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A Taxonomy of Internet Consolidation

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Author Mark McFadden
Last updated 2023-10-23
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Internet Engineering Task Force                         M. McFadden, Ed.
Internet-Draft                             internet policy advisors, ltd
Intended status: Informational                           23 October 2023
Expires: 25 April 2024

                  A Taxonomy of Internet Consolidation


   This document contributes to the ongoing discussion surrounding
   Internet consolidation.  At recent IETF meetings discussions about
   Internet consolidation revealed that different perspectives gave
   completely different views of what consolidation means.  While we use
   the term consolidation to refer to the process of increasing control
   over Internet infrastructure and services by a small set of
   organizations, it is clear that that control is expressed through
   economic, network traffic and protocol concerns.  As a contribution
   to the discussion surrounding consolidation, this document attempts
   to provide a taxonomy of Internet consolidation with the goal of
   adding clarity to a complex discussion.

Status of This Memo

   This Internet-Draft is submitted in full conformance with the
   provisions of BCP 78 and BCP 79.

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   Task Force (IETF).  Note that other groups may also distribute
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   This Internet-Draft will expire on 25 April 2024.

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   Copyright (c) 2023 IETF Trust and the persons identified as the
   document authors.  All rights reserved.

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   Provisions Relating to IETF Documents (
   license-info) in effect on the date of publication of this document.

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   Please review these documents carefully, as they describe your rights
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Table of Contents

   1.  Introduction - Why a Taxonomy?  . . . . . . . . . . . . . . .   2
   2.  Toward a Definition of Consolidation  . . . . . . . . . . . .   3
   3.  Background to Consolidation Issues  . . . . . . . . . . . . .   4
   4.  Economic Consolidation  . . . . . . . . . . . . . . . . . . .   5
     4.1.  4.1.  Economic Revenue Consolidation  . . . . . . . . . .   5
     4.2.  4.2.  Economic Flow Consolidation . . . . . . . . . . . .   6
   5.  Traffic and Infrastructure Consolidation  . . . . . . . . . .   7
   6.  Architectural Consolidation . . . . . . . . . . . . . . . . .   8
     6.1.  The Rise of Intermediaries  . . . . . . . . . . . . . . .   8
     6.2.  Vertical Architectural Consolidation  . . . . . . . . . .   8
     6.3.  Standards Development . . . . . . . . . . . . . . . . . .   9
   7.  Service and Application Consolidation . . . . . . . . . . . .   9
   8.  IANA Considerations . . . . . . . . . . . . . . . . . . . . .  10
   9.  Security Considerations . . . . . . . . . . . . . . . . . . .  10
   10. Conclusions . . . . . . . . . . . . . . . . . . . . . . . . .  10
   11. References  . . . . . . . . . . . . . . . . . . . . . . . . .  10
     11.1.  Informative References . . . . . . . . . . . . . . . . .  10
   Acknowledgements  . . . . . . . . . . . . . . . . . . . . . . . .  12
   Author's Address  . . . . . . . . . . . . . . . . . . . . . . . .  12

1.  Introduction - Why a Taxonomy?

   Internet consolidation has been under discussion for the last several
   years.  The 2019 Internet Society's "Global Internet Report:
   Consolidation and the Internet Economy" highlighted issues on this
   topic and kicked started a series of discussions and publications
   around consolidation.  The DINRG Workshop on Centralization took
   place in June of 2021 and was reported on at IETF 114[DINRG].
   Furthermore, a draft for the Internet Architecture Board (IAB)
   discussed issues of economic and technical consolidation[IABwrkshp].
   Despite community interest, the draft expired without further work or

   Several other contributions have focused on responses to
   consolidation.  However, the report from the DINRG Workshop makes
   clear that there are different "categories of centralization."  This
   draft does not attempt to propose responses to centralization,
   instead it attempts to build upon the Workshop's summary of
   "categories of centralization" with a goal of supporting future work
   and discussion.

