allows Re
those companies to quickly close experience gaps
with their customers & enables employees to work
more efficiently to serve those customers.
Ryan Smith – Qualtrics, Co-Founder, 6/19 $0
2016 2017 2018
FabFitFun = Community Input FabFitFun
Subscribers
We’re constantly tapping our members for real- 1.4MM
time feedback to better understand the products &
trends they like, the ingredients & formulations that
get them excited, & the categories that connect
them back to the FabFitFun brand & community. s
r
ibe
We’ve aggregated millions of data points about r 0.7MM
c
consumer product & brand preferences allowing us to s
b
precisely forecast satisfaction with personalized u
curations & enable a flywheel between deeper S
understanding & an improved member experience.
Daniel Broukhim– FabFitFun, Co-Founder / Co-CEO, 6/19 0
2016 2017 2018
Source: Qualtrics S-1 Filing (10/18). Morgan Stanley Estimate of 2018 Revenue (as part of SAP). FabFitFun (6/19)
Internet Trends 134
2019

## Page 135

Salesforce + Adidas = Collect Data to…
Increase Customer Input / Improve Products
Salesforce = Customer Engagement Salesforce
Annual Revenue
…as every company transforms their relationships $16B
with their customers…they're fundamentally
changing how they sell & how they service,
how they market & innovate.
e
u
They're connecting with their customers in a n
e $8B
whole new way. They're building incredible new v
intelligent 360-degree views of their customers, & Re
they're using extraordinary new tools to get
faster, more informed decisions & at the heart of
all this transformation is Salesforce.
Marc Benioff – Salesforce, Co-Founder / Co-CEO, 8/18 $0
FY2001 FY2010 FY2019
FY = January
Adidas = Customer Co-Creation Adidas
E-Commerce Sales
€2B
We need to be able to respond to consumer les
expectations immediately. The relationship a
S
between Adidas & Salesforce allows us to be
e
proactive in our designs – our ability to roll out c
new products & influence trends is amazing... mer €1B
m
o
Our direct connection with customers through C
-
Salesforce basically makes it happen overnight. E
Kasper Rorsted – Adidas, CEO, 6/18 €0
2014 2016 2018
Source: Salesforce SEC Filing. Goldman Sachs Investment Research. Marc Benioff @ FQ2:19 Salesforce.com Earnings
Call (8/18). Salesforce Connections 2018 Keynote Address, Adidas Annual Report (2018)
Internet Trends 135
2019

## Page 136

Stripe + Slack = Collect Data to…
Manage Direct Customer / Subscriber Relationships
Stripe = Transaction Management Stripe
Stripe Billing
…the most innovative companies are establishing
recurring relationships with their customers. 6.0x
As these businesses iterate to find the best pricing &
sales strategy, they’re often unnecessarily constrained by
what their billing system allows.
[Customers] needed to do more than just simple 3.5x
subscription management. Based on feedback from many
of our customers & others, we built Stripe Billing to
provide fast-growing businesses the tools to move quickly
& design billing around customer experience. 1.0x
Noah Pepper – Stripe, Engineering & Product Management, 4/18 2016 2017 2018 2019YTD
Slack = Effective Billing of Users Slack
Paying Share of Total Users
s 50%
r
Slack recently launched Fair Billing Policy & it e
s
makes our customers say 'Wow, that's amazing.‘ U
They'll tweet about it, tell their friends about it. Total

f 25%
They'll be very happy with us. They'll be much more o

e
likely to renew. They have a positive impression. r
a
h
S
That positive impression, obviously,
makes a huge difference. ing
y
a
Stewart Butterfield – Founder / CEO, Slack, 7/15 P 0%
2015 2016 2017 2018
Source: Stripe blog post (4/18). Stripe (6/19). Slack public disclosures (2015-2018). Stewart Butterfield Interview with SaaStr (7/15).
Internet Trends 136
2019

## Page 137

Plaid + Betterment = Collect Data to…
Improve Consumer Decision Making
Plaid = Financial Data Access Plaid
In the past, financial services were organized Bank Accounts Connected
geographically – a bank would serve a local population laid180MM
& offer whatever services it thought that area needed – P
which often meant many consumers were underserved.
h
Today, a new class of user-centric financial services it
w

companies are emerging that use data to tailor their d
e
t
services to the specific needs of individual consumers. c
e 90MM
n
n
Our goal at Plaid is to build the infrastructure that o
C

enables consumers to easily & securely share their s
t
financial data with any financial services app that n
u
helps them live healthier financial lives. o
c
c
A
0
Zach Perret – Plaid, Co-Founder / CEO, 6/19 k
n 2015 2016 2017 2018 2019
a
B
Betterment = Automated Financial Management Betterment
Assets Under Management
$20B
Emotions drive human behavior, especially when it ent
comes to money – people often engage in sub-optimal em
behaviors like trying to time the market. anag
Delivering high quality automated financial advice M $10B
in real-time at scale requires access to consumers’
financial data. We’re able to use data from Plaid der
Un
and other sources to deliver personalized, low-cost
s
financial advice to more than 450,000 customers. et
s
s
Jon Stein – Betterment, CEO, 6/19 A $0
12/15 9/16 6/17 3/18 12/18
Source: Plaid (6/19). Betterment disclosures and press releases (3/16-6/19).
Bank accounts connected refers to accounts connected to 3rd party services via Plaid.
Internet Trends 137
2019

## Page 138

Slack + HelloFresh = Manage Connections to…
Organize Internal + External Communication
Slack = Communication Channels Slack
Daily Active Users
r 12MM
a
e
Y
What Google is doing for the web,
f
o
we’re trying to structure by channel.
d
n
E

Team-first, organization-first approach to ,
s
messages as opposed to individual first. r
e
s 6MM
U

As individual productivity increases, it's the handoff e
iv
t
between people that gets more complicated. c
A
The talking to other people is the actual work.
y
il
a
Stewart Butterfield – Slack, Founder / CEO, 5/18 D
0
2014 2016 2018
HelloFresh = Feedback Mentoring HelloFresh
Annual Orders
HelloFresh uses Slack bots to 30MM
monitor social media. s
Whenever someone mentions HelloFresh, r
e
the bot pushes these notices into a Slack d
channel. They’re similarly alerted whenever Or
l
they get a review of their app on the a 15MM
u
n
Apple Store or Google Play. n
A
HelloFresh – 9/17
0
2016 2017 2018
Source: Slack Public Press Releases, Stewart Butterfield Interview With Inc. (5/18). Slack Public Case Study, Twitter (4/19) Hello Fresh Annual Reports.
Internet Trends 138
2019

## Page 139

Twilio + Shopify = Manage Connections to…
Communicate with Customers via Multiple Channels
Twilio = Customer Communication Twilio
Customers
15 years ago, talking to customers meant you 80K
had a phone number & customers could call it. r
Now, you’ve got text messaging, chat,
mobile apps with push notifications, WeChat, Yea

WhatsApp, Facebook Messenger. f
o

We want to provide one system that allows End40K

,
companies to keep up with this rapidly changing s
r
landscape & constantly iterating on those customer e
m
experiences with easy to use tools & infrastructure o
t
s
that they don’t have to worry about scaling. u
C
Jeff Lawson – Twilio, Founder / CEO. 11/17 0
2014 2016 2018
Shopify = Multi-Channel Dialog Shopify
Active Merchants
900K
We want to create an easy experience for our l
customers…we want to establish trust & a
form a human relationship with our customers b
lo
[merchants] when they reach out for G

,
s
support on our platform. t
n
a 450K
h
c
It is essential to give our team the tools to cultivate r
those relationships from anywhere in the world on e
M

the channels that our customers want to use. e
iv
t
Chris Wilson – Shopify, Merchant Operations, 11/18 Ac
0
2014 2016 2018
Source: Twilio Releases / Case Study (11/18). Jeff Lawson interview with BlogGeek.me (11/17).
Shopify active merchants per Brian Essex @ Morgan Stanley.
Internet Trends 139
2019

