UN: US, China lead digital economy

The United Nations, in its first Digital Economy Report, states that the US and China are creating the vast majority of wealth in the digital economy.

Shamika Sirimanne, director of the Division of Technology and Logistics of the UN Conference on Trade and Development (UNCTAD), told the media that research reveals that the economic geography of the digital economy does not display a traditional North-South divide. It is consistently being led by one developed and one developing country — the United States and China.

She spoke at a news conference on the launch of the Digital Economy Report 2019 at UN headquarters in New York on Wednesday.

According to the report, the US and China "account for 75 percent of all patents related to blockchain technologies, 50 percent of global spending on the "Internet of Things" (IoT), and more than 75 percent of the world market for public cloud computing.

The two nations also account for as much as 90 percent of the market capitalization value of the world's 70 largest digital platform companies.

Seven "super platforms" – Microsoft, followed by Apple, Amazon, Google, Facebook, Tencent and Alibaba ? account for two-thirds of the total market value, the report said.

It also illustrated that Google accounts for some 90 percent of the global internet search market, and Facebook is the top social media platform in more than 90 percent of countries.

And in China, "WeChat (owned by Tencent) has more than one billion active users and, together with Alipay, an Alibaba company, its payment solution has captured virtually the entire Chinese market for mobile payments. Meanwhile, Alibaba has been estimated to have close to 60 percent of the Chinese e-commerce market," the report said.

The report also noted that those companies are competing aggressively to stay on top.

The UN trade body warned that the dominance of those platforms is leading to a concentration and consolidation of digital value, rather than reducing inequalities between and within countries, with developing countries at the bottom.

The report outlines enormous potential gains from the increasingly interconnected global economy, but calls for "concerted global efforts to spread the wealth potential to the many people who currently reap little benefit from it".

It said the rest of the world, particularly countries in Africa and Latin America, are considerably behind.

Under current policies and regulations, such trajectory is likely to continue, further contributing to rising inequality, UN Secretary General Antonio Guterres said in a foreword to the report.

"We must work to close the digital divide," he wrote, "where more than half the world has limited, or no access to the internet. Inclusivity is essential to building a digital economy that delivers for all."

UNCTAD Secretary General Mukhisa Kituyi said, "We need to respond to the desire of people in developing countries to take part in the new digital world, not just as users and consumers, but also as producers, exporters and innovators, for creating and capturing more value on their path towards inclusive prosperity."

Kituyi noted that governments have a critical role in shaping the digital economy by defining the rules of the game through adapting existing laws and passing new ones in many areas.

"A smart embrace of new technologies, enhanced partnerships and greater intellectual leadership are needed to redefine digital development strategies and the future contours of globalization," Kituyi said.