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2.  Toward a Definition of Consolidation

   There's a reason that concerns have been expressed about the
   "definition" of centralization.  Centralization has seen many
   attempts to define "centralization."  In a now expired Internet-
   Draft, one definition was "the process of increasing control over
   internet infrastructure and services by a small set of
   organizations."  [Arrko1] A more recent Internet-Draft uses the
   following definition: "centralization" is the state of affairs where
   a single entity or a small group of them can observe, capture,
   control, or extract rent from the operation or use of an Internet
   function exclusively."[Nottingham]

   This is not simply a recent trend.  Dmytri Kleiner views the
   situation as primarily economic and notes that the dot com boom "was
   characterized by a rush to own infrastructure, to consolidate
   independent internet service providers and take control of the
   network."  He describes the environment in the early 2000s as a sort
   of economic land rush where investors tried to replace the smaller
   service vendors with larger ones on every scale, from low level
   telecommunications infrastructure to high level services such as news
   aggregation, e-mail and video.[Kleiner]

   Taking as a starting point the centralization of DNS services, there
   have also been studies of what centralization means in the context of
   key Internet services.  For instance, one academic study found that
   about 12,000 name servers used by websites in the Alexa top 1 million
   used exactly the same third-party infrastructure.[DNSmeasure] This
   finding led to the proposal of a metric for measuring the market
   share of organizations that provide DNS resolvers.[Entropy] In this
   case, the authors implicitly provide definitions of "centralization"
   based on external metrics.

   A completely different approach to the definition of consolidation
   can be seen by looking at research that focuses on the consolidation
   of data instead of economic measures.[DataConsolidation] In one study
   the authors state, "as users get used to using their services, the
   users' generated content and the data about their online behaviors
   are concentrated in such companies.  This phenomenon, called "data
   consolidation", has become a serious problem, which makes the
   Internet society seek to decentralize the current Internet.  The
   decentralized Internet aims to prevent the concentration of user data
   in a few giant companies."[ISOCconsolidation] This approach to
   centralization isn't an isolated research activity.  Another study
   surveys the ongoing research activities on "data centralization" from
   the Internet Society, EU Horizon-2020, and Decentralized web.

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   The key problem is that "centralization" means different things in
   different contexts.  Research takes on various topics including
   economic, network and data centralization.  As a result the guidance
   from the DINRG workshop seems to have an important message for those
   who would like to see a single definition of centralization: there
   are "categories" of centralization, each with its own

3.  Background to Consolidation Issues

   Internet consolidation is defined in one setting as "the process of
   increasing control over internet infrastructure and services by a
   small set of organizations."  [Nottingham] Economy of scale is the
   driving force behind consolidation because markets naturally
   consolidate when economies of scale come into play.

   The DINRG Workshop Report notes that:

   *  the economy of scale enables one to generate the same service
      outcome with far lower production costs, and consume fewer
      resources for each instance of the service transaction.

   *  a large user pool produces big data which helps improve service
      customization for each user, letting bigger companies gain an edge
      over smaller competitors.

   *  centralized application developments reduce the number of
      platforms, hence substantially reduce the cost in development and
      maintenance, and circumvent interoperability issues.  Consolidated
      development and operational efforts also help mitigate technical
      expertise shortages.

   *  most of all, monopoly players can dictate to the market the terms
      of the service and the service price bought to the market, which
      causes longer term stagnation of the market and increased
      inefficiency within the market, which acts as a drag on further

   The current consolidation and centralization of control and operation
   of Internet infrastructure and services was not an original design
   goal.  In fact, RFC1958 says:

   *  "This allows for uniform and relatively seamless operations in a
      competitive, multi-vendor, multi-provider public network."

   and later,

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   *  "Heterogeneity is inevitable and must be supported by

   Much of the discussion surrounding consolidation focuses on Internet
   services, applications and data.  However, contributions to the
   discussion of consolidation have also addressed economic, traffic and
   architectural consolidation.  In recognition of this, a taxonomy with
   four main categories is proposed:

