Page 298 - Electronic Commerce

Social Networking, Mobile Commerce, and Online Auctions

person. The site was unable to generate sufficient revenue to continue operations and
closed in 2000. More successful social networking sites followed several years later.
Friendster was founded by Jonathan Abrams in 2002. Friendster was the first Web site
to include most of the features found today in all social networking sites. The
company’s rapid growth outstripped its technological abilities and the company’s
management team was unable to agree on strategy for dealing with new competitors
such as MySpace and Tribe.net. As Friendster faded, MySpace became the leading U.S.
social networking site.
In 2006, Mark Zuckerberg expanded a virtual community site that he had developed 273
with a few friends at Harvard by purchasing the domain name Facebook.com for $200,000
and signing a number of major advertising deals, including a three-year agreement with
Microsoft. By 2008, Facebook had overtaken MySpace as the leading social networking site
in the world and by 2014 was reporting more than a billion regular users and annual
revenue of more than $6 billion.
The company’s initial public offering in 2012 placed the market value of Facebook at
$104 billion. Today, Facebook is the dominant general interest social networking site in
North America, Europe, and parts of Africa. It is a significant presence in many other
parts of the world as well. In 2011, Google introduced Google+ to compete with Facebook
and, although Google+ has gained a substantial number of regular users, it remains well
behind Facebook in every region of the world.
In Asia, local language social networking sites such as GREE and mixi in Japan and
Renren in China were launched within a year or two of Friendster and eroded that site’s
early successes in those countries. Also in China, the company Tencent Holdings created
QQ in 1999 to compete with Six Degrees and, in 2009 relaunched the site along with two
additional sites (WeChat and Weibo) that were expressly directed at the domestic Chinese
language market. Today, social networking sites that started in each country’s local
language hold top positions in China, Russia, and Japan. In Iran, a Persian language social
network named Cloob is the top site, aided by the Iranian government’s continuing efforts
to block U.S.-based sites such as Facebook and Twitter.
Orkut (named for the Google employee who developed the site in 2004) never really
caught on in the United States, but became the top social networking site in both Brazil
and India between 2008 and 2010. Since then, Facebook has overtaken the top spot in
those countries. However, Orkut continues to have a significant social networking
presence.
LinkedIn, a site devoted to facilitating business contacts, was founded in 2003 and
allows users to create a list of trusted business contacts. Users then invite others to
participate in several forms of relationships on the site, each of which is designed to help
them either find jobs, find employees, or develop connections to business opportunities.
LinkedIn has become the dominant business-focused social networking site in North
America, Europe, and South Africa.
Other social networking sites have met with varying degrees of success. Some sites
have developed a following by offering specific features; for example, YouTube (owned by
Google) popularized the inclusion of videos in social networking sites. Twitter offers users

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