The Social Networking Sites industry in the United States has experienced strong growth in earnings over the last few years as the number of mobile internet connections boosted the percentage of services conducted online. In 2020, the Covid-19 pandemic has caused a boom in the E-Commerce & Online Auctions industry, which is estimated to account for more than 20.0% of total retail sales, as consumers stay at home resulting in an increase in internet and social media use. However, only a handful of online giants dominate these industries, thus spurring debate over their market power.
Opportunities
Healthcare
The use of social media in health care has become more prominent and has escalated during the course of the pandemic. For example, social media can be used to deliver important public health messages and alerts as well as to recruit and communicate with facilities and staff. In 2020, healthcare workers have been turning to social media to answer questions and communicate with patients and with the overall public.
Platforms such as Twitter and Facebook have allowed organizations to expand their network by building relationships and sharing new information and discoveries online, and providing a trustworthy resource to the public. The Social Networking Sites industry can benefit from the public’s acceptance and adaptation of looking for information from doctors and health care workers online.
Education
Considering that some schools and colleges will remain closed during the fall semester, this field will likely provide various opportunities of expansion for the industry. Not only does social media facilitate collaboration and communication with students and teachers, but it also provides access to experts in their fields and different educational resources, whether it be on Twitter or Instagram. Educational content creation has been on the rise as more organizations gravitate online to expand their audience. Schools and colleges could use social media platforms as an educational tool and increase engagement with their community, especially during the pandemic since students are staying at home and increasing their screen times.
Challenges
Market concentration and acquisitions
The Social Networking Sites industry is extremely concentrated. In 2020, Facebook, Twitter and LinkedIn are anticipated to generate an estimated 84.8% of industry revenue, with Facebook alone accounting for 68.0%. Due to the intense competition, larger companies have been focusing on acquiring smaller companies with cutting-edge technology.
For example, Facebook acquired Instagram in 2012 and Whatsapp Inc., a messaging app, in 2014. These acquisitions helped diversify Facebook’s revenue streams while expanding its platform. However, not all acquisitions benefit the industry since there is a thin line between breaking anti-monopoly laws and having fair competition in an extremely concentrated market.
Disinformation and antitrust concerns
While social media is an instrumental tool to help bring social change and increase attention to important issues, such as inequality and racial movements like Black Lives Matter, these platforms are not as regulated and have become a tool to spread hate speech and unverified news. The interference of foreign governments in the 2016 US presidential election shed light to the problem and social media companies had made it a top priority to prevent the spread of fake news, especially now with the new presidential election just around the corner.
Still, members of the House Judiciary’s antitrust subcommittee have been investigating anticompetitive practices by these tech giants that could harm consumers and the industry. The CEOs of Amazon, Apple, Facebook and Google had to appear before Congress on July 29th to discuss their business practices while the antitrust subcommittee outlined their concerns about monopolization and market dominance strategies. The lack of regulation and increasing concern about business practices within the industry could change antitrust laws in the near future.
