The Internet Economy Foundation, Roland Berger and Warburg Pincus present

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The Internet Economy Foundation presents:

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Chapters

Status Quo

01

Looking back to see what lies ahead

02

The Internet Economy depends on Infrastructure

03

The Internet Economy needs Innovation

04

Innovation requires Talent

05

Innovation, Talent and Growth rely on Capital

06

Fair Play in the Digital Arena

07

The Tech to Come

08

Looking ahead

09

Policy

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2020 - Annual Report

Internet Economy Report 2020

Status Quo, Outlook & Recommendations

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Introduction

Preface

Since its founding in 2016, the Internet Economy Foundation has been an independent advocate for the building blocks of Europe’s digital future: world-leading digital infrastructure, abundant capital and support for startups & scale-ups, and free and fair competition in the Internet economy. We have published numerous reports on these issues and other important subjects such as education, cloud computing, or economic inclusion for emerging markets.

Given the ongoing need for updated information on these subjects, the IE.F together with its partners Roland Berger and Warburg Pincus, is launching the Internet Economy Report. It is mobile-first and web only, designed to be downloaded or shared, partially or as a whole.

Its aim is to gather the key facts, reflect the current trends, and advocate for the essential actions needed to help Europe take a decisive place in the Internet Economy. We see this as a “living” study, meaning we will continuously update it throughout the year and potentially add or subtract elements to reflect priorities and the status quo.

We hope this report aids your understanding of the Internet economy, and encourages you to contact us with ideas, suggestions or critiques for how to keep making it better.

Prof. Dr. Friedbert Pflüger

Chairman, Internet Economy Foundation

Clark Parsons

Managing Director, Internet Economy Foundation

This digital report was created by

Links to https://www.ie.foundation/ Links to https://www.rolandberger.com/ Links to https://www.warburgpincus.com

Chapters

Last Updated

Status Quo

01

Looking back to see what lies ahead

02

The Internet Economy depends on Infrastructure

03

The Internet Economy needs Innovation

04

Innovation requires Talent

05

Innovation, Talent and Growth rely on Capital

06

Fair Play in the Digital Arena

Outlook

07

The Tech to Come

08

Looking ahead

Recommendations

09

Policy

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Status Quo

01

Looking back to see what lies ahead

What events have shaped the Internet Economy in the last months?

7 Slides

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1

Around the globe, the spread of COVID-19 dominated the news in the first half of 2020

1) Source: Press articles, Roland Berger

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Events that shaped the 2020 internet economy

1) Source: Press articles, Roland Berger

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Events that shaped the 2020 internet economy

January 2020

Jan 1

The California Consumer Privacy Act goes into action, giving residents unprecedented data control rights

Jan 20

Vietnam’s biggest mobile company to roll out 5G services

Feb 10

European VC's stellar decade brought up 40 European unicorns

Feb 19

The European Commission unveils its strategies for data and human centric Artificial

Mar 20

YouTube and Amazon Prime sacrifice streaming quality to relieve European networks due to high demand during coronavirus pandemic

Mar 31

Dutch tech companies start ‘Tech against Corona’ initiative

Apr 7

Germany launches smartwatch app to monitor coronavirus spread

Apr 8

Europe’s tech companies announce nearly USD 500 million in deals

Apr 20

European Commission launches COVID-19 data platform to enable rapid collection and sharing of research data

May 16

Facebook announces plan to build a 23,000 mile undersea cable to bring internet to Africa

May 18

Commissioner Breton debates Facebook CEO Zuckerberg and stresses Europe's digital values

Jun 16

Germany rolls out COVID-19 contract-tracing app to fight second wave

Jun 16

Qualcomm launches new Snapdragon 690 processor to add 5G to budget phones

Jun 19

Google launches possible Pinterest rival named "Keen" that uses machine learning to curate topics

Jun19

Germany tightens online hate speech rules requiring platforms to send suspected content directly to the Federal police

July 2020

Regulation-related

Business-related

2

The European tech sector outpaces the overall economy …

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  • Between 2009 and 2017, the European tech sector's gross value added (GVA) has grown by over 60%.
  • During this time, the non-tech sectors in Europe grew by only 24%.
  • This shows that the tech sector is a driver of economic growth in Europe.

