A social network service (SNS) is one of the most prospering social media platforms in the Web 2.0 era. In May 2007, Facebook implemented “Open API,” which allows a third-party to create its own APIs and facilitates group interactions. This innovation led to a radical increase in user growth of Facebook and surpassed leading SNS, Myspace at that time. There have been several laws of network value such as Metcalfe’s and Reed’s law which assume different topology of networks. Borrowing these concepts, we hypothesize the positive relationship between the growth of SNS adoption and “Open API” policy. In other words, this policy revolutionized Facebook’s topology from one defined by Metcalfe’s law to that of Reed’s law. We model the duopoly competition of SNSs and show that the growth of SNS adoption is a polynomial function of time under both Metcalfe’s and Reed’s law, but the marginal growth under Reed’s law is greater than that under Metcalfe’s law. We also empirically test the existence of structural change after the adoption of “Open API” policy. The empirical result confirms the structural change in Facebook, which implies that “Open API” transformed Facebook one-to-one communication network into a group forming network.
Social Network, Network Value, Laws of Telecommunication, Network Growth, Open API
ISBN: [978-1-86435-644-1]; Full paper
Jung, Gwangjae and Lee, Byungtae, "How Did Facebook Outspace Myspace With Open Innovation? An Analysis Of Network Competition With Changes Of Network Topology" (2011). PACIS 2011 Proceedings. 88.