Digital is turning us into freelance workers whose worries about healthcare costs could finally help drive down those prices, and whose online purchasing seems increasingly likely to be influenced by Alibaba and other China-based operations.
Oh, and artificial intelligence promises to be more important to human history than fire.
Got all that?
Well, there’s more — much more — but those points stand as a fair summary of some of the main themes of this year’s Mary Meeker digital trends extravaganza. The venture capitalist and her famous slide deck — this year’s version had 294 slides that displayed charts, stats, graphs and quotes — made their annual appearance last week at a conference in California.
Reports of her 2018 internet trends presentation have been hard to avoid in recent days, and not every Meeker observation rises to the level of news or wisdom. Yes, eCommerce continues to account for more retail spending — she estimates roughly 13 percent at the present time, further emphasizing the point that the Census Bureau’s estimates of physical retail sales are all wet. Indeed, big tech firms with cash flows as robust as river currents keep moving into new areas — Meeker made the obvious point that Google is becoming more orientated toward commerce, not just ads, while Amazon keeps moving into advertising.
But Meeker always tells a story about where we are with digital, and where we might be in just a few years or decades. Her comments occasionally rise beyond the relatively mundane musings of a bean counter and point toward civilizational truths.
Right now, she said, consumers in advanced economies exist in a “privacy paradox,” in which data breaches keep people anxious about security, while those same people give all up sorts of personal information to companies in exchange for free and efficient digital services.
Meanwhile, regulators, many of whom have competing agendas, or impulses that seem to contradict the tenants of the free market — you can imagine the tracts, histories and philosophical case studies that will come from the recently enacted General Data Protection Regulation in Europe — are trying to keep up or, in their eyes, maintain a sense of meaningful privacy.
Speaking of history: When business, technology and economic historians in the coming decades are penning their treatments of this point in the digital era, a meaty chapter about China would probably make sense. Anyone who cares about what Meeker has to say knows the basics about Chinese eCommerce and payments, but a few points stood out from her latest presentation.
China-based companies are increasing their global reach, which will almost certainly lead to direct and indirect impacts on consumers outside that country, even though it’s been difficult, historically, for any of the Chinese digital giants to find much success outside of their home countries.
“Alibaba’s increasingly extending its platform beyond China with both acquisitions and equity investments,” Meeker said, according to a transcript of her remarks. About “8.4 percent of its revenue was outside of China, versus 7.9 percent in the previous year.”
That said, it’s not been all good news from Chinese digital firms overseas, as demonstrated by the proposed deal between MoneyGram and Ant Financial.
Chinese merchants are quickly changing or reinforcing how commerce takes place online and over mobile devices, and in tandem with in-person consumer activity.
One such company is a shoe seller called Belle. The retailer “has sensors all over the place. They know where people spend time in the store so they know where to place their products,” Meeker said. “They have RFID chips in shoes, so they know when people try on the shoes what the percentage take rate is of purchasing the shoes. You can also scan your shoe to get a sense of which shoes may fit you best.”
China is gaining more influence over digital operations as the country’s technological and business skills advance.
To demonstrate that point, Meeker offered a quick survey report on the world’s 20 largest web firms. “Five years ago, nine of them were in the U.S. (and) two were in China,” she said. “Today, 11 are in the U.S. (and) nine are in China. China is obviously gaining very rapidly.”
No one reading this needs to be told how the importance of the gig economy and freelance work continues to grow, but Meeker offered her perspective. According to her research, the U.S. on-demand workforce will increase 23 percent year over year in 2018, with some 6.8 million workers classified as such. She contends that is sending shockwaves throughout the economy and culture in ways perhaps not experienced in the United States since the transition a century or more ago from farm work to industrial labor.
“On-demand jobs are filling needs for workers who want extra income and flexibility, and have underutilized skills and assets,” she said. “The bottom line is, (for) on-demand and internet-related jobs, the scale is becoming significant in the U.S. and in other parts of the world.”
According to the Gig Economy Index™ from PYMNTS, nearly 40 percent of the American workforce now makes at least 40 percent of their income via gig work. What’s more, a growing majority of these workers (75.7 percent) say they would not leave freelance work behind for a full-time job, thanks in large part to the perks of gig employment, including flexibility, health benefits, supplemental incomes and creative fulfillment.
The governing principle behind the capability to match workers with employers via digital channels is data — who has what skills, who has what openings, what level of pay will attract the best candidates, at what times workers are needed most and so forth. And the nearly incredible accumulation of data, and the mathematical formulas that make sense of it, are leading humanity to something that might end up transcending our traditional concepts of civilization.
“Data volume is foundational to algorithmic refinement in AI performance. It’s foundational to tool and product improvement, artificial intelligence predictability and capability,” Meeker said. “Artificial intelligence service or platforms are merging from internet leaders. Amazon and Google are increasingly competing in this space.”
To underscore the significance of that, she used a quote attributed to Google CEO Sundar Pichai: “AI is one of the most important things humanity is working on. It’s more profound than electricity or fire. We have learned to harness fire for the benefits of humanity, but we had to overcome its downsides, too. AI is really important, but we have to be concerned about it.”
As in other digital endeavors, China is making meaningful gains in artificial intelligence. “If we look at AI in the U.S. and China and look at the competitions, China is increasingly winning the complex tasks in the competitions that take place,” Meeker said.
Finally, she talked up the role that data collection and analysis, combined with digital technology, is playing in healthcare — an issue whose political and economic importance will only increase as the United States and the Western world becomes older. Her optimistic view? The often life-changing burdens of medical expenses will lead to improvements as digital becomes more of a force in that sector.
“When customers start spending more, they tend to pay more attention to value and prices, especially with things like the internet,” Meeker said. “We ask the question, ‘With consumerization of healthcare and rising data availability, may we finally be at the cusp of reducing consumer healthcare spending?’ I certainly hope so.”