Sandeep Goyal
Jun 25, 2018

Blog: The Mary Meeker 2018 report skips India!

Is India in the danger of missing the digital bus? Or is it already going nowhere?

Blog: The Mary Meeker 2018 report skips India!
For those in the digital domain, every year, Mary’s report is bed-time reading for a few nights when it releases annually. For the uninitiated, Mary Meeker is a partner at Kleiner Perkins Caufield & Byers, and her annual Internet Trends report, since 1995, is a bellwether report keenly awaited by the global digital industry.
Well, it’s that time of the year again. Mary Meeker unloaded her highly anticipated internet trends report for the Code Conference crowd in Rancho Palos Verdes, California a couple of weeks ago. This year, the legendary lady released 294 slides in rapid succession, covering everything from smartphone behavior in the U.S. to tech company competition in China. Only, not a single slide this year was dedicated to India. Which was even more surprising because Ms. Meeker had devoted 55 slides in her 355 slides deck last year to India. Digital watchers are aghast. 
So, what happened? Has India become a has-been-going-nowhere, stagnant market that had nothing new, innovative or disruptive to offer in the year gone by? No one really knows the reason behind India’s omission from the Meeker Report, but it definitely doesn’t paint a rosy picture for India or the economic future of one of the fastest growing digital markets in the world. In 2017, I had covered the Meeker Report, especially the India part in great detail. Last year, Meeker had specifically highlighted the opportunities in the country’s broader startup and technology landscape, terming it as an incredibly fierce battleground for hardware and software companies, along with a buoyant ecommerce market that was being driven by the rise in mobile payments. India’s omission from this year’s report leaves me completely perplexed. Perhaps the only clue to India’s drop from Meeker’s favour can be found in a key slide in the 2018 report that shows that of the top 20 global internet companies, US continues to dominate with 11 entries, while China contributes the rest.
Since India has no major players in the global play-out, India finds no mention in Meeker’s analysis. Some analysts are calling it a wake-up call for India, especially in the light of the recent Flipkart-Walmart deal, which even failed to catch the Kleiner Perkins Caufield & Byers partner’s attention, let alone get an honourable mention.
In any case, the big themes of the Meeker Report this year revolve around China, privacy, ecommerce and work. Meeker was especially concerned this year about what she called the privacy paradox. She felt that usability improvements are based on data and this to Meeker’s mind creates a privacy paradox: internet companies make low-priced services better thanks to user data; users increase time spent based on their perceived value of said services; and regulators want to ensure user data is not used improperly. For Meeker it is key for internet companies to understand the unintended consequences of their products and that regulators understand the unintended consequences of regulation. Yet, Meeker cautioned, “But it’s irresponsible to stop innovation and progress”. 
Two years ago, Meeker estimated that about 3 billion people, or roughly 42 percent of the world’s population, was online in some way or the other. That number has in 2018 ballooned to 3.6 billion people or half the world’s population. Meeker also points out that a lot of these people are spending ever increasing amounts of time online. According to her report, US adults spent 5.9 hours per day on digital media in 2017, up from 5.6 hours the year before. Some 3.3 of those hours were spent on mobile devices, which are responsible for overall growth in digital media consumption. 
One of Meeker’s star observations for 2018 is that Amazon single-handedly dominates the world of ecommerce, especially in the US. Ecommerce itself grew 16% Y-on-Y in 2017 to around US $ 450 billion, and now constitutes roughly 13% of all retail sales. Of this, Amazon enjoys 28% market share with a gross merchandise volume (GMV) of US $ 129 billion. This when compared to 2013 when Amazon was still at US $ 52 billion, and a 20% market share, shows the tremendous growth trajectory of this US giant. But the more amazing fact that Meeker highlights is that Amazon is starting to dominate Search too! Meeker says in her report that the way consumers search is changing. Today, 49 percent of product searches actually start at Amazon compared to only 36 percent that start on a search engine. What’s more, Amazon is better poised to capitalize on those searches with features like one-click purchasing, which encourage consumers to use Amazon to fulfill orders that result from those searches. Product finding at Google, on the other hand, takes consumers away from Google, so orders are fulfilled by others. Meeker also devotes time to the emerging battle of the future: Amazon versus Alibaba. She makes note of how in 2017, Alibaba had a higher gross market value at $701 billion (to Amazon’s $225 billion) while Amazon had higher revenue ($178 billion to Alibaba’s $34 billion).
Another trend that Meeker highlights is that social media is driving purchases. Facebook leads as a platform of choice with 78 percent, followed by Instagram and Pinterest with 59 percent, Twitter with 34 percent and Snap with 22 percent. 55 percent of respondents said they purchased a product online after a social media discovery. 
