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Networks Effect helped Facebook Win

As we continually look into how powerful the Networks effects is to a┬ácompany or when promoting a product, we look at a quintessential example of a company that has thrived as a result of these effects. Facebook was first opened in a college dorm in 2004 and was created as a website specifically for Harvard students. It’s founder Mark Zuckerberg has since thrived by this company as it’s revenue now reaches an astounding $10.2 billion. We continually see how Facebook monopolizes most of all companies or applications that even try to compete against it. In future years, we might be able to witness Facebook “taking-it-all”.

 

Many people credit the network effect for the incredible success that Facebook has achieved in the social media field. Many experts also believe that because of this success, Facebook will create a “winner-take-all” atmosphere in which they take over all social network websites. For example, WhatsApp was a social media network competing against Facebook but was finally absorbed by Facebook. One by one, social media networks will end up like WhatsApp and Facebook will become a near-monopoly. Another example of a company thriving on networks effect and now taking control of the markets is Amazon. Amazon started off as an online bookseller and now we see after it passed its tipping point, it has been continually growing. Amazon pretty much sells every legal product now and is now taking over WholeFoods as well.

 

Companies that started out small but had a unique interest from the public quickly gained attention by consumers and although there was no particular difference between Facebook, Google+, mySpace, etc. because the public was so infatuated with Facebook and it’s popularity, it instantly became a hit. This article shows us that the Networks Effect is a huge movement that can make or break a company. Knowing how this phenomenon works can truly help in developing new business or trying to revamp a current company.

 

http://www.dw.com/en/network-effects-helped-facebook-win/a-40418818

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