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WhatsApp and the Erosion of the Network Effect

The article that I read for this blog post was titled “WhatsApp and the Erosion of the Network Effect” and was published by The Atlantic. The article was published when Facebook purchased WhatsApp for $19 billion and analyzes how this purchase demonstrates a reduction in the influence of the Network Effect. The main point that the article makes is that, because of high switching costs—for instance, the annoyance of having to re-upload several photos or create an entirely new network—the Network Effect must be in place for people to explore new social networks. However, because phones create less hassle for people to switch between networks, the network effect is not as much of a drive for other people to use new social networking apps.

This article relates to what we have learned in class pretty directly, as it is a real-world application of the “Network Effect” phenomenon that we studied two weeks ago. To review what we learned, the network effect is when a direct benefit occurs when your behavior is aligned with the behavior of others. Thus, the article claims that the network effect must be a primary motivator for other people to join new online social networks, because the switching cost is high; there truly must be an “everyone else is doing it” phenomenon in order for one to join a new network. Though I find the article’s analysis of the reduction of the network effect’s influence in mobile social networking apps interesting, and do agree with it somewhat, I still find that it plays a pretty preeminent role in which mobile networks people decide to join. For instance, I am on Snapchat because many of my friends are on it; however, I am not on WhatsApp because I do not see a purpose for it. Still, the article does make some interesting points and I do find it to be an interesting application of course topics.

The article can be found here:

http://www.theatlantic.com/technology/archive/2014/02/whatsapp-and-the-erosion-of-the-network-effect/283980/

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