A Taxonomy of Internet Consolidation
draft-mcfadden-consolidation-taxonomy-01

Independent Submission                                      M. McFadden
Internet Draft                            Internet policy advisors, ltd
                                                         March 10, 2023
Intended status: Informational
Expires: September 10, 2023

                   A Taxonomy of Internet Consolidation
               draft-mcfadden-consolidation-taxonomy-01.txt

Status of this Memo

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

   Internet-Drafts are working documents of the Internet Engineering
   Task Force (IETF), its areas, and its working groups.  Note that
   other groups may also distribute working documents as Internet-
   Drafts.

   Internet-Drafts are draft documents valid for a maximum of six
   months and may be updated, replaced, or obsoleted by other documents
   at any time.  It is inappropriate to use Internet-Drafts as
   reference material or to cite them other than as "work in progress."

   The list of current Internet-Drafts can be accessed at
   http://www.ietf.org/ietf/1id-abstracts.txt

   The list of Internet-Draft Shadow Directories can be accessed at
   http://www.ietf.org/shadow.html

   This Internet-Draft will expire on September 10, 2023.

Copyright Notice

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

   This document is subject to BCP 78 and the IETF Trust's Legal
   Provisions Relating to IETF Documents
   (http://trustee.ietf.org/license-info) in effect on the date of
   publication of this document. Please review these documents
   carefully, as they describe your rights and restrictions with
   respect to this document. Code Components extracted from this
   document must include Simplified BSD License text as described in
   Section 4.e of the Trust Legal Provisions and are provided without
   warranty as described in the Simplified BSD License.

McFadden              Expires September 10, 2023               [Page 1]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

Abstract

   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.

Table of Contents

   1. Introduction - Why a Taxonomy?.................................2
   2. Background to Consolidation Issues.............................3
   3. Economic Consolidation.........................................4
      3.1. Economic Revenue Consolidation............................4
      3.2. Economic Flow Consolidation...............................5
   4. Traffic and Infrastructure Consolidation.......................6
   5. Architectural Consolidation....................................7
      5.1. The Rise of Intermediaries................................7
      5.2. Vertical Architectural Consolidation......................8
      5.3. Standards Development.....................................8
   6. Service and Application Consolidation..........................8
   7. Security Considerations........................................9
   8. IANA Considerations............................................9
   9. References.....................................................9
      9.1. Informative References....................................9
   10. Acknowledgments..............................................10

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. Furthermore,
   a draft for the Internet Architecture Board (IAB) discussed issues
   of economic and technical consolidation. [1] Despite community
   interest, the draft expired without further work or publication.

McFadden              Expires September 9, 2023                [Page 2]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   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.

2. Background to Consolidation Issues

   Internet consolidation is "the process of increasing control over
   internet infrastructure and services by a small set of
   organizations." [2]  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
   innovation."

   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,

McFadden              Expires September 9, 2023                [Page 3]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   "Heterogeneity is inevitable and must be supported by design."[3]

   Much of the discussion surrounding consolidation focuses on Internet
   services, applications and data.[4]  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

3. 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.

   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
   Internet.

   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.

  3.1. 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. [6]

McFadden              Expires September 9, 2023                [Page 4]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   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. [7]

   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.

  3.2. 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 Internet.

   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

McFadden              Expires September 9, 2023                [Page 5]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   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.

4. 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 [8]
   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.

McFadden              Expires September 9, 2023                [Page 6]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   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
   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
   benefit.

5. 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. [10]

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

  5.1. 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
   intermediaries.

McFadden              Expires September 9, 2023                [Page 7]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

  5.2. 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 quickly than if multiple layers of the stack required
   innovation in parallel.

   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).

  5.3. 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.

6. 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

McFadden              Expires September 9, 2023                [Page 8]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   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
   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.

7. 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. In another draft [20], we
   discuss how the evolution of the Internet has changed the threat
   model.  Specifically, the changes to the end-to-end model (see
   section 4.2 above) have inserted new interfaces which must be
   reflected in security considerations for new protocols.

8. IANA Considerations

   This memo contains no instructions or requests for IANA. 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.

9. References

  9.1. Informative References

   [1]   Considerations on Internet Consolidation and the Internet
         Architecture [draft-arkko-iab-internet-consolidation-02].

   [2]   IBID

McFadden              Expires September 9, 2023                [Page 9]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

   [3]   Draft Report of DINRG Workshop on Centralization in the
         Internet, June 3, 2021, Huitema, Huston, Kutscher, Zhang,
         https://datatracker.ietf.org/meeting/114/materials/slides-114-
         dinrg-draft-report-of-dinrg-workshop-on-centralization-in-the-
         internet-01.pdf

   [4]   Design Expectations vs. Deployment Reality in Protocol
         Development Workshop 2019, Internet Architecture Board
         https://www.iab.org/activities/workshops/dedr-
         workshop/position-papers/

   [5]   Consolidation In the Internet Economy, Internet Society, 2019.
         https://future.internetsociety.org/2019/consolidation-in-the-
         internet-economy

   [6]   IBID page 5.

   [7]   Journal of Cyber Policy, Volume 5, Issue 1 (2020) Special
         Issue: Consolidation of the Internet
         (https://www.tandfonline.com/toc/rcyb20/5/1)

   [8]   An Empirical View on Consolidation of the Web, Trinh Viet
         Doan, Roland van Rijswijk-Deij, Oliver Hohlfeld, and Vaibhav
         Bajpai. 2022. ACM Trans. Internet Technol. 22, 3, Article 70
         (February 2022),
         https://vaibhavbajpai.com/documents/papers/proceedings/web-
         consolidation-toit-2022.pdf

   [9]   IBID page 70:3

   [10]  RFC 8890, The Internet is for End Users. Nottingham, Mark.
         August 2020. https://www.rfc-editor.org/info/rfc8890

10. Acknowledgments

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

   This document was prepared using 2-Word-v2.0.template.dot.

McFadden              Expires September 9, 2023               [Page 10]
Internet-Draft   A Taxonomy of Internet Consolidation          Mar 2023

Authors' Addresses

   Mark McFadden
   Internet policy advisors ltd
   Chepstow, Wales, UK

   Email: mark@internetpolicyadvisors.com

McFadden              Expires September 9, 2023               [Page 11]