## Page 140

Segment + Meredith = Manage Connections to…
Organize Customer Data Across IT Systems
Segment = Customer Data Infrastructure Segment
Annual Recurring Revenue
Today’s customers expect highly relevant,
contextualized experiences wherever they interact with
a business. However, this is an extremely difficult
technology problem to solve.
Businesses are interacting with customers across
dozens of digital channels, leading to a tangled mess
of data that is siloed throughout their organization.
Customer Data Infrastructure solves this problem.
It allows companies to collect, manage & easily
route their first-party data to whichever application
requires it, ensuring customer experiences are
consistent and relevant.
Peter Reinhardt – Segment, Co-Founder / CEO, 6/19
Meredith = Content Recommendation Meredith
l) Digital Advertising Share of Total
a
t
To 40%
Segment has enabled us to streamline
f
o
the customer data capture process,
%
while maintaining flexibility to customize (

for each of our 36+ magazine brands as needed. e
u
n
e
v
Before adopting Segment, we were spending far too e 20%
R
much money on disjointed analytics & we had
g
no way to look at the entire network at scale… in
is
t
r
We now look across the entire organization to make sure e
we’re best serving all of these groups. Adv
l 0%
a
it 2012 2015 2018
Grace Preyapongpisan& Kerry-Anne Doyle – ig
Meredith, Business Intelligence, 1/18 D
Source: Segment, Peter Reinhardt Blog Post (9/18). Segment Release (2018) Meredith Annual Reports (2012-2018). Note: Meredith digital advertising reflects National Media segment.
Internet Trends 140
2019

## Page 141

Snowflake + Instacart = Optimize Data to…
Improve Analytics / Recommendations / Personalization
Snowflake = Broad Data Access Snowflake
There's a lot of value in business data, but most Monthly Active Customers
companies struggle to extract that value. ~2,000
The issue is with existing technology. The list of
challenges we hear from our customers is consistent:
Data is segregated into separate silos,
significant energy goes into managing
infrastructure, concurrency & resource
limitations get in the way of business needs &
overall the tools are hard to work with.
Snowflake's unique architecture solves these problems
being built from the ground up to leverage the scale,
performance & elasticity of the cloud.
2014 2015 2016 2017 2018 2019
Frank Slootman – Snowflake, CEO, 6/19
Instacart = Product Replacements Instacart
Households Covered
Every time an Instacart shopper scans an item into 100MM+
their cart or marks an item as “not found,” we get
information that helps us make granular predictions of
an item’s in-store availability. This helps us
recommend appropriate replacements for
items likely to be out-of-stock.
Among other improvements, performing
complicated feature engineering in our
Snowflake data warehouse instead of python,
this new [item replacement] tool, which scores <20MM
15x more items than previous tools, was built
with 1/5 of the resources in 1/4 of the time. 2016 2017 2018
Instacart – 12/18
Source: Snowflake (5/19). Instacart (12/18).
Internet Trends 141
2019

## Page 142

Confluent + Accor = Optimize Data to…
Respond to Customer Events at Scale
Confluent = Data / Event / Response Confluent
Annual Bookings
Companies are still running on tech from batch-process 6x
era, yet their customers expect experiences with
real-time, contextual information.
Companies are now re-architecting their businesses
around real-time data with a new kind of data
infrastructure called event streaming platforms. 3x
With Confluent, companies can connect all of their
systems & power applications with live data sources.
Now, they can engage their customers
based on real-time events.
0x
Jay Kreps – Confluent, CEO, 6/19 2014 2015 2016 2017 2018
Accor = Availability Request Processing Accor
Monthly Requests for Lodging Availability
Accor’s augmented hospitality offerings include 4,800 6B
hotels, resorts, & residences across 100 countries.
As part of a shift to a more connected, real-time
future, Confluent is helping simplify & transform
the bookinglifecycle, connecting the data & event 3B
streams that are triggered the second a customer
clicks ‘book,’ from processing the payment & fraud
detection to adding dietary requirements & room
preferences from previous bookings.
Julien Ramakichenin – VP Distributed & Intelligent Systems, Accor, 6/19 0
1/16 1/17 1/18 1/19
Source: Confluent (6/19), Accor (6/19)
Internet Trends 142
2019

## Page 143

Looker + FarFetch = Optimize Data to…
Discover Business Insights + Optimize Fulfillment
Looker = Business Intelligence Looker
Customers
Looker helps companies better understand
all the data they have & I think this has
been a holy grail for a long time.
Companies want to be data-driven. They want
their employees to be able to ask questions
& get factual answers.
When we started out, companies didn’t understand
the lifetime value of their customers
completely, & there was this chaos going –
we wanted to bring data into the reach of any
company so it could use it more effectively.
Frank Bien – Looker, President & CEO, 8/18 2012 2013 2014 2015 2016 2017 2018
FarFetch = Optimize Order Fulfillment FarFetch
Annual Net Orders
) 4MM
In luxury fashion, there is often a mismatch between s
supply & demand...Emerging brands typically have ion
t
a
no route to the global market & their distribution is limited. ll
e
c
n
Farfetch has more supply / demand data than a
C

anyone else in the luxury fashion industry & is now t
e 2MM
supplementing it with even more market data. N
(

s
r
e
Over time, Farfetch will turn that data into strategic d
commercial insights to form the basis of advisory for the Or
l
fashion industry (starting with the luxury brands) through a
u
the development of a disruptive insights platform. n
n 0
A 2015 2016 2017 2018
Farfetch – 3/19
Source: Looker (6/19) San Jose Mercury News (8/18). Farfetch release (3/19).
Internet Trends 143
2019

## Page 144

UiPath + Sumitomo Mitsui = Optimize Data to…
Manage Data Growth & Eliminate Inefficiencies
UiPath = Data-Driven Process Automation UiPath
Customers
…[Robotic Process Automation’s (RPA)] benefits 3.0K
compound as employees are freed from the
burden of routine, monotonous manual work, r
enabling them to focus on high-value tasks such a
e
Y
as improving customer service, enabling front-line
staff to retrieve more data at a faster rate & Of

enhancing every aspect, from the booking d
n 1.5K
E
experience to customer service support.
,
s
r
UiPath Computer e
This leads to greater employee satisfaction & m
o
Vision Training more productive staff who deliver better customer t
s
service experience & positive feedback from u
C
customers. 0
2016 2017 2018
Daniel Dines – UiPath, Founder / CEO, 4/18
Sumitomo Mitsui = Increase Support Capacity Sumitomo Mitsui
s Digital Customer Penetration*
e 30%
Our key areas of RPA implementation include – ic
v
r
information gathering processes used to enhance e
S
sales & planning capabilities (customer transaction / l
industry data) & supporting branch operations a
igit
(customer performance reports / mortgage loan D
brochures).
ing
s 15%
U

The anticipated 3MM person-hours of productivity s
r
to be generated over the next 3 years [by using e
m
RPA] will be used to expand value-add operations, o
t
like enhancement of sales capacity through s
u
C
improved customer proposals.
f
o
0%
e
r 2016 2017 2018
Sumitomo Mitsui Financial Group a
h
S
Source: UiPath. Daniel Dines interview with Aviation & Defense Universe (4/18). Sumitomo Mitsui Banking Corporation press release (11/17) & 2017
annual report (5/18). Digital penetration defined as share of customers using any digital channel to conduct banking operations.
Internet Trends 144
2019

## Page 145

…Data Plumbing Tools =
Helping Businesses Real-Time
Collect Data…
Understand Customer Wants & Improve Business Processes
Increase Customer Input / Improve Products
Manage Direct Customer / Subscriber Relationships
Improve Consumer Decision Making
…Manage Connections…
Organize Internal + External Communication
Communicate with Customers via Multiple Channels
Organize Customer Data Across IT Systems
…Optimize Data
Improve Analytics / Recommendations / Personalization
Respond To Customer Events at Scale
Discover Business Insights + Optimize Fulfillment
Manage Data Growth & Eliminate Inefficiencies
Internet Trends 145
2019