Meeker also focuses on how shopping and entertainment are coming together to help customers with product and price discovery. She mentions YouTube and Chinese shopping website Taobao who video-enable purchases. She points to Wish which offers hourly deals to 300 million users through a combination of social and gaming; Pinduoduo does the same through inviting users to refer friends to reduce the prices they pay. 
Meeker this year identifies a US $7 billion opportunity in ad spend on mobile as time spent was up 29 percent in 2017 and ad spend was up 26 percent in the same period. India figures were not mentioned. Meeker also highlights the exponential growth in subscription services. She feels that subscription services appeal to customers because they offer access, selection, price, experience and personalization. As a result Netflix, which had 118 million subscribers in 2017, saw 25 percent growth, and Spotify, which had 71 million subscribers, saw an impressive 48 percent growth.
Bad content is finally getting cleansed. In the first quarter of 2018, Facebook removed 583MM fake accounts. 99% were flagged prior to user reporting. 21MM pieces of lewd content were removed; 96% flagged by algorithms. 3.5MM pieces of violent content were removed; 86% flagged by algorithms. 2.5MM pieces of hate speech were removed; 38% flagged by algorithms. In fact, FB added 7,500+ content moderators to its work force. Referring to Google/YouTube, Meeker says that 8MM videos were removed by them in Q4/2017; 81% flagged by algorithms and 75% removed before first view. Additionally, 2MM videos were de-monetized for misleading content tagging. Google/YouTube will have 10,000 content moderators by the end of 2018. 
Another interesting trend that Meeker identifies in her 2018 report is that more and more Americans are working ‘on-demand’. These on-demand jobs are filling needs for workers who want extra income and flexibility or who have underutilized skills or assets, as per Meeker. Uber (with 3 million drivers) and DoorDash (200,000 delivery agents); internet-enabled marketplaces Etsy (2 million sellers) and Upwork (16 million freelancers); and Airbnb (5 million listings) best illustrate Meeker’s ‘on-demand’ trend. 
Data gathering, sharing and optimization is ramping up at what Meeker calls a “torrid pace”, going from 12 zetabytes in 2015 to an anticipated 47 zetabytes in 2020 and 163 zetabytes in 2025! 
Another important point that Meeker makes is that messaging threads are increasingly foundational for consumers (Snapchat, Square Cash, Strava) and enterprises (Dropbox, Slack, Intercom). Enterprise threads organize information and teams and provide context and history.
But the most important theme of Meeker’s 2018 Report is China. Meeker feels China is taking over the world (President Trump would surely agree with that!). Five years ago, the U.S. had nine companies (Apple, Amazon, Microsoft, Google/Alphabet, Facebook, Netflix, eBay/Paypal, Booking Holdings and Salesforce) in the top 20 worldwide internet leaders and China had two (Tencent and Baidu). Today, the US has 11 (with the addition of Uber and Airbnb) and China has nine (with the addition of Alibaba, Ant Financial, Xiaomi, Didi Chuxing,, Meituan-Dianping and Toutiao). China also has the largest number of internet users in one country. But more importantly, China’s internet usage is accelerating with 753 million mobile internet users, up 8 percent; mobile video is growing at 22 percent year-over-year; short-form video has 100 million daily active users who average 50 minutes a day; and China’s online long-form video content budgets surpassed TV networks in 2017. Meeker, therefore, is emphatic in saying that while the U.S. is ahead, China is “focused, organized and gaining”. 
In the continuing China theme, Meeker further focuses on how Chinese companies are impacting and changing global retail. China is today at 20 percent in terms of global ecommerce share of retail sales and has the highest penetration rate in the world. It is also the fastest growing. Meeker illustrates her observations with examples: 
Alibaba’s Hema Stores, for example, are reimagining the grocery retail experience with digital grocery and real-time ecommerce.
Chinese shoe brand Belle is reimagining the offline retail experience with online analytics like a traffic heat map, RFID in floor mats and 3-D foot scans.
China also leads in mobile payments. Its mobile payment volume hit $16 trillion in 2017 and is led by AliPay (54 percent) and WeChat Pay (38 percent).
Mary Meeker is a rare visionary. Her observations too are subtle, yet sublime. She makes simple observations sometimes that leave you thinking for long. For example, Meeker says in her report this year that the speed of technological disruption is accelerating. It took about 80 years for Americans to adopt the dishwasher. The consumer internet became commonplace in less than a decade.
But the omission of India in Meeker’s 2018 presentation continues to worry me. It is no ordinary happening. A KPMG report from March 2018 ranked India third – after the US and China – in tech innovation leadership in the world, noting that “India has prioritized government support for entrepreneurship and a burgeoning culture of innovation. Many start-up business models are leveraging emerging technologies to cater to India’s mobile-first generation.” Given such massive potential for future growth, India’s going missing from Mary Meeker’s report is more than a little strange. Hope Mary will be kinder to India in 2019. 
(Sandeep Goyal is an avid watcher of trends, both in advertising as well as in the digital space. The Mary Meeker Report to him is like a Bible for digital trends worldwide.)


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