Final answer:
Network effects act as barriers to entry in the social media industry by increasing the value of platforms as more users join, which dissuades new competitors. Economies of scale, control of data, and intellectual property rights further protect established platforms from competition.
Step-by-step explanation:
Network effects can create significant barriers to entry in the social media industry. These network effects occur when the value of a product or service increases as more people use it. For social media platforms, this means that a platform becomes more attractive as more users join since it increases opportunities for users to connect and share content. This creates a barrier for new entrants because they must not only match the incumbent's offer but also overcome the existing user base's reluctance to switch to a new, less populated network.
Economies of scale are another barrier as established social media companies can spread costs over a larger number of users, thus operating more efficiently compared to new entrants. Control of resources, such as data, further strengthens established platforms' positions. Legal restrictions like intellectual property rights, large advertising budgets, and established brand names also make it difficult for new competitors to enter the market.