   *  Economic Consolidation

   *  Traffic and Infrastructure Consolidation

   *  Architectural Consolidation

   *  Service and Application Consolidation

4.  Economic Consolidation

   The Internet Society Report on Internet Consolidation suggests that
   the Internet's economy is defined as the economic activities that
   either support the Internet or are fundamentally dependent on the
   Internet's existence.[ISOCconsolidation]

   As a result, economic consolidation on the Internet refers to the
   effects of market consolidation on competition and the economic power
   of a small set of companies that dominate economic activity in the
   Internet.  There are two aspects to economic consolidation on the

   Economic consolidation means that a small number of companies
   dominate the marketplace and hence, the revenues gathered from the
   use of the Internet.

   Economic consolidation also means that a small number of companies
   control the flow of capital among enterprises that provide services
   on the Internet.

4.1.  4.1.  Economic Revenue Consolidation

   One of the two aspects of economic consolidation is the generation of
   revenue by a small number of enterprises.  As an example, Amazon
   accounts for more than 45% of all online retail spending in the
   United States.  Alibaba is estimated to have 60% or the electronic
   commerce market in China.  Meta - including Facebook, Messenger,
   WhatsApp and Instagram - dominates social media and messaging holding
   four of the world's top six social media platforms.

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   In each of these cases, a very small number of companies operate
   extremely popular services, concentrating revenue generation into
   those companies.  In fact, the popularity of these services is so
   great that value is created by adding other, complementary services
   onto the base they provide.  The dominant services thus control the
   foundation upon which other revenue streams are built.,xref

   The impact of revenue consolidation is enhanced by the presence of
   network effects in digital media and services.  A network effect is
   market feature where the benefit to the user or consumer of a product
   or service increases as the number of other users increases.  First-
   mover advantages play a role in defining the marketplace, but as a
   product or service gains traction and sees its market grow, the user
   base becomes the foundation for future growth.

   An example of this would be the dominance of the portable document
   format, originally introduced by Adobe.  As the number of users grew,
   it became the dominant format for the exchange of documents readable
   on a variety of devices.  While the network effect does not imply
   immediate or inevitable market dominance, it does seem to be tightly
   correlated with market leaders in digital, Internet-based services.

4.2.  4.2.  Economic Flow Consolidation

   In addition to revenue generation, the very large application layer
   companies (Alphabet, Amazon, Tencent, Meta and Alibaba) control how
   money and capital moves through enterprises providing services on the

   We have seen that embedded intermediaries that have substantial power
   can implement platforms that provide services to downstream consumers
   as well as upstream sources of content and applications.  As the
   controlling intermediary for those services and applications, these
   large companies are also able to dictate how economic flows move
   between consumers and providers of applications and services.

   Regulators and policy makers often are concerned about the enormous
   market power that these huge intermediaries have, but refrain from
   imposing controls or sanctions on the grounds that consumers get
   significant benefits when platform operators use upstream revenues to
   subsidize downstream services.

   That control is often influenced by the fact that an enormous amount
   of the economic flow related to the Internet occurs largely out of
   public sight.  Advertising is a critical part of the economic flow of
   the Internet.  Advertisers want their message to reach the broadest
   community of potential consumers possible.  As a result, advertising

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   platforms need to be built to provide services to the greatest number
   of potential advertisers.  The greater the reach of the advertising
   platform, the greater the value to the advertiser.  The result, on
   the Internet, is a trend to collect the advertising tools in a
   consolidated group of global, dominant enterprises.

   The end user sees free tools, services and information.  However, the
   cost of those services is paid for, largely, by advertising revenue
   that makes up a vast proportion of the economic flow of the Internet.

5.  Traffic and Infrastructure Consolidation

   A significant majority of the Internet's traffic is delivered from
   very large content services including Google, Amazon and Facebook.
   These companies naturally attempt to provide the best possible
   service for their customers - including perceived speed of content
   delivery - these content services seek to establish connections
   directly with the companies providing access to the network.  The
   result is a "flattening" of the Internet's traditional topology.

