Historically that has not been the case. Historically quality of life improvements have come from technological discoveries (e.g. penicillin) and social evolution (e.g. of the middle class). Who loses if penicillin is discovered? Who loses if some former serfs decide to become artisans instead?
The single biggest improvement in quality of life for most humans over most of history has probably come from improved hygienic practices. How does that come at someone's else's expense?
I also disagree with your specific claim that "Internet innovation" can't improve physical world problems. Would you claim books don't help solve the problem of clean water? Not literally, obviously; you can't use books to make clean water, except by ripping out pages and using them as water filters. But think how much harder it would be to solve the problem if books didn't exist. And the Internet is an innovation on the scale of printing.