## Page 146

Data is now fundamental to how people work &
the most successful companies have intelligently
integrated it into everyone's daily workflow…
Data is the new application.
Frank Bien – CEO & President, Looker, 6/19
Internet Trends 146
2019

## Page 147

Data / Artificial Intelligence
– Used Properly –
Can Improve Customer Satisfaction
Internet Trends 147
2019

## Page 148

Retail Customer Satisfaction =
Can Rise With Data + Personalization
Survey of Retail Customers
91%
Prefer Brands that Provide
Personalized Offers / Recommendations
83%
Willing to Passively Share Data in
Exchange for Personalized Experiences
74%
Willing to Actively Share Data in
Exchange for Personalized Experiences
Accenture (Global*)
Source: *Accenture survey of 8,000 consumers in Canada, France, Germany, Italy, Spain, Sweden, The UK, & USA (2018).
Note: Passively sharing data includes things like purchase history, etc. Active sharing data would include brand preference, favorite fabrics, etc.
Internet Trends 148
2019

## Page 149

People around the world have called for comprehensive
privacy regulation in line with the European Union’s
General Data Protection Regulation, & I agree…
…[New Regulation] should protect your right
to choose how your information is used —
while enabling companies to use information for
safety purposes & to provide services.
Mark Zuckerberg – Co-Founder / CEO, Facebook, 3/19
Internet Trends 149
2019

## Page 150

Data Volume + Utilization =
Evolving Rapidly / Broadly
Internet Trends 150
2019

## Page 151

Data Volume = Extraordinary Growth…
~13% Structured / Tagged & Rising Rapidly
New Data Captured / Created / Replicated, per IDC
200ZB 32%
B)
(Z
Global
Annual, 100ZB Replicated
16% Data
e,
olum 13%
V
a 10%
at
D 9% Structured Original
0ZB Data
2005 2010 2015 2020E 2025E
2018
Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere. Note:
1 petabyte = 1MM gigabytes, 1 zeta byte = 1MM petabytes of new data created / captured each year. The grey area in the graph represents
Internet Trends data generated, not stored. Structured data indicates data that has been organized so that it is easily searchable & includes metadata & 151
2019 machine-to-machine (M2M) data. Replicated data = data that is a copy of the original..

## Page 152

Data Propagation = Expanding…
Endpoints ⇋ Edge ⇋Core
ENDPOINT
People
EDGE
Branch Offices
CORE
Large
Datacenters,
Including Public &
Private Cloud
Connected
Processes
Source: Adapted from Graphics presented in IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere.
Internet Trends 152
2019

## Page 153

Data Stewardship = Evolving…
Enterprise Surpassed Consumer…Cloud Overtaking Both
Data Stored by Manager, per IDC
70%
(%)
l
a
b
Glo
l, 35%
ta
o
T

f
o
re
a
h
S
0%
2018
2010 2012 2014 2016 2018 2020 2022 2024
Consumer Enterprise Cloud
Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere.
Note: Consumer refers to devices owned by end users, such as smartphones, computers, external hard drives, etc. Enterprise refers to data
Internet Trends stored by businesses, often in on-premise data centers. Public cloud refers to services such as Amazon Web Services, Microsoft Azure, 153
2019 Google Cloud, etc. Note: 2018 = last full year before release of report. 2019-2025 are estimated from current trends.

## Page 154

Data Volume Share = EMEA Leads…
Followed by Fast Rising China…USA Falling
New Data Captured / Created / Replicated by Region, per IDC
40%
(%)
l
a
b
Glo
l, 20%
ta
o
T

f
o
re
a
h
S
0%
2018
2010 2012 2014 2016 2018 2020 2022 2024
EMEA China USA Asia (Ex-China) ROW
Source: IDC ‘Digitization of the World From Edge to Core White Paper’ developed in collaboration with Seagate (11/18), IDC DataSphere. IDC estimates
that China’s Data captured / created / replicated will grow 30% annually for next 7 years owing to more Internet users creating more data in China &
Internet Trends China’s above average usage of video surveillance – video is by far the most data-intensive type of data commonly captured / created / replicated today. 154
2019 EMEA’s datasphere is the largest in the world today owing, in part, to their mature use of video surveillance technology. Note: EMEA = Europe, Middle
East & Africa. ROW = Rest of World. Note: 2018 = last full year before release of report. 2019-2025 are estimated from current trends.

## Page 155

The data-driven world will be always on, always tracking, always monitoring,
always listening & always watching – because it will be always learning.
What we perceive to be randomness will be bounded into
patterns of normality by sophisticated artificial intelligence algorithms
that will deliver the future in new & personalized ways.
Artificial intelligence will drive even more automation into businesses & feed
processes & engagements that will deliver new levels of efficiency & products
that are tailored to business outcomes & individual customer preferences.
Today, companies are leveraging data to improve customer experiences,
open new markets, make employees & processes more productive &
create new sources of competitive advantage…
Traditional paradigms will be redefined (like vehicle or white goods ownership)
& ethical, moral & societal norms will be challenged…
David Reinsel / John Gantz / John Rydning – IDC, The Digitization of the World – From Edge to Core, 11/18
Internet Trends 155
2019

## Page 156

Data Volume + Utilization…
Technology Change > Human Adaptability
Humans’ ability to adapt to 14
technological change is increasing, Technology
but it is not keeping pace with the speed 12
of scientific & technological innovation.
To overcome the resulting friction, 10
humans can adapt by developing e We Are
skills that enable faster learning & g Here
quicker iteration & experimentation. n 8
Potential Human
Cha Adaptability Acceleration

f Owing to Faster Learning &
o
Developing these skills is particularly important 6 Smarter Regulation
e
for policy makers & regulators who are looking Rat
to protect the public interest. They need to be 4 Human
ready to try new approaches, iterate & Adaptability
change with the times so tech progress
goes hand in hand with public benefit. 2
Astro Teller – X, The Moonshot Factory 0
Adapted from Thomas Friedman’s Thank You For Being Late, 2016 Time
Source: Adapted from quotes originally appearing in ‘Thank you For Being Late’ by Thomas Friedman, 2016. Updated in June 2019 by Astro Teller.
Internet Trends 156
2019

## Page 157

Consumers + Businesses + Regulators =
Increasingly Drinking from Data Firehose
Source: The Canadian Press
Internet Trends 157
2019

## Page 158

…INTERNET USAGE =
THERE ARE CONCERNS…THERE IS GOODNESS
Internet Trends 158
2019

## Page 159

Usage Concern =
Overload…
Internet Trends 159
2019

## Page 160

Adults ‘Almost Constantly’ Online =
26% vs. 21% Three Years Ago
% of Adults Online ‘Almost Constantly’
Overall By Age Group
30%
26% 18-29 2015 36%
2018 39%
A 21%
US
, 28%
ts 30-49
en 36%
nd15%
po
Res 12%
50-64
% of 17%
65+ 6%
8%
0% 2015 2018
All Adults 0% 25% 50%
Pew Survey (USA) % of Respondents in Pew Survey, USA
Source: Pew Research (7/15 + 1/18)
Internet Trends 160
2019

## Page 161

Social Media =
Positive & Negative
Do Social Media Platforms You Use Make These
Health-Related Factors Better or Worse?
Self-Expression
Self-Identity
Better / Community Building
Positive Emotional Support
Awareness of Others
Access To Health Info
Real-World Relationships
Loneliness
Average
Depression
Anxiety
Worse / Body Image
Negative Bullying
Fear of Missing Out
Sleep Quality / Amount
More Negative More Positive
Source: Royal Society For Public Health Survey of 1,479 British teens in ‘early-2017’ Each teen was asked to rate 5 of the most popular social
networks (YouTube, Facebook, Twitter, Snapchat & Instagram) on each dimension. Data presented = average of scores for each social network.
Internet Trends . 161
2019

