I'm pessimistic about it, unfortunately. Studies have shown a sharp increase in teenage depression and anxiety since the introduction of the smart phone and social media. Yeah, the older generations were concerned about what them new fangled television sets and video games would do to our brains, but the primary difference is that they weren't portable in the same way smart phones are, so at least when you went out with your friends or family, you were able to leave those distractions at home. Also, television and video games of that era didn't offer the near unlimited amount of entertainment choices as offered by today's Internet. I think having infinite choice in this regard is more a negative than positive since it creates even shorter attention spans leading to more frivolous and lazy content that is compatible with those attention spans (i.e. Vines, GIFs, Memes, etc).
On the psychological side, it's leading to more atomization and disintegration of social cohesion. The Internet has this great ability to dehumanize people, since people are just represented by text and profile pics, while the relative anonymity offered protects you from the physical/emotional consequences of being a jerk. For kids whose life is more Internet than reality, will they begin to dehumanize others in real life the same way? There's some indications that they might be, with the way the 21 year old and under demographic is overrepresented in the mass shooting epidemic. Either that, or they lack zero real world social skills all together.
I think online retail has also played a huge role in the disintegration of social cohesion I mentioned, since you never have to leave your house to get anything you want. Back in the "good old days" the local businesses (i.e. record store, sporting good store, hobby shop, electronic store, video store etc) were important and integral to the local community, with those businesses and their owners being kind of like "old friends." You usually got to know the owners on personal terms, which translated into a more meaningful consumer experience. Amazon et al basically sees you as nothing but an account. When commerce was linked to your neighborhood in this way, you felt part of a "community." Now commerce is basically linked to your house.
To keep this from being tl;dr, this all basically translates into people becoming a lot more disconnected and self-absorbed, which could result in a lack of general empathy for anyone but your immediates.