London has a wonderful opportunity. Given its importance as a creative and financial centre, the potential growth in e-commerce provides a magical prospect for this city.
Currently the United States and in particular the West Coast, in the form of Silicon Valley, has leadership in "business- to-consumer" (B2C) and "business-to-business" (B2B) e-commerce activities. Although stock markets have become somewhat tired (perhaps only in the short term) with B2C, if you thought the Americans had an advantage in this area, just wait to see what they may be able to do in the B2B area.
The B2B strategic alliances initiated by clients of ours such as Ford, Unilever, Sears and Kellogg are emblematic of the big changes that will be taking place in the supply chain. This lead in e-commerce adds to the growing Americanisation - not globalisation - of the world. Being the first mover in e-commerce buttresses the other two advantages the US has: the size of its domestic markets and the efficiency of its capital markets - with high relative share valuations resulting in a low cost of equity capital.
However, Continental Europe and the UK are catching up rapidly. B2C models have been developed quickly, B2B models are similarly being introduced. Where we do have leadership (just as the Japanese do) is in the area of Wireless Application Protocol (WAP) technology, as Vodaphone, Nokia and Ericsson are all centred in Europe. If we can exploit this advantage, London could develop a significant leadership position.
In the area of education, too, where the web will encourage significant development of distance learning, London (and indeed the UK) has a spectacular advantage. This depends on the flexibility and adaptability of leading UK educational institutions and the willingness of academics to develop their research and teaching materials on the web.
There is a danger that established educational institutions will behave in a similar fashion to traditional companies, faced with competition from new internet-based rivals, financed on the public markets and held, as all new media companies seem to be held, to different financial standards. The investments of the established colleges in bricks and mortar may prove to be a liability, limiting their teaching to traditional channels of distribution. The new educational companies, given greater freedom and flexibility by the web, may provide access to educational materials and methods to a vast audience rapidly, efficiently and relatively cheaply. The inertia created by old habits, methods and even academic tenure is a great disadvantage - no old channel of distribution ever moves fast enough.
Thankfully London has changed significantly in the past 15 years in terms of the willingness of highly creative people to work for large multinational companies. Some years ago, it was anathema to many talented people to work in largely US-controlled creative organisations.
As in investment banking and management consulting, the intellectual challenges of a global business - working on global opportunities and issues - are a powerful attraction to the greatest creative minds. It may well be that local, national or regional work is interesting and important, but increasingly it is acknowledged that opportunities, issues and threats are global in scale and nature. The leadership position that London has in areas such as advertising, public relations, market research, and identity and design has resulted in an increasing concentration of major projects in the city.
Some believe that all this internet activity is purely a bubble. We have seen this before, from tulip mania in 17th-century Europe to the property and investment banking booms of the UK in the 1960s. There may be some justification that there is a growing financial bubble, not only in the US but in London and the UK, in France, Italy, Spain, Germany, Japan and Hong Kong, and this may be corrected in time. But what cannot be denied is that the internet has fundamentally and permanently changed the way we live our lives, communicate and do business. The benefits are being felt by consumers, who are as close to receiving perfect information as the classic economic models of supply and demand require.
This, combined with relatively low inflation, has resulted in a significant shift in profitability from the "old" economy to the "new". That is what the stock markets on both sides of the Atlantic are signalling. It is why stocks in technology, media and communication are up 18.5 per cent so far this year, and FTSE traditional industry stocks are down 7.3 per cent.
The web provides a major opportunity for established centres of commerce, such as London, to compete effectively. As pricing power shifts to the consumer, and he or she is provided with almost perfect information, there is a levelling of the competitive playing field. No longer is information power. It is the interpretation of information that becomes critical.
The web is a great equaliser - if anything, a very powerful democratiser and leveller, and probably the most effective socialistic force we have seen. What Russia and China could not do, the web may. Hopefully London will seize the opportunity.
Sir Martin Sorrell is chief executive of WPP Group