Social Media (2023), reveals that giants like Meta, Alphabet, and X (formerly Twitter) dominate this space, but smaller platforms and decentralized apps (dApps) are gaining traction, largely due to a focus on protecting data privacy.
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Beyond socializing, users increasingly use social media for diverse purposes, such as ecommerce, challenging the conventional definition of social media. Some major social media companies, such as X, are expanding on this to explore super-apps to offer a plethora of services. However, this approach faces technical and regulatory hurdles in the West.
The desire to build super apps is indicative of the attempts to diversify revenue streams. Traditionally, the core revenue stream of large social media companies has been online advertising. However, privacy concerns and regulatory antitrust and data privacy interventions represent substantial challenges to this model.
Large social media platforms have dominated due to network effects, where a platform’s value grows with user numbers. Disruptive players like Snapchat and TikTok have differentiated themselves with unique features rather than directly competing with big companies.
Amelia Connor-Afflick, Senior Thematic Intelligence Analyst at GlobalData, comments: “Smaller and new apps, such as decentralized apps, are somewhat challenging the network effects model. They often sell themselves by offering a smaller, more intimate online experience with enhanced data control and privacy.”
A range of social issues have also emerged alongside the growth of these platforms. Regulators and civil society have increased pressures to address online hate, harmful content, and disinformation with legislation such as the EU’s Digital Services Act and the UK’s Online Safety Act. Large social media companies are also increasingly using AI tools to moderate their platforms.
Connor-Afflick concludes: “The use and presence of social media platforms worldwide also reflects a free open internet, underpinned by democratic principles. Social media platforms have been embroiled in geopolitical tension in an increasingly unstable world. China and Russia have banned Meta platforms, India banned TikTok, and the EU, the US, and the UK have prohibited the use of TikTok on governmental personal devices.
“The future of social media hinges on adapting to evolving user preferences and growing regulatory pressures. Striking a balance between personalized advertising, user data privacy, and innovation will be pivotal in shaping the industry’s trajectory.”
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