Regulatory pressure, decentralisation to reshape social media sector
Increasing regulatory pressure on social media could reshape the sector’s revenue models, while smaller decentralised platforms are expected to attract more users this year, according to GlobalData.
The company’s latest Strategic Intelligence report highlights more severe legislation this year, including Australia’s social media ban for those under 16 and the UK’s potential smartphone ban in schools.
There may also be the outcome of Google’s second antitrust lawsuit regarding digital advertising, which could pave the way for more antitrust legislation against Big Tech companies.
“We are seeing the tides shift for social media companies as more comprehensive data privacy and consumer protection laws take shape,” commented GlobalData analyst Aisha U-K Umaru. “With immense reach and influence, social media companies will be increasingly under scrutiny.”
The regulatory scrutiny, as well as users’ desire for more intimate engagement, has led to smaller social networks, such as BlueSky, Damus, and Mastodon, entering the market.
Consumers’ increased concern about personal data and content moderation will see smaller decentralised apps (dApps) become more popular.
“New entrants to the industry may be able to carve out a niche within areas such as the dApps market. The industry, dominated by behemoths such as Meta and Alphabet, may therefore start to see more diversification, and it will be interesting to see the response of the incumbents,” said Umaru.
According to the report, social media companies are diversifying their revenue streams amid the threats to their ad-focused models.
X and Snap have offered paid subscription options. TikTok has invested in e-commerce and gaming, while Meta introduced the metaverse.
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