## Page 162

Digital Media =
Users Taking Action to Reduce Usage
% of Adults Trying to Limit Personal Parent Actions to Regulate Children’s
Smartphone Use, USA Internet / Phone Usage
70% 60% 57%
63%
52%
A A
47% US
, 39%
US ts
s, en
ent nd
d po
n 35% 30%
o
p Res
Res
f arent
o P 16%

% % of
0% 0% Used Digital Used Digital
2017 2018 Used Parental Controls For Used Parental Controls For
Websites Phone Use
Parental Controls Parental Controls
for Websites for Phone Use
2015 2018
Pew Survey (USA)
Source: Deloitte Mobile Consumer Survey, US (11/18) Pew Research (7/15 + 1/18)
Internet Trends 162
2019

## Page 163

Digital Media =
Businesses Taking Action to Help Users Monitor Usage
2018
Major Platforms Launched Wellness / Time Tracking Features
Apple Google Facebook YouTube
Screen Time Digital Wellbeing Your Time on Facebook Time Watched
Source: Apple, YouTube, Google, Facebook
Internet Trends 163
2019

## Page 164

Social Media Usage = Decelerating…
+1% vs. 6% Y/Y
Daily Time Spent on Social Media, Global
2.4 16%
ar) )
B
ne
ue
l Li
B
( ed
nt R
(
pe1.2 8%
Y
S /
s Y
r h,
ou t
H ow
r
y
l G
ai
D
0 0%
1/14 1/15 1/16 1/17 1/18 1/19
Source: Hootsuite & WeAreSocial Digital 2019 report (1/19). Note: 2019 Estimate owing to the fact that users were surveyed in January 2019, before they have completed the year 2019.
Internet Trends 164
2019

## Page 165

…Usage Concern =
Privacy…
Internet Trends 165
2019

## Page 166

Digital Media =
Privacy Concerns High But Moderating
People More Concerned About Internet Privacy vs. One Year Ago, Global
80%
64%
ts 52%
n
e
d
n
o
p 40%
s
Re

f
% o
2015 – Anthem Health announces that 2017 – Equifax reveals the personal
80MM personal health financial records of
records were stolen in a over 145MM Americans owing to an
‘sophisticated attack’ unsecured web portal
2014 – The New York Times reports on 2016 – Yahoo! reveals that 3B 2018 – The New York Times reveals
NSA documents showcasing government Customer records, including names, Cambridge Analytica improperly
tracking of USA smartphone use address & encrypted passwords were accesses 87MM Facebook profiles
breached
0%
2014 2015 2016 2017 2018
Source: CIGI-IPSOS Global Survey on Internet Security & Trust 2014, 2016, 2017, 2018. 2018 =
24,750 Internet users from 12/29/17-3/5/18. 2017 = 24,225, 2016 = 24,143, 2014 = 23,376.
Internet Trends 166
2019

## Page 167

Regulators / Businesses =
Improving Consumer Privacy Control
Regulators Mandating Businesses Improving
Privacy Rules / Policies Privacy Management
EU - GDPR California State Facebook Google
Passed – 2016 Passed – 2018 2018 2019
Effective – 2018 Effective – 2020
Source: Facebook (5/18). Google (4/18). EU – (3/18) State of California (6/18)
Internet Trends 167
2019

## Page 168

Digital Media =
Encrypted Messaging / Traffic Rising Rapidly
Select Messenger MAUs % of Web Traffic Encrypted
8B
100%
87%
ers l
e Us a
v b
o
ti l 53%
c 4B G
A ,
c
y i
l f 50%
f
a
nth r
T

Mo b
e
W

f
% o
0 0%
2014 2015 2016 2017 Q1:16 Q3:16 Q1:17 Q3:17 Q1:18 Q3:18 Q1:19
Default End-to-End Encryption
Optional / Announced End-to-End Encryption
No End-to-End Encryption
Source: Google, Tencent, Twitter, Facebook, Apple, Telegram releases & Morgan Stanley estimates. Note: *iMessage2 MAUs calculated by install base of Apple iPhones, as
estimated by Credit Suisse (2014-2017). WhatsApp employs end-to-end encryption by default. Facebook Messenger has end-to-end encryption capabilities but users have to
Internet Trends manually enable them. Instagram does not have end-to-end encryption but Facebook is planning to add that feature & make Facebook Messenger encrypted by default (1/19). All 168
2019 Gmail messages are encrypted at rest and in transit. Fortinet Q3:18 Quarterly Threat Landscape Report (11/18). HTTPS = Hyper Text Transfer Protocol Secure is the secure
protocol over which data is sent between the browser and the website the user is connected to.

## Page 169

…Usage Concern =
Problematic Content / Activity
Internet Trends 169
2019

## Page 170

More Than Half of Humanity (& Rising) =
Online
Internet Penetration, 2018
60%
51%
l
a
b
Glo
,
n
tio30%
tra
e 24%
n
e
P
t
rne
te
In
0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: CIA World Factbook, United Nations / International Telecommunications Union, USA Census Bureau. Internet user data is as of mid-year.
Internet user data: Pew Research (USA), China Internet Network Information Center (China), Islamic Republic News Agency / InternetWorldStats
Internet Trends / Bond estimates (Iran), Bond estimates based on IAMAI data (India), & APJII / GlobalWebIndex (Indonesia). 170
2019

## Page 171

Media Maxim =
People Prefer Negative News (2014)…
We use a lab experiment to capture participants’
news selection biases, alongside a survey
capturing their stated news preferences…
regardless of what participants say, they
exhibit a preference for negative news content.
Marc Trussler & Stuart Soroka – Consumer Demand for Cynical & Negative News Frames, 3/14
Source: The Journal of Media Economics (11/14) & The International Journal of Press / Politics (12/15).
Internet Trends 171
2019

## Page 172

…Media Maxim =
People Prefer Negative News (1909)
No one attempting to derive an estimate of the
present conditions in New York from the
front page contents of our many newspapers
could be blamed for concluding that society
is on the verge of deplorable anarchy.
James E. Rogers – University of Chicago Press, Quoting The Evening Post in The American Newspaper, 1909
Internet Trends 172
2019

## Page 173

Problematic Content on Internet =
Can Be Less Filtered + More Amplified
Internet Trends 173
2019

## Page 174

Images / Streaming =
Can Be More Powerful Than Text
Then Now
News via Edited Text News via Live Images
Source: The Library of Congress, The New York Times, Pixabay, Ring
Internet Trends 174
2019

## Page 175

Algorithms =
Can Amplify Users Own Patterns
Newsfeeds Curated Using…
Search Reading Followed App Followed
History History Accounts Interactions Interests
Google Apple Twitter Toutiao Reddit
Source: Google, Apple, Twitter, ByteDance, Reddit
Internet Trends 175
2019

## Page 176

Social Media =
Can Amplify Trending Topics
Do You Ever Get News or News Headlines from ____ ?
50%
43% Facebook
%)
(
nts
de
on25%
esp 21% YouTube
R

of
e
r 12% Twitter
ha
S
0%
2013 2014 2015 2016 2017 2018
Pew Survey (USA)
Source: Pew Research (9/18). Note Survey = 4,581 respondents interviewed between 7/30/18 & 8/12/18 vs. historical data from 2016 & 2013.
Note: Instagram / LinkedIn / Reddit / Snapchat / WhatsApp / Tumblr not shown owing to less than 10% of respondents using them to get news in 2018.
Internet Trends 176
2019

## Page 177

Traditional Media Platforms =
Can Amplify Social Media Trending Topics
% Articles Citing Content Originally
Posted To Facebook / Twitter (Leading Newspapers*)
6%
The topics for which
Facebook & Twitter are most commonly
er sourced [in newspaper articles] are
t
t
i similar across all countries –
Tw

