Today, digital platforms and various software environments represent a new kind of market power. Facebook is one of the most widespread phenomena around the globe, which has consolidated leadership positions in particular niches. The sources of Facebook’s market power are immense access to user data, comprehensive coverage of influence and impact on people, as well as high switching costs.
Firstly, the firm’s social networks represent a more familiar and well-established platform for communication for many Internet users. The transition to “alternatives” for many people seems to be a more challenging, troublesome solution. Secondly, the company has a reasonably strong network effect, wide distribution, and social resonance. Thirdly, Facebook does not charge a monetary fee for using the platform but takes valuable personal data, sets up marketing campaigns, and shows individual advertisements.
Thanks to a vast array of data, the company’s social networks have every chance and opportunity to set up targets in the best way and increase advertising rates and revenue. Therefore, the difficulty of “switching,” high competitiveness, and an extensive user database are the primary sources of Facebook’s market power.
A firm wishing to enter the social media market may face the following obstacles. One of the barriers to opening a new social network is the need for sufficiently large investments in the project and enough time. Marketing campaigns and promotions that help to increase the reputation and popularity of the firm require severe costs. Moreover, too much time is required for a designed plan and programs to manage and develop a social network and its interaction with various platforms.
The second and no less important problem for entering the social media market is the presence of fierce competition. For example, Facebook social media is already a massive giant in this niche, accounting for approximately 75 percent of this specific market in the UK and some other countries.
Consequently, trying to overtake this company or even be on an equal footing is already obviously a failed effort. Hence, a company that would like to enter the social networking market may face high competition and the need for significant expenses and sufficient time to develop ways to promote and promote a new project.