Despite having dozens of apps on our phones, we spend most of our time on Instagram, WhatsApp, or TikTok. Have you ever wondered why?
Today, there are thousands of different social networking applications you could actively use. However, the number of globally impactful apps barely exceeds the fingers on one hand. The most important reason for this is called the “network effect.” The network effect is a concept describing how the value of a product or service increases as more people use it.
To explain with a simple example: If you’re the only one using a messaging app among your friends, that app is useless to you. But as the number of your online friends using that app grows, it becomes indispensable to you. This effect is the primary reason why some social media platforms attract users like a magnet. It’s also why WhatsApp users hesitate to switch to alternative platforms, despite repeated criticisms about its handling of personal data security!
Back in 1908, when Alexander Graham Bell described the future of the telephone, his words, “A telephone without a connection to the telephone line is one of the most useless inventions in the world,” were one of the earliest warnings highlighting the importance of the network effect concept.
Today, the success of globally dominant apps like Facebook, Instagram, TikTok, X, and YouTube isn’t just because they are better than their competitors; it stems from the “winner-takes-all” rule brought about by the network effect. This situation arises as a result of social media platforms – also called tech titans in today’s digital economy – not only providing services but also setting the rules.
These platforms don’t just attract users; they also trap content creators, advertisers, and data-processing algorithms within their own ecosystems. Thus, they cease to be mere apps and transform into digital universes.
Once a platform gains dominance, it becomes harder for others to enter the market. At the same time, promising innovative competitors are either acquired by tech giants for astronomical sums or copied and neutralized. This structure is called “platform capitalism.” Examples like Facebook’s acquisition of Instagram and WhatsApp, or Instagram turning Snapchat’s ideas into “Instagram Stories,” are among the most typical features of this system.
Therefore, social networks gain power not only through the number of users they have but also by how well they can monitor and analyze what those users do. Every click, every like, every video watch time represents a “data source” for them. Using this data, they keep us engaged with more content and sell access to advertisers at higher prices. But there’s a cost to this:
We are no longer just users; we have become the product!
Many people who value their personal data want to switch to more secure apps. But because they don’t want to disconnect from their social circles, they often fail to act on this desire. This is called the “lock-in effect.”
TikTok stands out as one of the rare examples that shook this system. Despite facing regulatory pressure in many countries due to its Chinese origins, it managed to spread rapidly, especially among young users. Algorithmic personalization, its entertaining content structure, and cultural creativity played a huge role in this. While TikTok’s success shows that the network effect can be broken and platform capitalism doesn’t always prevail, such successes remain exceptions rather than the norm.
In conclusion, the factors determining the success of social media platforms today go beyond just software quality or user-friendly interfaces. The key determinants in this equation are now: which platform can keep more users engaged for longer periods, which one can collect and analyze more data, and which one can control all other players within its established ecosystem. The network effect lies at the heart of all these questions. Data dominance and platform capitalism demonstrate how this effect has become more complex and powerful today.