1) Current prices, tech-sector comprises NACE codes J62 and J63 / Europe = EU27 and UK, Norway, Switzerland

2) Source: Eurostat, Roland Berger

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3

… but the US tech sector grew even faster, doubling its gross value added since 2002

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  • Between 2009 and 2017, the US tech sector's GVA has doubled.
  • During this time, the non-tech sectors in the US grew by only 34%.
  • This shows that the tech sector is a driver of economic growth in the US.
  • Furthermore, when compared to the European tech sector, the US tech sector grew at a significantly faster pace over the same period

1) Current prices, tech-sector comprises NAICS codes 518, 519 and 5415

2) Source: United States Bureau of Economic Analysis, Roland Berger

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4

The European tech sector has added 1.6 million jobs since 2009, corresponding to an increase of 54%

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  • The European tech sector not only contributes to the overall economy, but directly employs roughly 1.6 million more people than in 2009 – an increase of 54%.
  • During this period, the total labor force in Europe has only grown by 5%.
  • The fact that the tech sector´s gross value added has grown more than its workforce hints at an increase in productivity.

1) Tech employees comprise all employees in business sectors J62 and J63 (NACE) / Europe = EU27 and UK, Norway and Switzerland

2) Source: Eurostat, Roland Berger

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5

The tech work force in the US has grown at roughly the same pace as in Europe

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  • The US tech sector has increased its workforce by 56% since 2009, while the total non-farm labor force has only grown by 9%.
  • The relative growth of tech workers in the US is similar to the growth seen in Europe.
  • However, while the US tech sector's GVA has grown much faster than in Europe, the comparatively similar increase in tech sector employment hints at a widening productivity gap: Europe's workforce increase has not translated into a similar growth in GVA as seen in the US.

1) Tech employees comprise all employees in business sectors 5415, 518 and 519 (NAICS); non-tech employees include only non-farm labor

2) Source: United States Bureau of Economic Analysis, Daxx.com, OECD, Roland Berger

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6

On average, European publicly listed internet companies grew their revenues much faster than the average Euro Stoxx 600-member

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  • Between 2012 and 2019, European publicly listed internet companies on average grew their revenues much more than the average member of the Stoxx Europe 600 price index.
  • While the mean of top 100 publicly listed internet companies grew revenues by 9% each year since 2012, Stoxx Europe 600 members' revenues grew by only 1% per year.
  • For data sampling and comparison, publicly listed internet companies were excluded from the StoxxEurope 600; in 2012, only six of the top 100 publicly listed internet companies were part of the StoxxEurope 600; by 2019, this index included 18 such companies.

1) Top 100 publicly listed companies in Europe by revenues, with internet companies being defined as sectors "Application Software", "E-Commerce Discretionary", "Infrastructure Software", "Internet Based Services", "Internet Media"

2) Source: Bloomberg, Roland Berger

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7

The difference is less pronounced in the US, where all companies saw stronger revenue growth when compared to Europe

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  • Between 2012 and 2019, US publicly listed internet companies, on average, grew their revenues over twice as much as the average member of the S&P 500 index.
  • While the mean of top 100 publicly listed internet company grew revenues by 12% each year since 2012, the average S&P 500 member's revenues grew by only 5% year-on-year.
  • For data sampling and comparison, publicly listed internet companies were excluded from the S&P 500; in 2012, 21 of the top 100 publicly listed internet companies were part of the S&P 500; by 2019, this index held 28 such companies.

1) Top 100 publicly listed companies in the US by revenues, with internet companies being defined as sectors "Application Software", "E-Commerce Discretionary", "Infrastructure Software", "Internet Based Services", "Internet Media"

2) Source: Bloomberg, Roland Berger

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01

Key Takeaway

The European tech sector's growth outstrips growth levels seen in the wider economy, but remains below US tech sector levels.

