Instant messaging and social network sites: combining coopetition strategies and network externalities

Abstract. In recent years, Instant Messaging (IM) and Social Network Sites (SNS) have became the most important social platform for computermediated communication. This study proposes an integrated theoretical framework by combining network externalities and coopetition theory to investigate the strategic behavior of IM and SNS service providers. We show how firms generally coopete instead of competing in order to overcome local network externalities and avoid market segmentation, rival firms divide or partition the overall market into separate segments, with each firm selling to different segments. This indirectly produces network effects between competing products.