/ among them are soft news topics as

k well as hard news topics such as
ceboo domestic & international politics,
Fa 3% breaking-news events or reporting
ng
i
t
i on movements, the last of which
C
es highlights the relative advantages of
cl
i
t
r social media as a
A
% source for journalists.
Gerret von Nordheim et al. – Sourcing the Sources, 6/18
0%
2010 2012 2014 2016
Source: Sourcing the Sources – Bournemouth University. *An analysis of the use of Twitter & Facebook as a journalistic source over 10 years in The New York Times, The Guardian,
& Süddeutsche Zeitung (leading newspapers in USA / UK / Germany). Analysis conducted by collecting articles from 2006-2016 across all 3 newspapers & running natural language
Internet Trends processing models on the text to identify articles that mention Facebook or Twitter as sources 177
2019

## Page 178

Social Media =
Can Amplify Bad Behavior
I Have Experienced _____ Online
42% = Offensive Name-Calling
32% = Spreading of False Rumors
16% = Physical Threats
Pew Survey (USA Teens)
Source: Pew Research (9/18). Note: survey = 731 respondents age 13-17 interviewed between 3/7/18 & 4/10/18
Internet Trends 178
2019

## Page 179

Motivated Bad Actors =
Can Amplify Ideologies
The main terrorist problem in the
United States today is one of individuals
radicalized by a diverse array of
ideologies absorbed from the Internet.
Peter Bergen & David Sterman – The Real Terrorist Threat in America - Foreign Affairs, 10/18
Internet Trends 179
2019

## Page 180

Unintended Bad Actors =
Can Amplify Misinformation
The Internet plays a role in fostering distinct & polarized
online communities among conspiracy theory believers...
Believers share their opinions & ‘evidence’
with other believers but are less willing to
share with people who are critical
of conspiracy theories –
with the Internet, conspiracy groups
become more homogeneous & their
beliefs become stronger over time.
Karen Douglas – Professor of Social Psychology, The University of Kent Writing for The Conversation, 6/18
Internet Trends 180
2019

## Page 181

Extreme Views =
Can Amplify Polarization
Polarization has been abetted by many factors. Americans are sorting themselves out
geographically, living in increasingly politically homogeneous neighborhoods.
Social media & the proliferation of media channels via the Internet & TV has played
a role, allowing people to communicate exclusively with people like themselves.
Identity & the growth of identity politics have also played a role – People have gravitated
toward groups that feel they are in a zero-sum competition against one another.
Francis Fukuyama – Stanford University, Professor of Political Science, 12/18
Distribution of Democrats & Republicans
On 10-item Scale of Political Values, per Pew Research, USA
Pew Survey (USA)
Note: Ideological consistency based on a scale of 10 political values questions (see methodology).The blue area in this chart represents the
ideological distribution of Democrats & Democratic-leaning independents; the red area of Republicans & Republican-leaning independents. The
Internet Trends overlap of these two distributions is shaded purple. Source: Pew Surveys conducted 1994-2017. Stanford release. 181
2019

## Page 182

Internet Platforms =
Driving Efforts to Reduce Problematic Content
Facebook YouTube
Content Items Removed vs. Videos Removed for Community Guideline Violations vs.
% Hate Speech Identified / Removed Before User Report Share Flagged / Removed Before First View
90MM 80% ) s10MM 80%
ar) ne on )
B Li ati
ol ne
ue i
l Red V Li
B (
( ne
i
m ng l Red
(
pa de
ui ew
S G i
ng t V
i ty
i s
er Reporti r
ud un i
l F
c Us m
x
E ore
, 45MM 40% ore Com5MM 40% ef
ed ef o B
B
ov T
ed ed
ng ov
Rem ov i
t w
O
en Rem Rem
h ed os
Cont ec ov de
pe
of Rem % Vi
es os
ec
i de
P i
% Hate S V
0 0% 0 0%
Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19 Q4:17 Q1:18 Q2:18 Q3:18 Q4:18 Q1:19
Source: Facebook Community Standards Enforcement Report (5/19). Pieces of content include posts, photos, videos or comments that were taken down due to violation of
community guidelines. Taking action could include removing a piece of content from Facebook, covering photos or videos that may be disturbing to some audiences with a
Internet Trends warning, or disabling accounts. Spam not included due to the scale (Billions of pieces of content removed quarterly. YouTube Community Guidelines enforcement Report (5/19). 182
2019 YouTube Community Guideline Violations can include sexual content, graphic / violent content, harassment, etc.

## Page 183

Consumers + Businesses =
Driving Efforts to Moderate Problematic Content
Global Independent Fact-Checking Organizations
200
The number of media outlets focused
obal on fact-checking & political
l accountability reporting has grown
G
, rapidly. Bolstered by new partnerships
ons
ati & technology, more fact-checking took
z
gani place during the 2016 election
r
O than in previous elections.
ng
i100
k
t Chec Media organizations including NPR
ac
F & The Washington Post report
ent record-breaking readership
Independ of their fact-checking work.
Alan Greenblatt – The American Press Institute, 4/17
0
2014 2015 2016 2017 2018
Source: Duke Reporter’s Lab Research (8/18). The Future of Fact-Checking: Moving Ahead in Political
Accountability Journalism, published by the American Press Institute (4/17)
Internet Trends 183
2019

## Page 184

We can definitely continue to improve how we manage the YouTube platform…
I see how much improvement we've already made…If you look back 2 years,
there were a lot of articles about how we handled violent extremism…
if you talk to experts in this field today, you can see we've made tremendous progress.
We are an information company - we committed last year to having >10,000 people moderating content…
I see how much progress we've already made. We just made changes to our
recommendation algorithms for borderline content & we've announced we've seen a
50% reduction in the views coming from recommendations on that content.
If you combine much better policies with technology to do that at scale,
I think you can be at a much better place.
Susan Wojcicki – CEO, YouTube, Interview @ Code Conference, 6/19
The Department of Homeland Security has engaged with major
social media companies to encourage them to continue to police their websites…
We do see that those efforts are bearing some fruit –
I think we have a long way to go & we look forward to continue
to engage with social media companies in that environment.
Brian Murphy – Principal Deputy Undersecretary, Department of Homeland Security, Testimony to USA Congress, 5/19
Internet Trends 184
2019

## Page 185

Perception of Internet (USA) =
Largely Positive for Individuals + Society
When You Add Up Internet Advantages & Disadvantages of
The Internet, It Has Been _____ for Me / Society
100% 90%
88%
ts 76%
n 70%
e
d
n
o
Resp50%

f
o
re
a
h
S
0% For Me = For Society =
Mostly Good Mostly Good
2014 2018
Pew Survey (USA)
Source: Pew Research. Poll of 1,785 USA Internet users from 1/3/18-1/10/18 & 2015, released on 4/30/18.
Internet Trends 185
2019

## Page 186

Age-Old Challenge of
Amplifying Good + Minimizing Bad =
Taking Rapid Twists & Turns
Internet Trends 186
2019

## Page 187

Global Relationships
Related to
Information + Data =
Evolving Differently / Rapidly
Internet Trends 187
2019

## Page 188

In a sense, the World Wide Web as we know it is over…
in its place is something altogether different:
a Balkanized ‘splinternet’…where your experience
online is determined by local regulation.
Mark Scott – Chief Technology Correspondent, Politico, 12/17 & 2/18
We need a new generation of laws
to govern a new generation of tech.
Brad Smith – President & Chief Legal Officer, Microsoft, 2/18
There’s a paradigm shift going on…
Governments are moving from a position of
non-interference to a realization that
if we want to keep a cross-border Internet going,
then we [need] a new system of governance.
Paul Fehlinger – Co-Founder, Internet & Jurisdiction Policy Network, 2/18
Note: ‘Splinternet’ originated by Clyde Wayne Crews Jr. writing for the Cato Institute in 2001.
Internet Trends 188
2019