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02

The Internet Economy depends on Infrastructure

Foundations of the Internet Economy – Part I

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1

The amount of mobile data traffic per smartphone is increasing and accelerating by an ever larger amount

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  • In 2019, the average European smartphone used 7.5 GB of mobile data per month.
  • Since 2012, this number has grown by an average of 64% each year.
  • Moreover, the amount of mobile traffic per smartphone is growing faster: between 2012 and 2015, mobile data traffic per smartphone grew by 1.6 GB, but between 2016 to 2019 this accelerated by a factor of three to 4.8 GB.
  • Total mobile data traffic in Europe amounts to 5.4 EB (exabyte) each month.

1) Europe = Western, Central and Eastern Europe

2) Source: Ericsson, GSMA, Roland Berger

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2

In Europe, mobile data usage differs widely between different countries

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  • The graphs shows how much data usage mobile broadband subscription varies across OECD countries.
  • European countries find themselves both at the top and the bottom of the data usage distribution, with users in Finland using 14 times as much data per mobile broadband subscription as users in the Slovak Republic.
  • Reasons for theses differences across countries include network quality, level of competition and individual attitudes towards digital services.

1) Source: OECD, Roland Berger

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3

Given its huge economic potential, a quick and comprehensive rollout of 5G is important to sustain a competitive economy

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  • In 2018, the economic value of mobile technologies and services amounted to 4.6% of global GDP.
  • Forecasts estimate that 5G technology will contribute USD 2.2 trillion to the global economy over the next years until 2034.
  • Key sectors such as manufacturing, utilities and professional/financial services are estimated to profit most from this growth.
  • Thus, 5G is not an end in itself but serves as a key enabler of digital business models.
  • In the long run, a quick and comprehensive 5G rollout is a must-have in order to secure Europe's economic future.

1) Source: GSMA, Roland Berger

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04

Key Takeaway

5G is a crucial enabler of new digital business models across all industries – A quick and comprehensive 5G rollout is a prerequisite for Europe's economic future.

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5

A look at international data flows reveals that European countries are reliant on other countries for their domestic internet connectivity

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Light blue lines show what happens to data that originate outside of France and that are routed through France on their way back to their domestic country:

  • 54% of data originating in Morocco are routed through France on their way to a Moroccan destination
  • 37% of Belgian sourced data flow through France on their way back to Belgium

Dark blue lines indicate what happens to data that originate in France and are routed to a French destination:

  • 77% of these data are routed through in-country links only
  • 16% are routed through Germany
  • 5% are routed through the United Kingdom

1) Source: Oracle

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6

The same applies to countries in Europe's neighboring regions, looking at Germany

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  • 5% of German sourced data are routed through France on their way back to Germany
  • 32% of Hungarian domestic data are routed through Germany

1) Geographical country codes and locations are defined by ISO-3166-alpha2 spec. IP address geolocation is based upon MaxMind data and proprietary internal algorithms

2) Source: Oracle

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... and the United Kingdom

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  • 4% of data originating in the UK are routed through the US on their way back to the UK
  • 23% of Irish sourced data are routed through the UK on the way to an Irish destination

1) Geographical country codes and locations are defined by ISO-3166-alpha2 spec. IP address geolocation is based upon MaxMind data and proprietary internal algorithms

2) Source: Oracle

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8

Data traffic from the US stays within US borders – Yet the US are highly important for the domestic traffic of countries in the region

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  • As the US is a large, contiguous country with only few borders, unsurprisingly 98% of data are routed to an US-destination without flowing through other countries
  • However, the US' strong regional position also means that many countries rely on the US for their domestic connectivity:
    • 57% of Mexican domestic data are routed through the US
    • 23% of Colombian sourced data are routed through the US on their way back to Colombia

1) Source: Oracle

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9

China's domestic data flows do not cross its borders – And no other countries route their domestic internet traffic through China

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  • All domestic data flows stay within China – no domestic internet traffic is routed through other countries
  • At the same time, no other countries route their domestic data flows through China

1) Source: Oracle

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10

Key Takeaway

European countries are far more reliant on each other regarding their internet traffic than China or the US – A strong argument for a single digital market

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11

The market for public cloud services is forecast to continue its growth path…

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  • Public Cloud Computing refers to scalable and elastic IT-capacities that are provided as a service to external customers
  • The market is growing at double-digit rates each year
  • Application services, also known by Software as a Service (SaaS), constitute the largest segment of the public cloud computing market
  • However, Desktop as a Service (DaaS) is estimated to be the public cloud computing segment with the highest growth rates (about 42% each year between 2019 and 2022)

