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May 26, 2021
7 minutes read

Why Proxies Are Key to Automation and the Digital Economy

The digital economy has been growing for decades, and while it has its ups and downs, its basic principles are solid. It is exactly in our online world that economies of scale, automation and efficiency really come together. As countless tools and software suites spring up to supply people with innovative solutions, there is a solid basis to say that internet proxies are really key to the whole digital economy.

To realize how our whole digital ecosystem comes together through countless types of proxies, we first need to look at how digital automation works and what barriers it encounters.

proxy networks are key to online automation
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API calls are everywhere in the modern economy

Most online services have application programming interfaces (or API), which allow external customers and devices to access data in the most efficient way – usually a JSON response.

This means that you could send a lightweight request to Twitter, Facebook or your favorite airline site and get precise data from the platform.

Airlines can send ticket price updates, while Twitter can send you new tweets with a certain hashtag, for example.

If you choose to buy anything online, the merchant will send an API request to your bank or credit card company to process the payment. The bank’s API would then send a lightweight response after a successful purchase. As you see, API calls are universally available and have created an environment for countless new businesses.

API calls facebook and twitter

Data gathering and data merchants – everyone’s doing it

Even though most people find out about data gathering through Facebook scandals and other privacy crises, it’s not always private data that digital businesses are after. As more governments adopt the open data policy, there is more than enough valuable data to go around.

As it stands now, countless businesses were founded after their owners analyzed public data. It is obvious that publicly available data are enough to find a niche that no one is catering to. For instance, you could start a brick-and-mortar coffee shop if you analyzed data on coffee shop locations in Google Maps and found a nice spot where there were no other coffee shops around.

Doing this manually is a daunting task, especially if you want to compare the coffee shop concentration to publicly available data about the number of residents in the area and their approximate spending habits.

Instead of clicking through thousands of pages and writing down every data point, people use data gathering scripts or web scrapers, which connect to a page (or, in some cases, APIs, like Web Scraping API) and collect those data points.

This is how online businesses can be so data driven and efficient – what takes an old-school data analyst a month would take a software script several minutes. Right now, billions of devices are gathering various data points online.

API calls facebook and twitter

Some data gatherers make an exclusive business from the data they collect. Various marketing tools are a good example – they gather, aggregate and provide data to other companies. Their search engine optimization (SEO) tools are well-known for their huge data aggregation capabilities. Nevertheless, gathering all that data is difficult.

The unexpected bottleneck for the digital economy

Both API calls and data gathering connections use the internet to connect to another server and retrieve data. Unfortunately, as the number of these connections scales, the servers implement a vital bottleneck, which has kept the online world from collapsing for decades.

Connection limiting – or IP address blocks – are the basic server protection functions, which administrators use to protect their websites. Any given server has its limitations, and if you try to connect to it a million times per second, it is going to overload and crash.

Hackers have used bulk connection requests for decades it what has become known as Denial of Service (DoS) attacks.

This is why any server will severely limit the number of connections any single IP address can make. It protects the server from abuse and lets any service operate uninterrupted.

DoS protection creates a conundrum: how can so many tools and businesses connect to other sites at scale? How can any tool get data thousands of times per minute, if it will get blocked for doing so? Come to think of it, most of the services we use every day would go offline or would work as slow as a human being, if there were no solutions to this bottle neck.

Connection limiting or IP address blocks

Some solutions do not solve the problem

All major digital businesses that need to avoid DoS attack protections have to use some work-around. In essence, all of these workarounds just change the IP address of their devices. Since the IP address is a major factor for identifying anyone online, you can scale the number of connection requests you send with the number of IP addresses you use.

Sadly, it’s not enough to buy a new computer for your work network and use it for a data gathering script, if you are doing it at scale. Every computer on the same network will share a subnetwork, which will be visible in its IP address. Servers also limit connections from the same subnets, because that is what attackers use for the next level DoS attacks – Distributed denial-of-service attacks (or DDoS attacks).

So what is the solution which countless flight ticket companies, SEO tools, ad verification companies and other businesses use?

Letting the online economy thrive

We’ve talked about changing the IP address as the saving grace for businesses, but the only way to do that short of getting a new Internet service provider (ISP) is by using a device with its own IP address as a middleman for the connection. These devices are called internet proxies, and they are used on a massive scale for the internet to function the way it does today.

A robust proxy network might host upwards of millions of proxies, which means that their clients can send almost unlimited API calls or data gathering efforts and avoid any DoS or DDoS protections. Since these businesses have no intention to break or disrupt the services they connect to, they have no real negative impact on the digital economy.

solve the DoS problem

As the digital economy expands, so do the ways in which proxy networks help various businesses.

  • All major e-commerce platforms, including Amazon, are gathering data on competitor platforms to provide the most appealing prices, product presentations and inventories.
  • Digital marketing agencies are using proxy networks to manage thousands of social media accounts for their clients on a daily basis.
  • The whole SEO industry is dependent on proxies to gather search engine result data and provide ranking tracking services or aggregated search query suggestions.
  • International businesses use proxies in other countries to get the freshest, most precise and the highest quality information.

Just think about how your world would look like today if there were no real data aggregation tools, no way to see localized information for another country, no flight ticket search engines, no real market analyses, no way to find out what products are lacking in the market, etc. It would definitely be a bleaker world for us all, and one where the digital economy plays a minor role.

That’s why you should thank your local proxy provider for the work that they do in enabling and vitalizing our economy.


James Keenan

Senior content writer

The automation and anonymity evangelist at Smartproxy. He believes in data freedom and everyone’s right to become a self-starter. James is here to share knowledge and help you succeed with residential proxies.

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