## Page 189

Global Internet Freedom…
Partly-Free = Rising…Free / Not-Free = Falling
Freedom House –Freedom on the Net (Global, 2018)
Internet Users Live in a Country Where ______ Internet Population ‘Internet Freedom Status’
55% 40%
Political, social, or religious content 35%34%
is censored / blocked 33%
%) 29%
(
47% al
ob
l 24%
Government Internet surveillance G
,
powers have increased over past year on 20%
ati20%
ul
op
P
47%
f
Access to certain social media / e o
r
messaging platforms have been blocked ha
S
42%
Government has disconnected Internet /
mobile networks often for political reasons 0%
Free Partly-Free Not-Free
2016 2018
Source: Freedom on The Net Reports 2016 + 2018. Note: Freedom on the Net measures the level of Internet & digital media freedom in 65 countries. Each country receives a numerical score from 0 (the most free) to 100
(the least free), which serves as the basis for an Internet freedom status designation of FREE (0-30 points), PARTLY FREE (31-60 points), or NOT FREE (61-100 points). Ratings are determined through an examination of
Internet Trends three broad categories – Access (Assesses infrastructural & economic barriers to access). Content Limits (Examines filtering & blocking of websites) & User Rights (Measures legal protections & restrictions on online 189
2019 activity; surveillance; privacy; & repercussions for online activity, such as legal prosecution, imprisonment, physical attacks, or other forms of harassment. Scores do not add to 100 owing to non-analyzed countries.

## Page 190

Global Internet Freedom Framework (Freedom House)
Freedom House Freedom on The Net Index
Measures a country’s level of Internet / digital media freedom, using questions
derived from Article 19 of UN’s Universal Declaration of Human Rights:
Everyone has the right to freedom of opinion & expression; this right
includes freedom to hold opinions without interference & to seek, receive &
impart information & ideas through any media regardless of frontiers.
Countries are given points for: 1) Obstacles to Access; 2) Limits on Content; 3) Violations of User Rights
Free
Countries with low economic / infrastructural / regulatory barriers to Internet access…
minimal blocking / filtering of content / information…strong privacy protections
Partly-Free
Countries with some barriers to Internet access (like state-owned providers handicapping competition)…
some blocking of content / information (like news sites or temporary blocks on social media)…
some privacy violations (like data collection requirements with weak judicial oversight)
Not-Free
Countries with strong barriers to Internet access (like cutting off the internet to certain regions)
…strong blocking of content (news sites, opposition figures, permanent blocks on social media)…
rampant privacy violations (like data localization requirements with low judicial independence, unchecked surveillance)
Source: Freedom House’s Freedom on The Net Reports 2016-2018. Note: Freedom on the Net is a collaborative effort between a small team of Freedom House staff & an
extensive network of local researchers & advisors in 65 countries. Freedom on the Net’s in-country researchers have diverse backgrounds—academia, blogging, traditional
Internet Trends journalism, & tech— & track developments from their country of expertise. In the most repressive environments, Freedom House takes care to ensure researchers’ 190
2019 anonymity or, in exceptional cases, works with foreign nationals living outside their home country.

## Page 191

World Wide Web =
Webs of Worlds Driven by Local Regulation…
Internet Regulation High
Low
USA 7 Largest EU India China
Economies*
Global Internet User % 8% 8%* 12% 21%
• Diverse regulatory • Diverse regulatory • Diverse regulatory • Central government
bodies with varied / bodies with varied / bodies, many with power bodies with strong
Internet distinct powers distinct powers to regulate access regulatory power
Access • Privately-owned • Privately-owned • Government initiative to • High government
telecom infrastructure telecom infrastructure increase Internet access ownership / control of
accessible to nearly all accessible to nearly all & usage as a network infrastructure with
residents residents ‘public good’ ability to regulate access
• Virtually no content • Limited content • Event-driven content • Strong content regulation
filtering & strong free filtering & free speech filtering often without & no expectation of
Content speech protections protections direct public input with speech protection
Regulation • No political censorship, • Limited political some speech protection
strong protection for censorship, some • Some censorship, • Regulation to ‘create a
hosts of user-generated liability for hosts of generally to remove more harmonious
content user-generated content ‘insulting content’ digital society’
• Some legal privacy • Strong legal privacy • Some legal privacy • Ability to collect user
protections related to protections related to protections related to data for regulatory
User government collection any collection of user government collection of purposes
Regulation of user data data user data
• Limited regulation on • Limited regulation on • Required government • Required government
encryption / secure encryption / secure approval for encryption / approval for encryption /
communication communication secure communication secure communication
Legend
Limited Regulation Moderate Regulation Strong Regulation
Note: *Based on analysis of Germany / UK / France / Italy / Spain / The Netherlands / Sweden – 7 largest economies in The European Union, representing >70% of The EU GDP in 2018 & a majority
of votes in the EU Parliament…Individual policies vary across The EU, in particular, some eastern European Union countries (e.g., Hungary) significantly limit Internet freedom in stark contrast to
Internet Trends more open EU nations. Analysis also takes into account EU-wide directives, such as GDPR. Source: Adapted from Freedom House 2018 Freedom on the Net Report. Global Internet User % as of 191
2019 2018 per CIA World Factbook, United Nations / International Telecommunications Union, USA Census Bureau. Internet user data is as of mid-year. Internet user data: Pew Research (USA), China
Internet Network Information Center (China), estimates based on IAMAI data (India).

## Page 192

…World Wide Web =
Webs of Worlds Driven by Local Regulation
Global Internet Regulatory Observations per Foreign Affairs (9/18)
USA European Union
In 1997, USA negotiated an agreement through the World Trade The GDPR has…created a blueprint that other states &
Organization that committed 67 signatory countries to organizations will study closely as they, too, seek to properly
‘procompetitive regulatory telecommunications principles’… balance individuals’ rights to data protection with their other
As the Internet grew more centralized & as its role expanded, rights & with the legitimate interests of business & government.
policymakers failed to keep up. When it came to updating The law’s main innovation is to establish a bedrock principle of
regulations for online activities…the Internet was treated as a accountability. It places responsibility for properly collecting &
special realm that did not need regulation & the bad guys took notice. processing personal data squarely on organizations &
extends to individuals the right to prevent their data from
being collected or processed. The GDPR also gives
Karen Kornbluh – Senior Fellow for Digital Policy, Council on Foreign Relations individuals the right to insist that their data be deleted.
Helen Dixon – Data Protection Commissioner, Ireland
India China
When a service provider sends an authentication request to Chinese leaders want to ensure a harmonious Internet – one that
Aadhaar (India’s National Identity System), the purpose of the guides public opinion, supports good governance & fosters
authentication is not revealed; all the government knows is when economic growth but also is tightly controlled…
someone uses his Aadhaar number, not where or why.
[Aadahaar shows] India’s approach to the Internet China has promoted ‘cyber-sovereignty’ as an organizing
is simple – empower users with the technical & principle of Internet governance…China envisions
legal tools required to take back control of their data. a world of national Internets, with government control
justified by the sovereign rights of states.
Nandan Nilekani – Founding Chair of Unique Identification Authority of India Adam Segal – Chair, Emerging Technologies & National Security, Council on Foreign Relations
Source: ’World War Web,’ Foreign Affairs, September / October Edition 2018
Internet Trends 192
2019

## Page 193

Open Internet =
Can Benefit All Constituents
Internet Trends 193
2019

## Page 194

Open Internet =
Core Constituent Motivations
Consumers
Want to Get What They Want Efficiently & Inexpensively
Businesses
Want to Sell Products & Services Profitably
Regulators
Want to Protect Consumers / Businesses / Social Institutions
Internet Trends 194
2019

