What does it mean for business when there’s a marketplace with 4.5 billion daily users, whose potential has barely been scratched? That’s the story of social platforms today. In 1999, only 4.63% of the global population — 279 million people — had internet access.. (1) Today, it’s 4.8 billion people (61% of the world), who spend on average 7 hours a day online. (2) In India and China alone, internet users rose from 9 million in 1999 to 1.6 billion today. Around the world, almost all of these people — 4.5 billion — use social media platforms every month. The numbers are still growing, and platforms are evolving to compete into new lines of business. The result will be an increasingly digitised global economy, with the potential for tremendous innovation and growth — and disruption for companies that aren’t prepared.
25 October 2021
Starting with single-user mainframe computers in the 1950s, networked PCs in the 1980s, client-servers in the 1990s and 2000s and mobile cloud platforms now, the world has long been moving toward a state where everyone is digitally connected to everything, all the time. The result of each shift has been a major impact on the global economy, bringing new ways to work, manufacture and buy and sell.
Today, while access is global, platform companies are highly concentrated. Fifteen of the twenty largest social / messaging platforms are in either China or the United States (US). The first non-US, non-Chinese company (Telegram, headquartered in Russia) only clocks in at number twelve. The biggest platforms truly are giants. Facebook, for example, in 2020 had 2.6 billion monthly users, YouTube 2 billion, WeChat 1.2 billion, and TikTok 800 million.3
To date, advertising has been social media platforms’ main source of revenue and it remains extraordinarily lucrative. Yet most of these companies are also evolving into e-commerce platforms. Facebook has launched new virtual storefronts for the Facebook platform and for Instagram.4 YouTube is turning its videos into a gigantic shopping catalog and is testing in-video shopping.5 WeChat’s “mini-programs” to order clothes, food, transportation and more has had $250 billion in annual transactions, double the year before, while TikTok has partnered with e-commerce platform Shopify.6
Digital platforms that aren’t considered social media are also evolving to compete in new lines of business. In 2020, Amazon produced $21.5 billion in its “other” category (which “primarily includes sales of advertising services”) up from $10.1 billion two years before.7 Apple is now a financial services company too: its app store platform offers proprietary apps for digital payments, credit cards and peer-to-peer money transfers.8
The boom in platforms that mix social media and e-commerce (“social commerce”) offers new ways to market goods and services or recruit talent. These opportunities may be especially rich among younger generations — and in sectors that aren’t traditionally considered tech or retail. Ten years ago, who would have thought that digital platforms would transform mobility through ride-sharing?
Ride-sharing is just one example of how disruption is expanding to many industries that touch these digital platform giants. Financial services companies, for example, have to meet the growing need for real-time payments on social commerce platforms. The creator economy, including not only artists but also educators and analysts, is gaining more access to more clients and the ability to monetise more intangible assets, such as advice and knowledge. As the virtual delivery of these and other services keeps growing and becoming more tailored to customer needs, many existing companies will have to evolve quickly to keep up.
Already, the FinTech boom has been largely fueled by the platform giants: as social platforms focused more on commerce, the need for digital payment platforms surged. Many of these innovative payment platforms are now turning into broader consumer financial services companies that offer investing, personal and small business lending, insurance and more.
All this is just the beginning. More and more of the economy is moving to platforms. That could lead to a decade of roaring economic growth and of disruption in many sectors once thought immune from startup competition. I'll discuss in the next article in this series.
1. “Individuals Using the Internet”, World Bank, accessed 7 October 2021, https://data.worldbank.org/indicator/IT.NET.USER.ZS.
2. “Digital Around the World,” Data Reportal, , accessed 7 October 2021, https://datareportal.com/global-digital-overview.
3. “Visualizing the Social Media Universe in 2020,” Visual Capitalist, accessed 7 October 2021, https://www.visualcapitalist.com/visualizing-the-social-media-universe-in-2020/.
4. “Introducing Shops on Instagram,” accessed 7 October 2021, https://business.instagram.com/blog/introducing-shops-on-instagram.
5. “Google Plans to Make YouTube a Major Shopping Destination,” Bloomberg, 9 October 2020, https://www.bloomberg.com/news/articles/2020-10-09/google-tries-to-turn-youtube-into-a-major-shopping-destination; and “YouTube to pilot test shopping from livestreams with select creators,” TechCrunch, 21 July 2021, https://techcrunch.com/2021/07/21/youtube-to-pilot-test-shopping-from-livestreams-with-select-creators/.
6. “WeChat advances e-commerce with $250 billion in transactions,” TechCrunch, 19 January 2021, https://techcrunch.com/2021/01/19/wechat-2020;“TikTok partners with Shopify on social commerce,” TechCrunch, 27 October 2020, https://techcrunch.com/2020/10/27/tiktok-invests-in-social-commerce-via-new-shopify-partnership/.
7. Form 10-K filed by Amazon.Com Inc. with US Securities and Exchange Commission, accessed 7 October 2021, https://www.sec.gov/ix?doc=/Archives/edgar/data/1018724/000101872421000004/amzn-20201231.htm.
8. “Apple Card vs. Apple Pay vs. Apple Cash: Differences you need to know,” CNET, accessed 7 October 2021, https://www.cnet.com/personal-finance/your-money/apple-card-vs-apple-pay-vs-apple-cash-differences-you-need-to-know/.