When I originally downloaded TikTok, I assumed it was primarily about dances and funny sketches. It didn’t feel like something deeper, but rather like a distraction or something to do when I didn’t feel like studying. But as I began my master’s degree, it became evident to me that TikTok is more than simply entertainment; it is an immense platform that leverages network effects better than any other.
Eisenmann, Parker and Van Alstyne (2006) define network effects as situations in which a product’s value increases as more people use it. TikTok is a perfect example of this: as more people sign up and create accounts, more content is generated. The more content there is, the better the algorithm develops at offering exactly what someone wants. This cycle is so powerful that TikTok has expanded into a global platform.
Van Alstyne, Parker and Choudary (2016) argue that platforms succeed by arranging interactions rather than generating everything themselves. TikTok’s innovation is not the never-ending stream of different types of videos, but the way in which creators and viewers around the world are connected. A trend that starts overnight in New York can go viral in Rotterdam the next morning.
However, not all network effects are positive. TikTok’s popularity comes from its abundance, but it also contains numerous risks. Dangerous challenges spread almost as quickly, if not quicker, than harmless memes. The constant stream of content can be overwhelming, and there are also privacy and national security issues. For example, in 2025 TikTok was fined 530 million euros by the European regulator for violating GDPR (Reuters, 2025). TikTok demonstrates that network effects can cause platforms to grow rapidly, but their existence ultimately rests on how well they ensure security, privacy and trust.
Do you believe TikTok’s success will continue, or will the negative side of network effects eventually undermine its growth?
References
Eisenmann, T., Parker, G., and Van Alstyne, M.W. 2006. Strategies for Two-Sided Markets. Harvard Business Review 84(10) 92-101.
Reuters. (2025, 2 mei). TikTok fined 530 million euros by EU regulator over data protection. Reuters.com. https://www.reuters.com/sustainability/boards-policy-regulation/tiktok-fined-530-million-euros-by-eu-regulator-over-data-protection-2025-05-02/
Van Alstyne, M. W., Parker, G. G., & Choudary, S. P. 2016. Pipelines, platforms, and the new rules of strategy. Harvard Business Review, 94(4), 54-62.