## Page 195

Open Internet =
Online Reviews Can Boost Multi-Sided Accountability…
Do Online Consumer Reviews / Government
Oversight Help ‘A Lot’ to _________
Ensure Safety of 41%
Ensure Safety of Products / Services
Products & Services 33%
Make Companies 45%
Make Companies Accountable to Consumers
Accountable to Consumers 30%
Make Consumers Feel 46%
Make Consumers Feel Confident About Purchases 25%
Confident About Purchases
0% 25% 50%
Consumer Reviews Government Oversight
Pew Survey (USA)
Source: Pew Research Survey (12/15). N = 4,787 USA Consumers.
Internet Trends 195
2019

## Page 196

…Open Internet =
Online Reviews Can Boost Multi-Sided Accountability
Airbnb
Total Host / Guest Reviews on Airbnb
90MM
Safety is our number one principle at
Airbnb, the whole thing only works if s
ew
you feel safe – we have a few hundred i
people on our Trust & Safety Team Rev
t
s
who really work with the ue
G

Airbnb community to facilitate that. ng
i
k
oo45MM
B
70% of guests – when they stay on &
nt
Airbnb – leave a review, which ou
c
means we’ve built a system that c
t A
allows the community to review Hos

l
properties on Airbnb & build trust. ota
T
Brian Chesky – CEO, Airbnb, 4/19
0
2013 2014 2015 2016 2017 2018
Source: Total host / guest reviews per Airbnb (6/19). Each booked trip taken on Airbnb can have 0-2 reviews depending on if the host account and/or booking guest writes a review.
Brian Chesky quote per interview on CBS News (4/19)
Internet Trends 196
2019

## Page 197

Reveals / Actions / Reactions
Amplified on Internet =
Can Drive Transparency + Rapid Change for
Consumers / Businesses / Regulators
Internet Trends 197
2019

## Page 198

Reveal / Action / Reaction…
Twitter = Communication Tool for Citizens…
Humanitarian Concerns
JJ Watt Hurricane Blood Emergency
Harvey Relief Donors India Rescue
$42MM Raised… …11K Donations… …Accident -> Safety
1 Year 1 Year <3 Hours
(2017) (2017) (2010)
Source: Twitter (7/10-8/17)
Internet Trends 198
2019

## Page 199

…Reveal / Action / Reaction…
Twitter = Communication Tool for Consumers + Businesses
Consumer / Business Concerns
Starbucks Glossier Under Armour
Starbucks Security Policy… …New Packaging… …New Steph Curry Shoe Sizes
<2 Days <1 Day <1 Week
(2018) (2019) (2018)
Source: Twitter (4/18-4/19) Note: Under Armour included ‘Curry 5’ shoes in the ‘Girl’s Shoes’ section of their website & updated sizing nomenclature to “Grade School” rather than ‘Boys.’
Internet Trends 199
2019

## Page 200

Reveal / Action / Reaction…
Social Media = Communication Tool for Citizens + Regulators
Social Media is Important For _________
69%
Getting Government Officials to Pay Attention to Issues
67%
Creating Sustained Movements for Social Change
58%
Influencing Government Policy Decisions
Pew Survey (USA)
Source: Pew Survey of 4,594 USA adults (6/18). Note: Percentages = respondents who responded ‘very important’ or ‘somewhat important’
Internet Trends 200
2019

## Page 201

Open Internet =
Can Be Messy, But Effective…
Consumer / Business / Regulators =
Key to Work Together to
Amplify Good + Minimize Bad
Internet Trends 201
2019

## Page 202

During the first two-decades of the Internet’s growth,
too much faith was put in the technology itself.
Not enough was done to address challenges
such as the spread of surveillance technologies,
abuse of online platforms & the general undermining of trust.
…[governments] should work to establish better baselines &
metrics to assess the Internet’s true impact, as well as the
kinds of actions that enable the good & mitigate the bad.
Advocates for the open Internet should acknowledge that regulation
can help, while remaining vigilant to unintended consequences.
…all of these stakeholders should continue to forge coalitions
that work across borders in support of flexible, focused &
rights-compliant efforts to improve freedom online.
Jason Pielemeier – Policy Director, The Global Network Initiative, Council on Foreign Relations Blog, 7/18
Internet Trends 202
2019

## Page 203

First Step in Long Journey =
An Algorithmic Bill of Rights?
Crowdsourced Algorithmic Bill of Rights, per Sigal Samuel @ Vox
1) Transparency
2) Explanation
3) Consent
4) Freedom from Bias
5) Feedback Mechanisms
6) Data Portability
7) Redress
8) Algorithmic Literacy
9) Independent Oversight
10) Federal / Global Governance
Source: In early 2019, Vox reached out to 10 experts (including Kartik Hosanagar – original proposer of an Algorithmic Bill of Rights) at the
forefront of investigating how Artificial Intelligence risk is creeping into multiple aspects of life. Vox reporter Sigal Samuel asked them each to
Internet Trends 203
2019 name a protection the public needs enshrined in law, resulting in a crowdsourced, proposed Algorithmic Bill of Rights.
Full detail available - https://www.vox.com/the-highlight/2019/5/22/18273284/ai-algorithmic-bill-of-rights-accountability-transparency-consent-bias

## Page 204

Highly Regulated Internet =
Can Favor State Control
Internet Trends 204
2019

## Page 205

A fundamental First Amendment principle is that all persons have access to places
where they can speak & listen & then, after reflection, speak & listen once more.
Today, one of the most important places to exchange views is cyberspace, particularly social
media, which offers relatively unlimited, low-cost capacity for communication of all kinds.
Anthony Kennedy –Former USA Supreme Court Justice – Majority Opinion, Packingham v. North Carolina, 6/2017
If there be time to expose through discussion the falsehood & fallacies,
to avert the evil by the processes of education,
the remedy to be applied is more speech, not enforced silence.
Louis Brandeis – Former USA Supreme Court Justice – Concurring Opinion, Whitney v. California, 5/1927
I urge improving the governance capacity in cyberspace & developing
a governing network led by the [Communist Party of China].
Internet media should spread positive information, uphold the correct
political direction & guide public opinion & values towards the right direction.
Internet service providers should take responsibility to prevent cyberspace
from degrading into a platform full of harmful, false & provocative information.
Xi Jinping – President of The People’s Republic of China, As Translated by Xinhua, 4/2018
Source: USA Supreme Court (6/17). As translated to English by official China State media (Xinhua, 4/18)
Internet Trends 205
2019

## Page 206

Cyber Attacks =
Sophistication + Scope Continue to Rise
Internet Trends 206
2019

## Page 207

Cyber Attacks =
Evolving Sponsors / Targets / Asks / Detection
1) State-Sponsored Actor Attacks = Rising
USA / UK / The Netherlands / Germany Have Publicly Indicted State-Actors
2) Large-Scale Data Provider Attacks = Rising
Cloud Providers / Telecoms / Data Brokers Seeing Elevated Attack Activity
3) Monetary Extortion Cases = Rising
Non-Attributable Currencies (e.g., Crypto) Enabling Anonymous Ransom Payments
4) Attack-to-Detection Dwell Time = Continues To Fall
Average Days = 78 (2018)…101 (2017)…416 (2011)
Source: FireEye M-Trends Report 2019
Internet Trends 207
2019

## Page 208

Cyber Attacks =
Opportunities Created by Online System Weaknesses
Data Center Operators –
Downtime Experienced in Past Year
per Uptime Institute
40%
31%
%)
( 25%
A financial services firm engaged a Mandiant Red nts
Team to evaluate the effectiveness of its information de
security team’s detection, prevention & response on20%
capabilities. The team was able to obtain full esp
R
administrative control of the company domain &
compromise all critical business applications without of
e
any software or operating system exploits. r
ha
S
Instead, the team focused on identifying
system misconfigurations, conducting social
engineering attacks & using the client’s
internal tools & documentation.
FireEye Threat Research, 4/19 0%
2017 2018
Source: Uptime Institute 2018 Report. FireEye Note: Uptime Institute is a professional services organization best known for its data center tier standards for data
center uptime. Each year, it conducts a survey of 900 data center operators on a variety of topics, including data center outages.
Internet Trends 208
2019