1) Source: Gartner, Roland Berger

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12

Cloud infrastructure services are dominated by market players from the US and China, posing data protection issues

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  • The market for cloud infrastructure is dominated by non-European providers – with the risk of European public cloud data potentially becoming subject to non-European jurisdiction, posing data protection issues
  • The US Clarifying Lawful Overseas Use of Data (CLOUD) Act, for example, requires US cloud service providers to preserve, backup, or disclose customer data if requested to do so by federal law enforcement authorities – regardless of where the data in question are stored
  • This means that data stored on a European server that is operated by a US cloud service provider might be transferred to US authorities – even with considerable effort the risk of violating European data protection rules cannot definitely be ruled out

1) Source: Gartner, Roland Berger

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02

Key Takeaway

Cloud computing is the backbone of digitization. Therefore, a competitive and innovative cloud market is paramount for Europe's future.

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03

The Internet Economy needs Innovation

Foundations of the Internet Economy – Part II

3 Slides

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1

The US takes the lead regarding patents for digital technologies, China has almost caught up – But Europe lags behind

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  • Between 2010 and 2018, the number of patents for digital technologies granted to applicants from the US, Europe and China rose by 11% each year.
  • The number of patents granted to applicants from the US rose by 72% between 2010 and 2018 – concurrently, the number of patents granted to Chinese applicants rose by an extraordinary 460%.
  • Europe trails behind the two regions, with regard to growth rate (+55%) as well as in absolute numbers.

1) Audio-visual technology, digital communication, computer technology, IT methods for management

2) Source: World Intellectual Property Organization, Roland Berger

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2

But innovation capacity is more than just patents: European countries score high on Bloomberg's Innovation Index

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  • Each year Bloomberg ranks 66 countries across the globe by their overall innovation capacity.
  • Each country is scored on a 0-100 scale based on seven equally weighted metrics:
    • R&D intensity
    • Manufacturing value-added
    • Productivity
    • High-tech density
    • Tertiary education efficiency
    • Research concentration
    • Patent activity
  • There are 13 European countries among the global top 20.

1) Source: Bloomberg, Roland Berger

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The innovation top-scorers in Europe align along a North-South axis surrounded by further above average potential

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  • The map illustrates that the top 20 European countries are clustered in Western and Northern Europe.
  • Additionally, several European countries are ranked above the global average of 65.
  • Overall, the 35 European countries are rated at an average score of 69, pointing towards Europe's potential for innovation.

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03

Key Takeaway

Regarding patents, Europe lags behind the US and China. Still, Europe's overall innovative potential remains high and well-placed

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04

Innovation requires Talent

Foundations of the Internet Economy – Part III

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1

Europe has no single Silicon Valley – Instead there are many tech clusters spread across the continent

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  • The largest European tech hubs, as defined by the 20 regions with the highest share of employees in knowledge intensive services, are distributed across 19 countries in all parts of the Continent
  • While the share of tech workers alone does not lead to digital products, they create regional ecosystems that foster creativity and innovation

1) Regions correspond to NUTS2 (for London, several NUTS2-levels have been merged for reasons of clarity), tech workers are employees in knowledge-intensive high-technology services as defined by NACE codes 59-63 and 72

2) Source: Eurostat, Roland Berger

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2

This geographic diversity manifests itself also in the distribution of major startup clusters and top universities

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  • London-based startups have received the highest amount of funding in 2019.
  • The map of the ten cities with the highest amounts of startup funding in 2019 highlights that Europe's major startups clusters are distributed across the continent.
  • Most startup clusters have grown in the vicinity of highly ranked universities (Times Higher Education ranking).

1) Greater London Area comprises several cities, thus three universities are listed

2) Universities in Madrid and Bucharest are not ranked as top universities by THE, therefore no rank is displayed

3) Source: Dealroom, THE, Roland Berger

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3

Employee stock option programs help startups attract talent, but too few countries in Europe have a supportive regulatory framework

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  • Employee stock option programs are important for startups that lack the cash flows to pay high salaries.
  • Instead they compensate their employees by offering stock options that give the employee the right to buy the company's stock at a specified price.
  • The employees benefit if the company's value increases and its stocks rise above the exercise price.
  • However, national regulation often makes the implementation of employee stock option programs very difficult – especially in Spain, Germany and Belgium.

