Bust and recovery

During 2000, the first internet boom peaked as people realised that many internet companies were not delivering the huge profits that investors had expected. Stock markets around the world saw huge falls in the prices of technology shares and many investors stopped putting funds into technology - and,particularly, internet companies.

This saw many internet companies go bankrupt as their funds dried up. It also saw many mergers and purchases by companies that had successfully raised funds before the bust.

Over the next few years the internet industry grew smaller. However, the number of people using the internet continued to grow rapidly. By 2002 it was estimated that over 550 million people were using the internet and broadband internet access was becoming available, opening the door to new services.

At the same time traditional companies, many of whom had either not bothered with or had very simple websites, began to realise the power of the internet to communicate with customers and began introducing services such as online banking and stock trading. Gradually, due to the weight of the number of users, the internet started to regain credibility and attention.

By 2003, the internet industry had turned around, but in a more cautious and corporate way. Newer companies such as Google were emerging to compete with older internet companies such as Yahoo .

Microsoft had beaten Netscape in the web browser market and companies such as Amazon and eBay had successfully established themselves.

Many small companies began to form to take advantage of renewed confidence in the internet market, seeing the rise of many smaller online retailers.

The amount of money spent on online advertising began to rise rapidly and traditional press began to see falling advertising revenue.

The music and movies industries began to see huge rises in piracy, or theft, due to peer-to-peer downloading networks as broadband internet access became widely available.