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Social Media Industry Environment and Interactions Research Paper


This report is aimed at examining the work of the social media industry. In particular, it is necessary to focus on such issues as its competitive environment, the interactions with other companies, and the regulations that can affect these organizations. Moreover, much attention should be paid to the technologies that these enterprises use. One should also focus on innovations because they play a critical for the sustainability of these companies. Overall, this analysis can be useful for anticipating the main trends that may later transform the social media industry.

Competitive environment

The size of this industry can be measured in several ways. At first, one should consider the number of users who rely on these online resources. According to the estimations made in 2005, there were 1.7 billion people who were using social media (Statista, 2015a). It is important to remember that the net revenues of this industry are slightly more than $ 5.1 billion (Pacheco & Udowitz, 2014). Nevertheless, they are expected to increase by approximately 200 percent during the next decade (Pacheco & Udowitz, 2014).

Admittedly, this sector is dependent on the development of other industries because they often act as advertisers of the products or services offered by other enterprises. However, the social media industry does not rely on the single sector of the economy. Thus, they are more resilient to changes. It is possible to distinguish various segments of this industry. For instance, one can mention social networking sites, blogs, video-sharing resources, forums, photo-sharing sites, enterprise networks, and many other resources.

Overall, the social media industry performs several market functions. In particular, it enables businesses to advertise their products and services. These online resources help enterprises reach clients who may differ in terms of their age, gender, linguistic background, and so forth. At the same time, they may serve various needs of Internet users. One can distinguish several leaders of this industry. Much attention should be paid to such online resources as Facebook, YouTube, Twitter, Reddit, and Pinterest. The market share of these sites can be presented in the form of a table:

Name of the social media site Market Share
Facebook 46, 6 %
YouTube 21.2 %
Twitter 4. 58 %
Reddit 3. 92 %
Pinterest 1.5 %

(Statista, 2015b)

Industry environment

The social media industry serves two types of customers. At first, one should consider Internet users who may use these sites for various purposes. At the same time, it is vital to consider the needs of enterprises that rely on social media to increase people’s awareness about their products and services. Social media companies rely on various suppliers. In part, they are dependent on the enterprises manufacturing the equipment that is required for the functioning of Internet sites. At the same time, these organizations cooperate with software developers that can create new opportunities for Internet users.

Overall, this market is not very stable because many new businesses can create online resources that suit many people. For instance, for a long time, this industry has been dominated by Facebook. Nevertheless, Twitter has been able to attract many Internet users within a short period. Additionally, social media attract the attention of venture investors. Thus, start-up companies can generate sufficient capital to begin their operations.

There are several issues that influence the work of these organizations. For instance, they are required to restrict hate speech because it is one of the requirements set by the government. This policy is adopted in various countries, including the United States. As a result, these companies are required to develop software applications that can detect instances of hate speech (Farrington, 2014, p. 128). However, these businesses are more affected by the regulations that are related to the privacy of users and the protection of copyrighted materials. For instance, they can be required to delete videos, texts, or software applications. Additionally, they can be requested to disclose information about Internet users who are suspected of some illegal activities. Each of such incidents can tarnish the reputation of social media corporations.

Financial aspects

It is important to mention that the expenditures on information technologies vary considerably among the representatives of this industry. They spend between $ 1 and 2 billion on their IT resources (Zaruzelsky & Loehr, 2013). In particular, these agencies spend approximately 15 percent of their revenues on research and development. However, one should remember that in some cases, these businesses can pay significant amounts of money to strengthen their IT capabilities. For instance, Facebook purchased Whatsapp for more than $ 7 billion. Thus, it is possible to say that IT infrastructure is a top priority for these organizations.

Applications and technologies

Social media companies make extensive use of technologies that enable users to create their content. These tools are frequently called Web 2.0. For instance, one should speak about the JavaScript applications that are necessary for changing the content of web pages. Additionally, these companies apply the Document Object Model because this platform is useful for modifying certain parts of web pages without having to reload them (Stair & Reynolds, 2013). Additionally, much attention should be paid to the technologies that help customers interact with an external server. Among such programs, one can distinguish various web browsers. Additionally, they strongly rely on PHP web servers.

Additionally, these companies attach much importance to those technologies that enable users to communicate with one another. In particular, they apply Voice over IP applications such as Skype. For example, Facebook allows Internet users to call each other by phone. There are many firms that develop applications for social media companies. These organizations can be small or medium-sized businesses that make social networking sites more appealing to users. Nevertheless, there are large corporations. For instance, one can distinguish Adobe Systems that creates the so-called “rich Internet applications” (Stair & Reynolds, 2013, p. 204). Furthermore, one can consider the work of such companies as Microsoft, Google, and Apple.


The rules that regulate the social media industry are mostly related to such issues like privacy. In particular, these enterprises are expected to ensure that the confidential data of users are not disclosed to third parties. However, there are no trade associations that regulate the work of such organizations. This outcome can be partly explained by the fact that this industry is driven by innovation. Moreover, it is very competitive. Therefore, the excessive use of standards can impair the development of these companies.

Overall, the main trend is that these enterprises want to integrate various services. These services can be related to such activities as text messaging, phone calls, sharing videos, emailing, and so forth. To some degree, this strategy is adopted by Facebook. It is one of the reasons why this corporation acquired Whatsapp. Another significant trend is that these businesses want to adjust their services for the users of mobile phones. There are several businesses that can be regarded as the game-changers of this industry. Much attention should be paid to the work of Google and Apple because they create operating systems for smartphones. These changes require social media companies to change their websites. These examples indicate that in many cases, profound changes can be caused by the activities of businesses that do not necessarily belong to this industry.

There are several areas that are of great interest to the senior executives of social media companies. In particular, they pay attention to applications that improve the work of tablet computers or smartphones. For instance, they want to make sure that their online resources are fully compatible with Android or Mac Os. It is one of the trends that should be identified.


Overall, this discussion suggests that the social media industry is very dynamic. The representatives of this economic sector want to adjust to the new technological trends. Furthermore, they attach much importance to the changing lifestyles of Internet users who tend to rely more on smartphones. This industry is profoundly dependent on the technologies that enable people to create, modify, and share content. Apart from that, their applications are aimed at integrating various services such as the search of videos, phone calls, emailing, and so forth. The success in this industry is based on the ability of managers to anticipate the changing lifestyles of people who rely on social media.

Reference List

Farrington, N. (2014). Sport, Racism and Social Media. New York, NY: Routledge.

Pacheco, E., & Udowitz, R. (2014). U.S. Social Media Advertising Revenues to Reach $15B by 2018. Web.

Stair, R., & Reynolds, G. (2013).Fundamentals of Information Systems. New York, NY: Cengage Learning.

Statista. (2015a). Most popular social media websites in the United States in June 2015, based on share of visits. Web.

Statista. (2015b). Web.

Zaruzelsky, B., & Loehr, J. (2013) The 2012 Global Innovation. New York, NY: Booz&Co.

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IvyPanda. 2020. "Social Media Industry Environment and Interactions." May 17, 2020. https://ivypanda.com/essays/social-media-industry-environment-and-interactions/.


IvyPanda. (2020) 'Social Media Industry Environment and Interactions'. 17 May.

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