A Presentation by Professor John Ure at NUS Lee Kuan Yew School of Public Policy on the Internet Economy and Policy
Internet business is primarily focused upon mass consumption, mass usage. There are exceptions. Enterprise (private) cloud computing often relies upon serving a relatively small number of very large corporate clients, but even in these cases, the volume of traffic is critical.
The early analysis of Internet business was focused on the “long tail” argument, that the incremental cost of service delivery was close to zero so even small volume sales added to net profits. What that model did not fully account for was the ease of entry and therefore the ease of customer switching. Web 2.0 has seen the rise of SNS and other services that equally depend upon volume, but to attract advertisers rather than subscribers or buyers.
The latest wave of commercial innovation employs big data analytics to profile users via metadata. This creates a host of personal data privacy issues. In recent times these have become confused with bigger issues of national security, leading to requirements on international Internet companies to build local data centres to store personal data. This confuses a market issue with a security issue. Data centres will get built where the volume of local traffic and the local security conditions justify the investment.
Download the presentation on Internet Business Economics and Regulation