A network effect is arguably one of the most powerful competitive advantages a business can have. While network effects can come in different forms, the concept is simple: A business benefits from a network effect when the value of its platform increases with each additional user that joins.
Continue Reading Below
Social networks are great examples of businesses with network effects. But which social networks are the largest? Measured by their monthly active users, the top 10 social networks range from user counts of 313 million all the way to an impressive 1.9 billion. Here are world's top social networks, along with some interesting takeaways about this list.
Image source: Getty Images.
World's biggest social networks
- Facebook (1.9 billion users)
- WhatsApp (1.2 billion users)
- YouTube (1 billion users since 2013)
- Messenger (1 billion users since 2016)
- WeChat/Weixin (889 million users)
- QQ (869 million users)
- Qzone (638 million users)
- Instagram (600 million users)
- Twitter (319 million users)
- Weibo (313 million users)
In a chart, the world's top 10 social networks look like this:
Data from company press releases and SEC filings. *YouTube is ranked higher than Messenger since YouTube achieved this milestone in 2013 and Messenger achieved it in 2016.In addition, YouTube hasn't shared any recent updates on its users, but it's likely larger than Messenger today. Platforms without reliable user data or insignificant social characteristics were excluded. Chart by author..
Facebook dominates the list
It's fair to say that Facebook (NASDAQ: FB) knows a thing or two about building successful social networks. The company absolutely dominates this list.
Not only do the 1.9 billion monthly active users on the company's core Facebook app beat out the rest of the world's social networks by 700 million users or more, but also three of the top four social networks are all Facebook properties. Facebook's messaging apps, WhatsApp and Messenger, have 1.2 billion and 1 billion monthly active users, respectively. And Facebook's photo- and video-sharing app Instagram -- at 600 millionusers -- made the list as well.
Image source: Facebook.
In addition, Facebook's social networks continue to grow rapidly. Even the company's core Facebook app saw its monthly active users grow a nice 17% year over year in the fourth quarter of 2016. This growth rate easily beats Twitter's 4% year-over-year growth in the same period, despite the fact that Twitter's growth is on a much smaller base.
Tencent is crushing it in China
Believe it or not, there's another dominant company on the list. While many people in North America may be unfamiliar with its social networks, Chinese internet company Tencent Holdings (NASDAQOTH: TCEHY) owns three of these 10 social networks: WeChat and Weixin (essentially different modes of the same app), QQ, and Qzone. These social networks are the fifth, sixth, and seventh largest social networks in the world.
Image source: WeChat.
Notably, the fact that Facebook and Tencent together account for a whopping seven of the top eight social networks reinforces how strong of a competitive advantage social networks have. By flexing the significant reach and breadth across their platforms and integrating features across the networks under their name, Facebook and Tencent offer significant value to their users and to the businesses who make money on their networks.
Snapchat isn't so hot after all
One surprising social network that didn't even make the list is Snapchat, owned by parent company Snap (NYSE: SNAP), which just went public in March. Despite being one of the biggest IPOs in recent history, Snapchat has about 301 million monthly active users, according to estimates by Statista.
But Snapchat could make it onto this list soon. Though Snap opts to only share its daily active users with investors, this metric was up sharply in the fourth quarter of 2016, suggesting Snapchat still has some growth ahead of it. Snapchat's daily active users hit 158 millionduring this period, up 48% year over year.
Image source: Getty Images.
Can Facebook and Tencent continue to dominate the list in years to come, proving the staying power of a network effect? Or are the world's biggest social networks more susceptible to disruption than might be thought? For now, Facebook and Tencent's prevailing presence on this list suggests the biggest social networks won't be knocked from dominance easily.
10 stocks we like better than FacebookWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Facebook wasn't one of them! That's right -- they think these 10 stocks are even better buys.
Click here to learn about these picks!
*Stock Advisor returns as of February 6, 2017
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Daniel Sparks owns shares of Facebook. The Motley Fool owns shares of and recommends Alphabet (A and C shares), Facebook, and Twitter. The Motley Fool has a disclosure policy.