Question

Explain how the value of a social media network increases with the number of connections. Apply concept to explain why Facebook or Google often purchase new, unprofitable startup social media companies for billions of dollars.

Answer 1

Social media networking has become the most common form of communication used by a large number of people,this network leads to an improved experience when more number people participate for e.g. when more number of people post content on twitter such as links and media,the more useful will be the platform provided that more number of people have acess to it.Reason that the value of a social media network increases with the number of connection is because more the usage of the product more will be its value.As of 2020 reports published there are more than 4.5 billion people who use the internet and 3.8 billion social media users.Nowadays everything has been under the control of social medial network i.e a value network allows its users to buy and sell products and information at the same time it has many advantages such as strengthen business connections,advancement of career by getting career advise and support anything which has got an advantage will have its own disadvantage but when weighed advantage of social media network is much more and helps in the easement of everything

Facebook or google purchase new,unprofitable startup social media companies for billions of dollars is because their goal is to be a central hub that caters the various needs of people,so it is not unusual for them to invest in a company that makes smart shoes or a new innovative heater system .From this it is much clear that facebook or google does'nt want any competitors and they should be the number one of all times and for that they purchase new startup at initial stage and offer them billions of dollars, recently facebook has aqquired all the messaging apps i.e it unified all messaging apps on one platform inorder to maintain monopoly and be the central hub of service providing.