Since the first rudimentary interfaces were created in the 1990s, a number of browsers have entered the market, with a select few achieving market dominance over our access to web content. Today’s bar chart race video, by the YouTube channel Data is Beautiful, is a nostalgic look back at how people used to access the internet, from Mosaic to Chrome.
The First Wave of Browsers
Simply put, web browsers are the software applications that act as our portal to the internet. Today, aside from the occasional pop-up box, we barely notice them. In the early ’90s though, when the web was in its infancy, the crude, boxy interfaces were a revolutionary step in making the internet usable to people with access to a computer. The first step in this journey came in 1990, when the legendary Tim Berners-Lee developed the first-ever web browser called “WorldWideWeb” – later renamed Nexus. Nexus was a graphical user interface (GUI) that allowed users to view text on web pages. Images were still beyond reach, but since most connections were dial-up, that wasn’t much of a limitation at the time.
The precurser to the modern browser was Mosaic, originally developed as a temporary project by the the University of Illinois at Urbana–Champaign (UIUC) and the National Center for Supercomputing Applications (NCSA). After his graduation from UIUC in 1993, Marc Andreessen teamed up with Jim Clark, the founder of Silicon Graphics, to produce a commercial version of the browser. The resulting software, Netscape Navigator, became the first widely used browser, moving the internet from an abstract concept to a network that was accessible to everyday people. The company soon staged a wildly popular IPO, which saw the 16-month-old startup reach a valuation of nearly $3 billion. Naturally, the fanfare surrounding Netscape had captured Microsoft’s attention. Immediately after Netscape’s IPO, the first version of Internet Explorer (building off a licensed version of Mozilla) was released. The browser wars had begun.
The Internet Explorer Era
In 1995, Bill Gates was looking to capitalize on the “Internet Tidal Wave”, and was up to the challenge of eating into Netscape’s market share, which stood at about 90%. – Bill Gates Ultimately, Netscape was no match for Internet Explorer (IE) once it was bundled with the Windows operating system. By the dawn of the new millennium (beware Y2K!) the situation had reversed, with IE capturing over 75% of the browser market share. With Netscape mostly out of the picture, IE had a stranglehold on the market. In fact, Microsoft’s position was so comfortable that after IE6 was released 2001, the next full version wouldn’t ship until 2006. It was during this time that a new player came onto the scene. Mozilla Firefox was officially launched in 2004, seeing over 60 million downloads within its first nine months. For the first time in years, Microsoft began to feel the heat of competition.
Goliath and Goliath
Despite the growing popularity for Mozilla Firefox, it was a browser backed by another tech giant that would eventually lead to IE’s downfall – Google Chrome. Chrome was pitched to the public in 2008 as “a fresh take on the browser”. While Microsoft struggled with open web standards, Chrome’s source code was openly available through Google’s Chromium project. By 2011, Firefox and Chrome had eroded IE’s market share to below 50%, and a year later, Chrome would end Internet Explorer’s 14-year reign as the world’s top internet browser. Today, the browser market has come full circle. Chrome has now become the dominant browser on the market, while competitors fight to increase their single-digit market shares. IE has dropped to fourth place.
Looking Back at the Peaks
In the 25 years since Netscape gave people access to the internet, a few browsers have had their moment in the sun. Here are the years of peak market share for all the major browsers: Once a browser becomes popular, it can be incredibly difficult to carve into its market share. Even during the height of the iPhone era, Apple’s browser, Safari, was only able to manage a 7% market share. For now, it looks like Chrome will continue to be the world’s preferred method of experiencing the internet. If Chrome’s current trajectory continues, it could become the third major browser to surpass a 90% market share. on But fast forward to the end of last week, and SVB was shuttered by regulators after a panic-induced bank run. So, how exactly did this happen? We dig in below.
Road to a Bank Run
SVB and its customers generally thrived during the low interest rate era, but as rates rose, SVB found itself more exposed to risk than a typical bank. Even so, at the end of 2022, the bank’s balance sheet showed no cause for alarm.
As well, the bank was viewed positively in a number of places. Most Wall Street analyst ratings were overwhelmingly positive on the bank’s stock, and Forbes had just added the bank to its Financial All-Stars list. Outward signs of trouble emerged on Wednesday, March 8th, when SVB surprised investors with news that the bank needed to raise more than $2 billion to shore up its balance sheet. The reaction from prominent venture capitalists was not positive, with Coatue Management, Union Square Ventures, and Peter Thiel’s Founders Fund moving to limit exposure to the 40-year-old bank. The influence of these firms is believed to have added fuel to the fire, and a bank run ensued. Also influencing decision making was the fact that SVB had the highest percentage of uninsured domestic deposits of all big banks. These totaled nearly $152 billion, or about 97% of all deposits. By the end of the day, customers had tried to withdraw $42 billion in deposits.
What Triggered the SVB Collapse?
While the collapse of SVB took place over the course of 44 hours, its roots trace back to the early pandemic years. In 2021, U.S. venture capital-backed companies raised a record $330 billion—double the amount seen in 2020. At the time, interest rates were at rock-bottom levels to help buoy the economy. Matt Levine sums up the situation well: “When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off.” Source: Pitchbook Why is this important? During this time, SVB received billions of dollars from these venture-backed clients. In one year alone, their deposits increased 100%. They took these funds and invested them in longer-term bonds. As a result, this created a dangerous trap as the company expected rates would remain low. During this time, SVB invested in bonds at the top of the market. As interest rates rose higher and bond prices declined, SVB started taking major losses on their long-term bond holdings.
Losses Fueling a Liquidity Crunch
When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice. In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses. In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.
What Happens Now?
While much of SVB’s activity was focused on the tech sector, the bank’s shocking collapse has rattled a financial sector that is already on edge.
The four biggest U.S. banks lost a combined $52 billion the day before the SVB collapse. On Friday, other banking stocks saw double-digit drops, including Signature Bank (-23%), First Republic (-15%), and Silvergate Capital (-11%).
Source: Morningstar Direct. *Represents March 9 data, trading halted on March 10.
When the dust settles, it’s hard to predict the ripple effects that will emerge from this dramatic event. For investors, the Secretary of the Treasury Janet Yellen announced confidence in the banking system remaining resilient, noting that regulators have the proper tools in response to the issue.
But others have seen trouble brewing as far back as 2020 (or earlier) when commercial banking assets were skyrocketing and banks were buying bonds when rates were low.