   In fact, a recent study shows that these large services can reach
   more than 76% of the Internet without having to traverse traditional
   Tier 1 and Tier 2 ISPs.  Besides bringing benefits of low latency and
   higher security to their users, these large-scale networks are also
   able to implement improvements and innovations in protocol design by
   having far greater control over the elements of the infrastructure
   being used to deliver services.

   An empirical view of this consolidation in February of 2022 shows
   that the number of webpages that are hosted on these networks has
   increased from 2015 to 2020 at a rate exceeding 80%. In looking at
   data sources including TLD datasets and Alexa Top 1M datasets only a
   small number of content delivery networks host the vast majority of
   landing pages.

   Centralization of this sort makes traffic filtering easier since
   forcing a content network to block specific content (or worse,
   blocking the content network entirely) would make a large amount of
   the content unavailable.  As these networks begin to migrate other
   services to HTTP (for instance, DNS over HTTP), more than the web is
   affected by the impacts of filtering by centralized content services.
   In fact, blocking a content network entirely would block all the
   content of the network, not just the content that was the target of
   the filtering.

   This happens at all layers.  As an example at the application layer,
   in 2021 Google and Apple were forced to remove applications created
   by the Russian political opposition from their stores.  The ability

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   of a government to influence the content network means that
   centralization can lead to a reduction in the diversity of
   information or services on the Internet.

   As the content networks grow in scale, the networks themselves grow
   to support the required network capacity.  This sets up a feedback
   look that drives market concentration toward the infrastructure
   provided by the content networks.  As these networks grow larger, it
   becomes difficult for smaller networks and infrastructure providers
   to compete with the economies of scale from which the large networks

6.  Architectural Consolidation

   A third category of consolidation is the evolution of the Internet's
   architecture to meet contemporary use cases and requirements.  Early
   descriptions of the Internet's architecture described heterogeneous
   endpoints connected by neutral transports.  The end-to-end principle
   suggested that the transport of data between endpoints was provided
   without much intervention.  [RFC1958]

   Two developments have led to architectural consolidation: the
   emergence of intermediary services and the movement of transport
   related code to the application layer.

6.1.  The Rise of Intermediaries

   In the first case, technologies like CDNs are built into the network
   for the efficient delivery of content and services.  The consumer is
   largely unaware that the service or application is being hosted by an
   organization other than they one they think they contacted.  Instead,
   content delivery is pushed as close to the consumer as possible to
   ensure that the end-user experience is as optimal as possible.

   The result is a series of security, economic and policy concerns
   associated with the small number of very large providers of these
   intermediary services.  However, in this section we only want to
   consider the architectural issues specific to the use of

6.2.  Vertical Architectural Consolidation

   The second case is vertical architectural consolidation.  This is
   where the companies that control the applications attempt to control
   all aspects of the communication.  For instance, the provider of the
   browser may be the organization that the browser connects to.  The
   advantage of this kind of architectural consolidation is that it
   allows the largest players to introduce technological innovation more

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   quickly than if multiple layers of the stack required innovation in

   With tools like DNS over HTTPS, we see applications taking control of
   the infrastructure of transport in addition to providing an
   application or service.  Applications essentially provide their own
   ecosystem (from centralized control of DNS services all the way to
   the end-user experience).

6.3.  Standards Development

   Others have rightly observed that, in the current environment,
   development of protocols and standards for the Internet is largely
   confined to a small number of participants from a small number of
   organizations.  One trend is that the giant enterprises on the
   Internet also dominate the development of protocols.

   Having a small number of organizations controlling the infrastructure
   of the Internet also means that innovative technologies can be
   implemented quickly and at large-scale.  In 2022, a study in the ACM
   Transactions on Internet Technology found that Google accounting for
   60% of all TLS 1.3 secured resources.  Some other, large CDNs use TLS
   1.3 almost exclusively.  QUIC is also an example of a new technology
   that profits from consolidation.  Large scale intermediaries can
   facilitate the deployment and adoption of new standards because the
   decision for the adoption is propagated across the infrastructure
   instead of through user adoption or feature updates.