1) Source: Index Ventures, Roland Berger

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04

Key Takeaway

There are many tech cluster with lots of talent across Europe. However, attracting talent with employee stock option programs is difficult in many countries

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05

Innovation, Talent and Growth rely on Capital

Foundations of the Internet Economy – Part IV

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1

Based on data by Invest Europe, European companies increasingly attract venture capital investments

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  • The amount of venture capital invested in European companies has increased by 18% each year since 2012.
  • In 2019, EUR 10.6 bn of venture capital were invested in European companies.
  • Almost one quarter (~25%) of this sum was attracted by companies in the UK.
  • The most important source of venture funds in 2019 were government agencies (20%).

1) Source: Invest Europe, Roland Berger

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However, highly important later stage investments have grown at a slower pace, constituting one third of all VC investments

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  • While the overall European venture capital market as measured by Invest Europe has grown 18% each year between 2012 and 2019, VC investments in later stage funding rounds have only increased by 10% per year until 2018; 2019 has seen a new surge in late stage funding.
  • The share of later stage venture capital of all invested venture capital has decreased markedly from ~45% in 2012 to 36% in 2019.
  • This trend squeezes the chances of startups to get to later stage funding and to roll out their business model at scale.

1) Source: Invest Europe, Roland Berger

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According to CB Insights, VC investments are on the rise across the globe – Yet Europe trails far behind markets in the USA and Asia

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  • To compare venture capital investments across world regions, we draw on data by CB Insights using a broader definition of what constitutes venture capital.
  • Therefore, data on the European venture capital market displayed here differ from the ones shown in previous graphs.
  • However, this does not limit the data's value for a global comparison.
  • While the European venture capital market has grown by 37% each year, Europe is lagging behind Asia and the US regarding the absolute amount of venture capital invested.

1) Source: Moneytree Report, CB Insights, Roland Berger

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While US and Europe are almost on a par at angel & seed stage, Europe clearly lags behind regarding early and later stage funding

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  • The relatively weak position of the European venture capital market becomes even clearer when looking at the median funding companies receive at different financing stages.
  • While the European median company's funding in the angel & seed stage is comparable to that of companies in the US, there is a sizeable gap regarding early and later stage funding.
  • European companies' median deal size is ~50% less at the early and later stage than their US counterpart.
  • However, the difference between median deal sizes in Europe and the US has been decreasing since 2012, showing that Europe is slowly catching up.

1) Source: PitchBook, Roland Berger

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Chart 1
Chart 2
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5

European startups are increasingly reliant on foreign investment, weakening the network effects of self-sustaining ecosystems

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  • Across Europe, the share of domestic investments in startups has decreased from 48% in 2016 to 34% in 2019.
  • During this period, investments from outside of Europe have increased from 27% to 42% - the share of non-domestic, European investments has remained largely the same.
  • While the origin of funding usually (and rightfully) is of secondary concern for most startups, the lack of domestic funding weakens the emergence of local startup ecosystems.
  • In these, successful founders become new investors who stay involved in the market and leverage their skills, knowledge and capital to help create new successful startups.
  • Employee stock options programs can therefore increase the amount and share of domestic investments by attracting and retaining talented founders in the European startup ecosystem.

1) Source: Dealroom, Roland Berger

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06

Key Takeaway

Europe lacks venture capital to fund innovative companies, especially in the later stage. Also, startups can rely less and less on domestic funding

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06

Fair Play in the Digital Arena

Foundations of the Internet Economy – Part V

10 Slides

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1

Large digital platforms are the dominant key players of the internet economy – With huge market shares across the globe

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  • Google dominates the market for search engines in the Western hemisphere.
  • The search engine market in China is less concentrated – the dominant player Baidu has a market share of 64%.
  • Attempts to establish alternative search engines to Google have not gained traction so far – Microsoft's search engine Bing for example has a market share of 6% in the US.

