So Facebook filed its IPO papers, and the numbers are eye-popping. The company appears to be worth about $100 billion, or a bit more than the GDP of Tunisia. Others shade it a bit lower, but one thing is certain: it’s good to be Facebook.
Facebook is special because, in network economic terms, its product is a platform, and successful platforms are few and far between. For all its bells and whistles and features and privacy policies, Facebook remains—at heart—a place that people hang out. As the proprietor of a popular hangout, Facebook gets to write the rules guiding all the folks who think it’s a good place to pitch their businesses or to make some sales. In network economic terms, these businesses operating inside Facebook’s business comprise an aftermarket.