Koo folds up. Why startups fail to join the ranks of Big Tech

livemint.com:

Koo’s collapse underlines the fact that social media platforms are “natural" monopolies because of network effects. In this sense, they are like utilities. Power and gas utilities are natural monopolies.

There is rarely room for more than one player in a given geography. Social media platforms have some of the same characteristics although they are radically different businesses in every other way. Once a social media platform becomes the dominant player, network effects just increase its dominance and builds a moat.

If you and your friends are on Facebook, you are unlikely to sign up on a rival platform and you will probably encourage more friends to sign up on Facebook. The same network effect is in play for Instagram, Twitter (now renamed X), and LinkedIn. Meaningful rivals to these platforms exist only in places like China, where Facebook and X are explicitly banned.

Even with TikTok, after the short video platform was banned in India, no meaningful local equivalent has developed. Quite a few local startups tried to fill the vacuum caused by the ban, but none seem to have succeeded. Indians prefer to go through the cumbersome process of accessing TikTok via virtual private networks (VPNs) and cross-posting TikTok content on WhatsApp (another platform that gained dominance from network effects).

Ousting an entrenched social media platform is very difficult. Facebook managed to push past MySpace and Orkut thanks to its many innovative features. It hasn’t happened since.