Deep beneath the ocean waves, hundreds of submarine fibre optic cables transmit vast quantities of information. When we send a social media “like” or an email, read the news or FaceTime with a friend overseas, the data we transmit travels on these cables. More than 98 per cent of all international internet traffic uses submarine cables. And more than US$10 trillion in financial transactions are sent via submarine cables every day. Their importance to the function of the internet can hardly be overstated. Without submarine cables, the internet as we know it simply wouldn’t exist.

Historically, most of these cables were built and owned by telecommunications companies, and even though they were privately owned, the cables were available to anyone willing to pay to use them. But that’s changing, according to research by El Hadi Caoui and Andrew Steck, professors at the University of Toronto.  

Global tech giants such as Alphabet, Amazon, Meta and Microsoft — often called content providers — are playing an increasingly large role in building and operating this type of infrastructure. When these companies lay submarine cables, they build them for their own exclusive use. They don’t sell their excess capacity to other companies, as telecommunications companies have traditionally done.

This shift is a double-edged sword. Content providers build submarine cables where they need them the most, ultimately improving latency and efficiency of the services they offer. But these exclusive networks could also create a multi-track internet in which large tech companies have access to better infrastructure than innovative startups, and competition suffers as a result.

“Over the past decade, content providers became the biggest users of international bandwidth,” says Steck, an assistant professor of strategic management. Between 2005 and 2021, the share of international bandwidth — the total amount of data that can be transmitted over the internet — used by content providers increased to 69 per cent, from 5 per cent. In response to their rapidly growing bandwidth needs, these content providers have laid their own undersea cables. 

In research published in Information Economics and Policy, Caoui and Steck quantified this phenomenon. Between 2010 and 2015, content providers accounted for just 3.5 per cent of new submarine cable construction. But in the most recent five-year period (2021–26), their share had increased to 24.4 per cent. “These companies are also now playing a bigger and bigger role on the supply side as owners of internet cables,” says Steck.  

One driver of the increase is the tech giants’ investments in data centres, which are data and bandwidth intensive. Tech giants rely on these giant facilities to operate things like generative AI, search or social connection. But the telecom companies that traditionally built and operated submarine cables didn’t necessarily design their networks to service these bandwidth-hungry facilities, which meant organizations risked lag times or disruptions. In response, the tech giants decided to build their own. 

“The infrastructure rollout will likely improve the quality of the content providers’ services,” says Caoui. “If Google builds data centres all around the world, it will improve latency by basically bringing services like Google Maps closer to customers.”

Caoui and Steck speculate however, that continued large-scale infrastructure investment by content providers could possibly stifle competition by creating a multi-track internet. If the speed and quality of the infrastructure built by the content providers were to exceed that of the “public” internet, a possible downside over the long run might be more difficulty for new companies seeking a foothold in the content provider marketplace.

“This points to the possibility of a future where major tech companies each have their own private internet infrastructure,” says Steck. “Historically, the internet has had a kind of open and public sort of philosophy. Different companies build their own projects using publicly accessible infrastructure of the internet. But if a multi-track internet becomes a reality, publicly accessible infrastructure might not receive the same level of investment as the private internets run by the tech companies. And in that world, a startup with a brilliant new idea might have to use slower infrastructure. It would put them at a competitive disadvantage against these internet giants.”