Pandemic exposes Digital Inequality

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Dear Readers,

In today’s blog I would like to highlight the dichotomy of Big Tech companies defying Pandemic with their record sales on one hand and the almost 40% world population without internet access on another. This could be a matter of survival especially when the world got quarantined and people were asked to stay indoors.

Big Tech Boom:

This week undoubtedly belong to the Big 4 Technology titans (Apple, Amazon, Facebook and Google), not for the depositions of their CEOs before the U.S Congress but for the way they have outsmart COVID-19 to register a spectacular FY20 Q2. If we add Microsoft to the group it becomes a lethal combination 5 companies who control more than 20% of S&P 500 and have a total Market cap of greater $5 trillion dollars. Not since the 1980s have the biggest five companies had such a large share of the index, according to S&P Dow Jones Indices.

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Source: FT

In many ways, the COVID-19 pandemic has been a boon for tech companies. As Amazon’s Jeff Bezos, Apple’s Tim Cook, Google’s Sundar Pichai, and Facebook’s Mark Zuckerberg all noted in their opening statements at the antitrust hearing before the U.S Congress, people appreciate the services their companies provide. This is not surprising. Digital technologies have enabled employees to do their work from home, students to continue their classes online while schools are closed, and people to stay in touch with loved ones, order things online and entertain themselves while quarantined at home.

This got reflected in the share price of the Tech giants with Amazon rising more than 40% during the Pandemic period. The revenues during the Q2 was a staggering $89 Billions.

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Source: Yahoo Finance.

North America International Amazon Web Services
Amazon Sales ($B) 55.4 22.6 10.8

Source: Amazon 10Q

As for Google and Facebook, they suffered temporary losses from reduced advertising revenues but still managed to do well quite well in the period. The share prices of Facebook and Google managed to jump around 60% and 30% respectively during the period.

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Source: Yahoo Finance.

North America Europe Asia Pacific Rest of the World
Facebook Sales ($B) 8.3 4.2 4.6 1.5

Source: Facebook 10Q

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Source: Yahoo Finance.

United States EMEA Asia Pacific Canada & Latin America
Alphabet Sales($B) 18 11.3 6.9 1.8

Source: Alphabet 10Q

Apple meanwhile sprang a huge surprise with its staggering sales number. It sold $26 Billion dollars of iPhones in the FY20 Q2 alone. The shares jumped around 60% during the same period.

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Source: Yahoo Finance.

Americas Europe Greater China Japan Rest Of Asia Pacific
Apple Q2 Sales ($B) 27 14.17 9.46 5.21 3.89

Source: Apple 10Q

Microsoft share price has jumped more than 30% during the last 3 months.

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Source: Yahoo Finance

As we can see in the revenue data, most of the sales have come in the region with high access to internet.

Digital Inequality:

As I reflect over the last 4 months under different degrees of “stay at home” orders from the Government, I can see the amount of digital adaptability people are forced to do. Many people who never did video call in their live had to learn different avenues to contact their loved ones. Students in schools were asked to submit assignments online. Employees were doing work from home, juggling between a smartphone and a computer. For many people its not an easy switch.

All the services that have made lives so much better under social-distancing rules – from remote working to online shopping to streaming services – are available only to those with access to a reasonably fast and reliable Internet connection and suitable hardware. Many are also receiving health care and accessing government support online, further highlighting the critical importance of universal access.

According to the data from internetworldstats there are still 3 Billion people in the world as of June 30, 20020 who remain cutoff from the internet.

Region Population (Mil) Internet Users (Mil) Internet Penetration
Africa 1300 566 44%
Asia 4300 2525 59%
Europe 830 727 88%
Latin America/Carribean 650 467 72%
North America 370 333 90%
Australia/Oceania 43 29 67%

Source: Internet World Stats

The situation is much worse in under developed countries where an average of two out of every ten people are online. While progress has been made in bridging the digital divide, COVID-19 has brought to the fore how precarious access to internet communication is in many parts of the world. Without access to proper internet how can the students avail the much needed lessons from home, how can people order essential services for delivery and the most important access healthcare information and consultation sitting at home.

India Digital Divide:

India Government ordered multiple shutdowns since March 2020 forcing 1.3 Billion to stay indoors. As people were encouraged to stay indoors, they started to put greater reliance on technology in the home. But working, learning and connecting with friends remotely requires households to meet a digital threshold. For many low-income families, in India, such connection is a luxury.

India, home to one of the fastest growing internet population has an Internet user base of over 500 Million users but given its size the Internet penetration is around 40%.

Country Population (M) Internet Users (M) Internet Penetration
India 1380 565 41%

Source: Statista.com

In such a scenario it would be very difficult to have proper online classes for students, work from home schedules, home delivery etc except for in big Cities and urban centers.

Bridging Digital Divide:

If COVID-19 has taught us anything, it is that access to technology and a basic level of digital skills are necessities. Individuals, corporations, educational institutions and communities have all had to take a leap into a digital environment in order to cope with what may be the new normal.

Governments are well aware of these disparities and are assessing how to increase their efforts in the short-term to ensure access, including working with private companies to provide hardware and free Internet access for a short period. Much more needs to be done, Governments can prioritize efforts as the urgency increases not just for short-term stop gap measures but for long-term solutions.

For example, the 2011 report by the UN Special Rapporteur on the Promotion and Protection of the Right to Freedom of Opinion and Expression probably gave the first and most expansive interpretation of the relationship between access to the Internet and the fulfillment of human rights. This report highlighted access to infrastructure, relevant content, and digital literacy as vital elements of a rights-based definition of access to the Internet.

In addition, in 2016, the UN Human Rights Council also passed a non-binding resolution emphasizing that denial of internet access is a violation of international human rights law. Nevertheless, neither any Court of law nor any other human rights body, has yet ruled on what actions a state is obliged to take to ensure access to the Internet.

As part of the global response, states deciding what measures to put in place should consider how to potentially increase access to internet inside households. For countries with very limited resources, it may not be possible to provide internet access to a broad portion of the population. Governments may need to narrow the focus because of the constrained resources. Thus the U.N and other multilateral organizations need to push for internet access as part of their sustainable development goals. We should not wait for another Pandemic to improve access to the internet.

Conclusion:

  • COVID-19 has brought to the fore the wide disparity in digital inclusiveness and literacy.
  • People in underdeveloped countries with low internet penetration suffered more in the absence of household internet.
  • Internet access should be a fundamental right and no more a luxury good.
  • Governments should take the help of private sector and incentivize them to invest in building infrastructure for digital access.
  • Individuals, Civil Society, Community leaders, Private Sector, Governments and Multilateral Organizations should focus on improving digital literacy.

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