1) Source: Statcounter, Roland Berger

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2

In Europe and the US, Google and Apple split the market for mobile operating systems among themselves

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  • Mobile operating systems are the main gateway to the digital world for most consumers.
  • Basically, Google and Apple divide the market for mobile operating systems between themselves.
  • Android is a Linux distribution, i.e. essentially an open source platform
  • However, Google – via the Open Handset Alliance – has implemented an isolationist policy toward Android, developing only the platform's proprietary add-ons.
  • In China, Android is by far the most popular mobile operating system – however, in China a forked version of Android that is independent from Google is installed on most phones

1) Source: Statcounter, Roland Berger

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3

The world of social media is to a large extent shaped by Facebook and Google's YouTube

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  • The graph depicts the share of specific social media platforms among the most popular social media platforms measured by monthly active users.
  • Facebook and its wholly-owned subsidiary Instagram have a market share of almost 50% combined.
  • Another quarter of all monthly active users can be attributed to Google's YouTube.
  • Thus, two companies dominate almost 75% of the global social media market.

1) Source: Statista, Roland Berger

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The market for mobile messenger apps mirrors this pattern. Large digital platforms divide the market among themselves

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  • Again, market share is measured as the share of each mobile messenger service among the most popular mobile messengers.
  • As with other digital services, the market is dominated by a very small number of internet platforms.
  • Facebook and its wholly-owned subsidiary WhatsApp have a market share of 54%.
  • WeChat and QQ Mobile, both owned by Tencent, make up another 36% of the global mobile messenger services market.

1) Source: Statista, Roland Berger

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Global advertising spending is moving to the digital sphere – Especially spending on mobile advertising has grown enormously

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  • A decade ago, print and TV received 70% of advertising spending.
  • Digital advertising already played an important role in 2010, with 19% of advertising being spent on channels accessed through desktop applications.
  • In 2018, the share of advertising spending on print and TV decreased to merely 41% – a drop of 29 percentage points.
  • The share of advertising spent on mobile channels has increased most – in 2010 the iPhone had been on the market for only three years, therefore the market for mobile advertising was still in its infancy.
  • However, by 2018, one third of global advertising spending went into mobile channels.

1) Source: Bond Internet Trends 2019, Roland Berger

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The digital advertising market is growing by 21% each year – Google and Facebook divide half of the market among themselves

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  • Since 2010, global digital advertising spending has been increasing by 21% each year.
  • Until recently, Google and Facebook have steadily increased their share of this market – in 2018 the two digital platforms received 60% of the total global digital advertising expenditure.
  • However, Google's and Facebook's market share has decreased in 2019, due to – among others – rising competition from Amazon, especially in the US market.

1) Source: eMarketer, Roland Berger

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Digital platforms turn their market shares into economic success – Seven of the ten most valuable companies are digital platforms

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  • Seven companies among the ten most valuable companies are digital platforms.
  • Just five years ago, only three of the most valuable companies were digital platforms (Apple, Alphabet, Microsoft).
  • A decade ago, just Apple and Microsoft ranked among the ten most valuable companies.

1) Source: Bloomberg, Roland Berger

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Combined market capitalization of the seven digital platforms is more than twice as high as the total of all Euro Stoxx 50 members

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  • The seven most valuable digital platform comprise a market capitalization of more than EUR 6bn.
  • This is more than twice the sum of the market capitalization of all member companies of the Euro Stoxx 50 Price Index.

1) Source: Bloomberg, Roland Berger

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Platform-based business models have outgrown traditional industry sectors in the last years

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  • The high market capitalization of the seven most valuable digital platforms follows a larger pattern: companies whose business model focuses the coordination of networks via digital platforms have seen much larger growth of revenues and market capitalization than companies that supply physical goods, design technology solutions or provide services.
  • Examples for companies in the different groups:
    • Asset builders: Volkswagen, Coca-Cola, Walmart
    • Service providers: Allianz, Bank of America, Axa
    • Technology creators: SAP, IBM, Samsung
    • Network coordinators: Alphabet, Oracle, Tencent

1) Source: Bloomberg, Roland Berger

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Chart 2

10

Key Takeaway

Digital platforms continue to dominate the Internet. Europe needs its own innovative business models – and a regulatory framework to ensure fair competition

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Outlook

07

The Tech to Come

Each year, new technologies enter the public domain – Not all of them bound for success, but none should be ignored for its potential

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1

Hot topics 2020 – and beyond?

