IFRS Foundation

Business Model & Innovation

  • Product Design & Lifecycle Management
  • Business Model Resilience
  • Supply Chain Management
  • Materials Sourcing & Efficiency
  • Physical Impacts of Climate Change
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for:
Internet Media & Services

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Energy Management

Environmental Footprint of Hardware Infrastructure

With the Internet & Media Services industry providing a growing amount of content and service offerings, companies in this industry increasingly own, operate, or rent more data centers and other hardware. Thus, the management of the energy and water use associated with IT hardware infrastructure is of great importance to shareholder value. Data centers need to be powered continuously. Disruptions to the energy supply can have a material impact on operations, depending on the magnitude and timing of the disruption. Companies face a trade-off between energy and water consumption due to data center cooling needs. Cooling data centers with water instead of chillers is a means of improving energy efficiency, but it can lead to dependence on significant local water resources. Decisions about data center specifications are important for managing costs, obtaining a reliable supply of energy and water, and lowering reputational risks, particularly as there is an increasing global regulatory focus on climate change and as opportunities arise from innovations in energy efficiency and renewable energy.

Customer Privacy

Data Privacy, Advertising Standards & Freedom of Expression

Companies in the Internet & Media Services industry rely on customer data to innovate new tools and services, generate revenues through advertising sales, and track and prevent criminal activities, such as hacking and online predators targeting children. However, the use and storage of a wide range of customer data, such as personal, demographic, content, and behavioral data, raises privacy concerns, leading to increased regulatory scrutiny in many countries around the world. Companies face reputational risks from providing access to user data to governments, which raises concerns that the data may be used to limit the freedoms of citizens. Companies may also face increased costs of compliance associated with the varying local laws or government demands related to censorship of culturally or politically sensitive material on websites. This issue has impacts on company profitability through the loss of users and can influence decisions to enter or operate in certain markets.

Data Security

Data Security

Companies in the Internet Media & Services industry are subject to a large and growing number of cyber attacks and social engineering threats, which puts customer information and a company's own data at risk. Inadequate prevention, detection, and remediation of data security threats can influence customer acquisition and retention and result in decreased market share and lower demand for the company’s products and/or services. By identifying and addressing data security threats in a timely manner companies can protect brand value and will be better positioned for customer acquisition and retention. Furthermore, effective management can avoid significant expenses associated with data breaches—most commonly directed at recapturing users following a breach.

Employee Engagement, Diversity & Inclusion

Employee Recruitment, Inclusion & Performance

Employees are key contributors to value creation in the Internet Media & Services industry. While the number of job openings in the industry continues to grow, companies are finding it difficult to recruit qualified employees to fill these positions. The shortage in technically skilled domestic employees has created intense competition to acquire highly skilled employees, contributing to high employee turnover rates. In response to talent shortages, companies are hiring foreign nationals, which creates risks related to perceived social implications in the host and home countries of workers. Companies offer significant monetary and non-monetary benefits in order to improve employee engagement and, therefore, retention and productivity increase. Initiatives to improve employee engagement and work-life balance might influence the recruitment and retention of a diverse workforce. As the industry is characterized by relatively low representation from women and minority groups, efforts to recruit from and develop diverse talent pools can serve to address the talent shortage and generally to improve the value of company offerings. Greater workforce diversity is important for innovation, and it helps companies understand the needs of their diverse and global customer base.

Competitive Behavior

Intellectual Property Protection & Competitive Behavior

Despite the openness of the Internet, companies in the Internet Media & Services industry spend a significant proportion of their revenues on intellectual property (IP) protection, including acquiring patents and copyrights. While IP protection is inherent to the business model of some companies in the industry and is an important driver of innovation, the IP practices of companies can be a contentious societal issue. Companies could sometimes acquire patents and other IP protection to restrict competition and access to benefits from innovation, particularly if they are dominant market players. Due to the complexity of software, its abstract nature, and increasing IP rights protection related to software, Internet Media & Services companies have to navigate overlapping patent claims to be able to operate. As a result, companies in the industry may find themselves constantly in litigation or subject to regulatory scrutiny either due to allegations of patent violations if they engage in unethical business practices, or are perceived as doing so, or because they are suing others for IP infringement. Adverse legal or regulatory rulings related to antitrust and IP can expose internet media and services companies to costly and lengthy litigations and potential monetary losses as a result. Such rulings may also affect a company’s market share and pricing power if its patents or dominant position in key markets are legally challenged, with significant impact on revenue. Therefore, companies that can balance the protection of their IP and its use to spur innovation with ensuring their IP management and other business practices do not unfairly restrict competition, have the potential to lower regulatory scrutiny and legal actions while protecting their market value.

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