Network effects became a common phrase in the middle of the 20th century when the digital era was gaining traction. Major companies that first experienced the feature included Apple and Microsoft. Both firms had products that were essential in the digital revolution, and these products were associated with economies of scale. The two companies were distinct, and network effects influenced how technology declined or improved. The role of digital implements was to simplify certain activities for humans, and this could be achieved when more people share specific platforms and utilize the available features or data. The value of network effects increases when the product is used more, which is evidenced by popular social media sites like Facebook and Twitter (Graf-Vlachy et al., 2018). The websites became popular and valuable as more people joined and used them regularly.
Network effects compel certain companies to increase the functions of their products and give more value to customers. The growth of Facebook is one the outstanding examples. It started as a messaging app, but later, such features as a photo editor and video calls were designed to ensure the users engage with each other without seeking alternative networks. Network effects also increase the pace of innovation because technology companies strive to create more value for the clients since it directly influences revenue growth and popularity. Among the positive effects, there is also the simplification of communication and rapid transfer of information. Individuals interact easily and improve their productivity and efficiency. However, the negative result is that people become dependent on some networks, allowing company owners to collect sensitive data. Such scenarios become a threat to people’s lives because the information may be breached and used for malicious intentions, such as spreading fake news (Weiss, 2018). Eventually, these practices lead to manipulation and motivate people to disassociate themselves from the network.
References
Graf-Vlachy, L., Buhtz, K., & König, A. (2018). Social influence in technology adoption: Taking stock and moving forward. Management Review Quarterly, 68(1), 37-76. Web.
Weiss, G. L. (2018). Network effects are becoming even more important on emerging platforms.Forbes. Web.