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Private 5G: Ultra low latency and incredibly high bandwidth connections supporting AI-driven applications serving an exploding number of sensors and endpoints

Digital Twin: Virtual replicas of physical devices that data scientists and IT pros can use to run simulations before actual devices are deployed

Multiexperience: Permutations of modalities (e.g., touch, voice and gesture), devices and apps that users interact with on their digital journey

Embedded AI: The use of machine and deep learning inside a software platform

Social Distancing Technologies: Designed to warn people when they get too close to each other, typically relying on communications that travel short distances

1) Source: Gartner, Roland Berger

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Gartner Hype Cycle for emerging technologies, 2019

08

Looking ahead

Key questions and topics relevant for the European Internet Economy in 2020 – and beyond

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1

COVID-19 will dominate both the news and the economy in the coming months – but we should also keep sight of political and regulatory issues

Overall economy

European internet economy

Save for later

What impact will the spread of COVID-19 have on the global economy?
Higher demand for selected digital services (e.g. digital workplace, food delivery, ecommerce)
Smartphone sales and travel & tourism services will be negatively impacted

Will negotiations between UK and EU produce a viable trade agreement?
No-deal-scenario might negatively impact the European startup ecosystem as London and Oxford are important hubs


Who will win this year's US presidential election?
Trump presidency might fuel debate on digital tax and further fan the digital Cold War between the US and China

    What will the forthcoming Digital Services Act to be proposed by the European Commission in Q4 2020 look like?

    Tighter liability for digital platforms may help to decrease digital disinformation while posing a potential risk for freedom of speech and digital innovation


    Will the rollout of 5G technology be subject to further political regulation regarding technology suppliers?

    Restrictions regarding the choice of technology suppliers might delay the rollout of 5G


    Will the European Commission pursue further antitrust cases against digital platforms?

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    Recommendations

    09

    Policy

    Concrete recommendations for action for a future-ready digital economy in Germany and Europe

    5 Slides

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    1

    Europe must drive the rollout of 5G to harvest the economic benefits of the new technology

    1

    Policy makers should both demand and enable a quick rollout of 5G across Europe to support new business models

    2

    Such a policy framework should encourage the use of technologies like virtualized and open radio access networks that establish new opportunities for European suppliers and reduce dependence on single suppliers

    3

    European regulators should push for a further opening of (mobile) telecommunications markets across Europe

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    2

    Data portability and interoperability are paramount to secure a competitive and innovative market for cloud computing services

    1

    European governments should closely align their cloud strategies and strengthen the European cloud ecosystem

    2

    The market offers a wide variety of cloud computing services and technical solutions – clients should clearly define their mission to find the right service provider

    3

    Data portability and interoperability between cloud service providers should only be regulated by statutory provisions if the codes of conduct developed as part of the stakeholders' self-regulation prove to be ineffective

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    3

    The EU member states should more strongly align on common standards for startups

    1

    The European Commission should aim to create a European Single Startup Market by striving for a single legal framework for startups across the continent

    2

    The European Startup Nation Standard should be advanced through a European directive that – among others – makes it easier and more attractive to grant employee stock options

    3

    Both the EU and its member states must continue to increase their investment in basic research to spark the creation of further innovation ecosystems across the continent

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    4

    European startups need better access to venture capital and particularly to later stage financing

    1

    European governments should follow the European Investment Fund's example and set up fund-of-funds to lessen the risk for investors and mobilize private capital

    2

    Government authorities across Europe should set up dedicated later stage venture capital funds and use public funds to leverage private capital

    3

    The European Commission should revive and finalize the Capital Markets Union to align legal frameworks regarding venture capital

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    5

    European Internet companies must rely on fair competition – rules and regulations must be adapted to the age of digital platforms

    1

    Improve data portability by enabling customers to transfer all data of personal value to another platform

    2

    Rigorously unbundle vertical services among dominant platforms to increase freedom of choice for consumers

    3

    Ensure platform neutrality and guarantee access to important points of access to digital infrastructures without discrimination

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    The End

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