For years, Facebook has been the most popular social network worldwide. In the third quarter of 2012, the market leader surpassed 1 billion users, being the first social network achieving this (Statista, 2016). Currently, it has 1.71 billion monthly active users, compared to 1,000 million users for WhatsApp, and 200 million users for Snapchat (Statista, 2016). Not only wins Facebook in number of active users, also in off-site exposure (Facebook like and share buttons exist on more than 10 million websites), and images (Facebook users upload 300 million images every day, compared to 80 million uploads on Instagram, which is also owned by Facebook) (Doz, 2016). Thus, Facebook it the most successful social network platform ever existed.
The enormous amount of users is one of Facebook’s advantages, due to the same-side network effects. This user-base creates a lock-in for Facebook, since switching cost for users are high. Over the years, companies who tried to take a bit of Facebook’s pie, were bought and their software and technologies were used to improve Facebook itself. Hence, the market leader controls possible disruptive competition that appear to pick off users by buying them (Gans, 2016). Given this, it might be tempting to conclude that Facebook cannot be disrupted.
However, new social networks are on the rise. Such as ‘This’. What is This? The idea behind the social network is: less is best (compared to Facebook’s ‘more is better’). The startup limits the sharing of users to cut the noise, encouraging people to share more thoughtfully. This will not be working for Facebook since less sharing results in less revenue from advertisements (Pando, 2014).
A second upcoming network is Ello, which is trying to collect more users based on their privacy policy. Facebook has had a lot of critique about privacy issues and their use of customer data. Ello is responding to the desire for more privacy, since it does not share user data with advertisers, and takes care of the privacy of users (Doz, 2016). Considering that Facebook’s revenue is largely based on sharing information with advertisers, the growth in privacy concerns and this new business model can be harmful to Facebook.
Another social network which shows its concerns about transparency and privacy is Minds. However, Minds focusses more on business users and therefore competes with ‘Facebook for Work’. Contrary to Facebook for Work, Minds offers a white-label social network for enterprises, enabling companies to rebrand the network to make it appear as if they made it. This takes away the privacy, security, and data leakage concerns (Doz, 2016).
Thus, trying to take out a market leader is not a matter of competing for the same customer base. Instead of competing, it is about disrupting. Companies will have to change the game and undermine the business model of Facebook. Possibilities are to focus on sharing, privacy or business users, like This, Ello, and Minds do. The future will show whether such social networks will rise and if Facebook will eventually die or not.
References:
Gans, J. (2016) What would it take to disrupt a platform like Facebook?, Harvard Business Review
(Doz, 2016) http://www.doz.com/social-media/how-to-disrupt-facebook
(Forbes, 2016) http://www.forbes.com/sites/thomasbrewster/2016/06/29/facebook-location-tracking-friend-games/#7bab311f3348
(Statista, 2016) https://www.statista.com/statistics/264810/number-of-monthly-active-facebook-users-worldwide/
(Statista, 2016) https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/
(Pando, 2014) https://pando.com/2014/11/13/why-the-new-social-network-this-is-a-facebook-alternative-that-actually-makes-sense/