7.  Service and Application Consolidation

   Services and applications are those tools that users see when they
   interact with the Internet.  They take advantage of the
   infrastructure (and, access) parts of the Internet's ecosystem.
   According to the Internet Society's report on consolidation, "a small
   number of companies operating some of the Internet's most popular
   services dominate this market.  Many of these companies act as multi-
   sided markets or platforms, meaning they offer a base upon which
   other applications, processes or technologies can be developed."

   By itself, Google holds 90% of the global search market, the number
   one mobile operating system (Android), the top-user-generated video
   platform and has more than 1.5 billion active users of its Gmail
   email service.  Google also has a map service, a public DNS resolver
   service, a cloud service and a document store.

   While twenty years ago, an application would simply rely on the
   underlying operating system to provide its communications and
   transport services, now applications and services do this for

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   themselves.  This is a case of the intermediary or platform providing
   the application integrating all the necessary components for
   providing a service on the Internet.

8.  IANA Considerations

   This memo includes no request to IANA.

9.  Security Considerations

   While this document does not describe a specific protocol, it does
   discuss the evolving architecture of the Internet.  Changes to the
   Internet's architecture have direct and indirect implications for the
   Internet's threat model.  Specifically, the changes to the end-to-end
   model (see section 6 above) have inserted new interfaces which must
   be reflected in security considerations for new protocols.

10.  Conclusions

   This document seeks to rekindle and restart the discussion on
   consolidation.  As argued above, Internet consolidation is happening
   at different places and different layers of the Internet.  Though
   there has been interest in the Internet consolidation in the past,
   now is the time to start the discussions again.

11.  References

11.1.  Informative References

   [Arrko1]   Arrko, J., "Considerations on Internet Consolidation and
              the Internet Architecture", 2019,

              Kwon, T., Song, J., Jung, H., Chun, S., Lee, H., Kang, M.,
              Park, M., and E. Cho, "How To Centralize the Internet: A
              Focus on Data Consolidation and User Privacy", 2022.

   [DINRG]    Internet Engineering Research Group: DINRG, "Draft Report
              of DINRG Workshop on Centralization in the Internet",
              2021, <

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              Zembruzki, L., Jacobs, A. S., Granville, G. S., and G,C,M.
              Moura, "Measuring Centralization of the DNS Infrastructure
              in the Wild", 2022.

              Viet Doan, T., Rijswijk-Deij, R., Hohlfeld, O., and V.
              Bajpai, "An Empirical View on Consolidation of the Web",

   [Entropy]  Bates, S., Bowers, J., Greenstein, S., Weinstock, J., Xu,
              Y., and J. Zittrain, "Evidence of Decreeasing Internet
              Entropy;: The Lack of Redundancy in DNS Resolution by
              Major Websites", 2022.

              Internet Architecture Board, "Design Expectations vs.
              Deployment Reality in Protocol Development Workshop 2019",
              2019, <

              Internet Society, "Considerations on Internet
              Consolidation and the Internet Architecture [draft-arkko-
              iab-internet-consolidation-02] (Expired)", 2019,

              The Internet Society, "Consolidation In the Internet
              Economy", 2019, <

   [JCP]      Journal of Cyber Policy, "Consolidation of the Internet",
              2020, <>.

   [Kleiner]  Kleiner, D., "The Telekommunist Manifesto", 2022.

              Nottingham, M., "Internet Centralization: What Can
              Standards Do?", 2023, <

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   [RFC1958]  Carpenter, B., "Architectural Principles of the Internet",
              RFC 1958, DOI 10.17487/RFC1958, June 1996,

   [RFC8890]  Nottingham, M., "The Internet is for End Users", RFC 8990,
              DOI 10.17487/RFC8990, August 2020,


   Many thanks to all who discussed this with us in DINRG in 2021, 2022,
   and 2023.

Author's Address

   Mark McFadden (editor)
   internet policy advisors, ltd
   6 Bridge Street
   NP16 5EY
   United Kingdom
   Phone: +1 608 504 7776

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