Overview of the Social Media Industry

Since most social media accounts and activities are free-of-charge, the challenge for social media firms has been to monetize their vast user bases. As of the first quarter of 2024, Facebook had 3.05 billion monthly active users (the majority are on mobile devices), Instagram had 2.4 billion and TikTok had 1.1 billion according to DataReportal and Insider Intelligence.

Meanwhile, LinkedIn has been quite successful in generating revenues. It not only sells advertising, but also sells subscriptions to account upgrades for users who are interested in deeper services. Since LinkedIn, largely aimed at business professionals and job seekers, is a popular way for salespeople to initiate conversations with potential customers, and for corporate recruiters and human resources managers to seek new hires, the site has had significant success in generating recurring revenues. In late 2016, LinkedIn was acquired by Microsoft for about $26.2 billion.

Facebook has rapidly become one of the most successful of all the world’s advertising platforms. Both Facebook and LinkedIn have made it extremely easy for small to mid-size businesses to design and initiate their own ads on social media, where these advertisers have the option of carefully targeting their ads to select groups of users by interest, occupation, education, geography or habits. At the same time, these sites have broad appeal to major national advertisers.

TikTok, owned by Chinese company ByteDance, is the international version of the video sharing social network app called Douyin in China. TikTok was released in 2017, and its users are comprised mainly of Generation Z and younger Millennials, in more than 150 countries. The app specializes in short-form entertainment (often about 15 to 30 seconds in length) and utilizes a powerful engine that suggests content tailored to each users’ taste and viewing history. It has become so popular that consumers worldwide are highly influenced, in terms of tastes and trends, by what they see on the platform. In the U.S., TikTok had 170 million users as of 2024. It is expanding into online e-commerce sales via the TikTok site, bringing it into direct competition with Amazon.

However, TikTok has drawn the ire and concern of many government legislators. Part of their concern is TikTok’s immense popularity with young children and teens, where the firm’s largely unregulated short-form video content could be used to manipulate (politically or otherwise), misinform or exploit young people. The other major concern is the platform’s ability to intensely monitor the online activities of users in the U.S., EU and elsewhere, and then report massive amounts of useful personal information back to the government of China, the nation where TikTok’s owners re headquartered. Some members of the U.S. Congress cite national security concerns, and lawmakers have banned the use of the app on government-owned devices. In the U.S., TikTok is attempting to defuse the controversy by separating out and storing American user data in servers based in America and operated by Oracle’s cloud services, but that doesn’t necessarily ensure that the data could not be copied and transferred. There is some chance that the eventual result could be a sale of all or part of TikTok to non-Chinese owners.

A service of great interest is Pinterest, a virtual pin board on which users post photos, recipes, notes, lists or anything else pertaining to hobbies, projects and other interests. As of April 2023, Pinterest had 463 million global monthly active users, according to DataReportal. This visual platform heavily influences consumers who are seeking ideas for fashion, interior decor, cooking/food and events such as weddings.

While the social media pioneers were largely U.S.-based, and the audiences of leading sites like Facebook are global, many nations can boast of their own local social media success stories. This is particularly important in China, where the government limits access to many of the outside world’s most popular sites such as YouTube and Facebook. Popular Chinese services include 51.com, Weixin/WeChat and Kaixin0001.com. Moreover, Ushi.cn is a Chinese service targeted at the LinkedIn-type of professional user.

The biggest news in social media involves Twitter. It was acquired by Elon Musk and a few partners in October 2022 for $44 billion. Musk renamed the platform as X and plans ongoing changes and innovations, and eventually hopes to evolve the platform into an all-purpose app similar to China’s WeChat, with multiple entertainment, shopping and financial services features.

X faces new competition, however. In mid-2023, Facebook launched an X-like short-form text platform named Threads. Users can share posts of up to 500 characters, photos and videos of up to five minutes in length. Thread integrates with Facebook’s popular Instagram service, and it immediately garnered a huge user base. There are other competitors as well, including Mastodon. Bluesky and Spill.

The best known social media platforms are in a mature state, with vast user bases. That is, their early phases of rapid growth in numbers are past them. Now, they want to capitalize on profit potential through the sale of advertising, and sometimes through the sale of merchandise and value-added subscription services. Consequently, these platforms are focused on driving both user engagement and advertising revenues via new features.

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