## Page 209

2-Factor Authentication =
Incomplete Adoption Limits Effectiveness
% Sites Supporting 2-Factor Authentication, Global*
60%
54% 52%
30%
Security experts have seen a significant uptick in the
number of clients securing their VPN or remote access
infrastructure with multi-factor authentication.
However, there is frequently a lack of multi-factor
authentication for applications being accessed
from within the internal corporate network.
0%
FireEye Threat Research, 4/19 2014 2015 2016 2017 2018
Source: Elie Bursztein (Security & Anti-Abuse Lead @ Google). analysis of dongleauth.info database data (12/18). FireEye (4/19)
Internet Trends 209
2019

## Page 210

Cyber Attacks =
Increasingly Focused on Sensitive Data
Sensitive Records Exposed in Security Breaches
500MM
As more & more customers move to al 447MM
ob
l
G
software as a service & cloud, ,
s
he
attackers are following data. c
ea
r
B

y
Attacks against cloud providers, urit
ec
telecoms & other organizations S
n 250MM
i

with access to large ed 198MM
s 178MM
po
amounts of data… x
E
increased in 2018.
ords
Rec
l
FireEye M-Trends Report 2018 ua 37MM
nn
A
0
2015 2016 2017 2018
Source: Identity Theft Resource Center (2014-2018). MalwareBytes 2019 State of Malware Report. Note: Trojan malware = malware specifically designed to evade detection by security software.
Observed volume calculated as an average of monthly observations for a quarter. A sensitive record defined as personal information that could be used to commit a crime against a victim exposed
Internet Trends 210
2019 due to an online security breach (e.g., bank credentials being accessed illicitly). Variation in number of records often driven by large individual breaches. In 2015, Anthem Health revealed 78MM
personal records via breach. In 2017 Equifax exposed ~150MM personal records via breach. In 2018, Marriott International exposed ~383MM records via breach.

## Page 211

Cyber Attacks =
Effects Amplified by State Sponsorship
States are using the tools of cyberwarfare
to undermine the very foundation of the Internet: trust.
They are hacking into banks, meddling in elections, stealing
intellectual property & bringing private companies to a standstill.
The result is that an arena that the world relies on for
economic & informational exchange has turned into an active battlefield.
Cyber-operations are emblematic of a new style of competition…
In operation after operation, many of them hardly registered
by the wider world, states are weaponizing the Internet.
All these incidents occurred in a gray zone of conflict –
below the threshold of outright war
but above that of purely peacetime behavior.
Michèle Flournoy & Michael Sulmeyer – Co-Founders, WestExec Advisors, Foreign Affairs, 9/18
Internet Trends 211
2019

## Page 212

WORK =
STRONG ECONOMIC INDICATORS…
INTERNET-ENABLED SERVICES / JOBS HELPING
Internet Trends 212
2019

## Page 213

Global Relative GDP (Current $) =
China + USA + India Rising…Europe Falling
Global GDP Contribution (Current $)
40%
40%
GDP26%
l 25%
a
b
Glo20% 22%

f
% o 15%
6% 7%
4% 3%
3%
0%
1960 1970 1980 1990 2000 2010 2017
USA Europe China India Latin America
Source: World Bank (GDP in current $). Other countries account for ~30% of global GDP.
Internet Trends 213
2019

## Page 214

Cross-Border Trade = 29% of Global GDP…
Foundational to Global Economy
Trade as % of Global GDP
40%
DP
G
al
ob
l 20%
G

% of
0%
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2017
Source: World Bank. Note: ‘World Trade’ refers to the average of Imports & Exports (to account for goods in-transit between years) for all nations.
Internet Trends 214
2019

## Page 215

Global Relative Unemployment Concern = High…
USA = Low…
Are unemployment & jobs among top three worries for your home country?
Ipsos / Reuters Surveys
40% 38%
y 34% 33%
el
v
i
t
osi
P

g 24%
erin
nsw 20%
A 17%
nts
de 11%
on
esp
R
%
0% 2/17 3/18 3/19 2/17 3/18 3/19
World Average USA
Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative sample of >1K
people in 28 representative countries. February 2017 included owing to lack of published March 2017 report. World average reflects average of Germany, Israel, UK, USA, Belgium,
Internet Trends Japan, Poland, Sweden, China, Hungary, Peru, Turkey, India, Australia, Canada, Mexico, Brazil, Russia, France, Argentina, Saudi Arabia, South Africa, South Korea, Italy & Spain. 215
2019

## Page 216

…Global Relative Unemployment Concern…
USA = Materially Below Other Countries…
Are unemployment & jobs among top three worries for your home country?
Ipsos / Reuters Survey (3/19)
Rank Country Share Rank Country Share
1 Italy 69% 14 China 29%
2 South Korea 66% 15 Canada 27%
3 Spain 61% 16 Belgium 24%
4 South Africa 57% 17 Peru 22%
5 Argentina 49% 18 Japan 19%
6 India 44% 19 Israel 18%
7 Turkey 44% 20 Hungary 17%
8 Mexico 38% 21 Sweden 15%
9 Brazil 35% 22 Poland 15%
10 Saudi Arabia 34% 23 UK 14%
11 Russia 33% 24 Germany 11%
12 France 32% 25 USA 11%
13 Australia 30%
Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative
sample of >1K people in USA & other countries. Note: Percentages do not add to 100% because respondents were allowed to pick 3 choices. . .’
Internet Trends 216
2019

## Page 217

…USA Relative Unemployment Concern =
Low & Falling
Which of following are top three worries for your home country (USA)?
Ipsos / Reuters Surveys
February 2017 March 2018 March 2019
Rank Concern Share Rank Concern Share Rank Concern Share
1 Healthcare 36% 1 Crime & Violence 35% 1 Healthcare 39%
2 Crime & Violence 33% 2 Healthcare 33% 2 Financial/Political Corruption 28%
3 Terrorism 31% 3 Terrorism 29% 3 Immigration 28%
4 Unemployment & Jobs 24% 4 Financial/Political Corruption 23% 4 Moral Decline 26%
5 Financial/Political Corruption 22% 5 Immigration 23% 5 Crime & Violence 22%
6 Immigration 21% 6 Moral Decline 23% 6 Poverty & Social Inequality 21%
7 Moral Decline 20% 7 Poverty & Social Inequality 19% 7 Climate Change 21%
8 Poverty & Social Inequality 19% 8 Unemployment & Jobs 17% 8 Extremism 19%
9 Taxes 17% 9 Extremism 15% 9 Terrorism 18%
10 Education 16% 10 Education 15% 10 Education 15%
11 Climate Change 13% 11 Taxes 14% 11 Taxes 15%
12 Extremism 12% 12 Climate Change 12% 12 Unemployment & Jobs 11%
13 Environmental Threats 9% 13 Environmental Threats 10% 13 Environmental Threats 10%
14 Maintaining Social Programs 7% 14 Inflation 7% 14 Inflation 6%
15 Inflation 6% 15 Maintaining Social Programs 5% 15 Maintaining Social Programs 6%
16 Childhood Obesity 3% 16 Childhood Obesity 2% 16 Childhood Obesity 4%
17 Access To Credit 2% 17 Access To Credit 2% 17 Access To Credit 0%
Source: Ipsos Survey Data of ~20K global respondents. Ipsos conducts this survey on a monthly basis, asking the same questions of a statistically representative sample of >1K
people in USA. Note: Percentages do not add to 100% because respondents were allowed to pick 3 choices.
Internet Trends 217
2019

## Page 218

Consumer Confidence Index (USA) = High & Rising…
@ 97 vs. 88 Sixty-Five Year Average
Consumer Confidence Index (CCI)
120
USA 88=
),
6 65-Year Average
6
9
1

to60

d
e
x
e
d
(In
I
CC
0
1954 1959 1964 1969 1974 1

[Text truncated. The interactive version has the rest.]