In the first half of the year, Internet companies above designated size achieved business revenue of 695.1 billion yuan, a year-on-year increase of 25.6%.

Recently, the Ministry of Industry and Information Technology announced the operating conditions of Internet companies above designated size in the first half of the year. The development of the Internet and related service industries is stable, business revenue is growing rapidly, operating profit and R&D expenses maintain double-digit growth, and sub-sectors show different growth trends.

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I. Overall Operation

Internet business revenue grew rapidly. In the first half of the year, my country's Internet and related service enterprises above designated size (hereinafter referred to as Internet enterprises) achieved business revenue of 695.1 billion yuan, a year-on-year increase of 25.6%, an increase of 1.2 percentage points from January to May, and an average growth rate of 19.7% over the past two years.

Figure 1 Growth of Internet business revenue in the first half of 2020-2021

The growth rate of industry profits rebounded. In the first half of the year, Internet companies above designated size realized operating profits of 65.86 billion yuan, a year-on-year increase of 27.4%, an increase of 14.3 percentage points from January to May, and an average growth rate of 14.4% over the past two years.

R&D expenses maintained a rapid growth. In the first half of the year, Internet companies above designated size invested 34.63 billion yuan in R&D expenses, a year-on-year increase of 13.9%, and the growth rate increased by 3.2 percentage points year-on-year.

II. Operation Status by Business

(I) Information service revenue grew steadily, while the high-speed growth trend of audio and video services slowed down. In the first half of the year, Internet companies completed information service revenue of 397.4 billion yuan, a year-on-year increase of 15.4%, an increase of 1 percentage point from January to May; accounting for 57.2% of Internet business revenue, a year-on-year decrease of 3.4 percentage points. Among them, the growth rate of business revenue of audio and video service companies slowed down compared with January to May and the same period last year; online game companies achieved a slight increase, reversing the negative growth situation in January to May; the growth rate of business revenue of news and content service companies and search service-based companies increased compared with January to May.

(II) Various platforms are booming, and the revenue of Internet platform services is growing rapidly. In the first half of the year, Internet companies achieved platform service revenue of 232.6 billion yuan, a year-on-year increase of 55.3%, an increase of 2.8 percentage points from January to May; accounting for 33.5% of Internet business revenue, an increase of 4.2 percentage points year-on-year. Among them, online sales platform companies grew rapidly driven by the "6.18" promotion activities and multi-scenario live broadcasting; life service platform companies and companies that mainly provide manufacturing and production logistics platform services have a stable and positive development trend; the business revenue of online education service companies has fallen significantly year-on-year.

(III) Internet access service revenue grew steadily, and Internet data service revenue grew rapidly. In the first half of the year, Internet companies achieved Internet access and related service revenue of 20.07 billion yuan, a year-on-year increase of 8.3% (down 5.8% in the same period last year); Internet data service (including cloud services, big data services, etc.) revenue of 10.77 billion yuan, a year-on-year increase of 23.4%, and the growth rate increased by 9.1 percentage points year-on-year.

III. Operation Status by Region

Internet business revenue in the eastern region maintained rapid growth, and the western region showed outstanding growth. In the first half of the year, the eastern region completed Internet business revenue of 588.3 billion yuan, a year-on-year increase of 25.7%, an increase of 1.6 percentage points from January to May, accounting for 90.5% of the national (excluding cross-regional enterprises) Internet business revenue, an increase of 0.3 percentage points year-on-year. The central region completed Internet business revenue of 17.96 billion yuan, a year-on-year decrease of 14.1% (an increase of 26% in the same period last year). The western region completed Internet business revenue of 41.21 billion yuan, a year-on-year increase of 47.9%, an increase of 35.9 percentage points year-on-year, an increase of 1.3 percentage points from January to May, and 22.3 percentage points higher than the national average. The Northeast region completed Internet business revenue of 2.46 billion yuan, a year-on-year increase of 18.4% (a decrease of 4.8% in the same period last year), and the growth rate fell by 4.7 percentage points from January to May.

Major provinces and cities achieved rapid growth, while other provinces and cities showed divergent development trends. In the first half of the year, the top five provinces and cities in terms of cumulative internet business revenue were Beijing (up 32.1%), Guangdong (up 6.2%), Shanghai (up 56.4%), Zhejiang (up 26.1%) and Fujian (up 26.4%), with a total internet business revenue of 554.9 billion yuan, a year-on-year increase of 27%, 1.4 percentage points higher than the national average, accounting for 85.4% of the national total (excluding cross-regional enterprises). There were 23 provinces and cities in the country that achieved positive growth in internet business revenue, one more than last month, of which six provinces and cities, including Shanghai, Guizhou, Hainan, Yunnan, Tibet and Liaoning, saw growth rates of more than 50%, while Shanxi and Inner Mongolia saw declines of more than 30%.

IV. Growth of the number of mobile applications (APPs) in my country

The number of mobile applications (APPs) has rebounded slightly. As of the end of June, the number of APPs monitored in the domestic market was 3.02 million, a net increase of 20,000 from the previous month. Among them, the number of APPs in local third-party application stores was 1.66 million, and the number of APPs in the Apple Store (China) was 1.36 million. In June, 160,000 new APPs were added to the shelves, and 140,000 APPs were removed from the shelves.

The number of game applications has stopped falling and rebounded, and the scale remains the leading. As of the end of June, the number of the top four mobile application scales accounted for 58.2%, and other 10 categories of apps such as life services and education accounted for 41.8%. Among them, the number of game apps continued to lead, reaching 729,000, a net increase of 1,000 from the previous month, accounting for 24.1% of all apps. The number of daily tools, e-commerce and social communication apps reached 465,000, 295,000 and 271,000 respectively, ranking second to fourth in mobile application scale, accounting for 15.4%, 9.8% and 9.0% of all apps respectively.

Game apps ranked first in terms of total distribution. As of the end of June, the total number of apps distributed on third-party app stores in my country reached 186.74 billion times. Among them, game downloads ranked first, with 28.37 billion downloads; daily tools, social communications, music and video, and life services ranked second to fifth with 25.93 billion, 24.34 billion, 19.78 billion, and 17.23 billion, respectively. News reading apps were downloaded 14.43 billion times, system tools were downloaded 13.47 billion times, and e-commerce apps were downloaded 11.75 billion times, of which e-commerce and news reading apps increased significantly compared with the previous month. Among the remaining types of apps, apps with a total download volume of more than 50 billion times include finance (9.3 billion times), education (8.33 billion times), and photography (6.86 billion times).