Both Facebook and Apple know their users will stay

The firms get away without doing much innovation since their giant user bases act as moats against competition

for all of the company’s services combined, and that’s likely to plateau. So, another year like 2009, when Facebook’s revenues grew 186%, is extremely unlikely. Both companies’ giant user bases, however, are powerful moats against competition (in messaging, that means against each other, too). Whisper it, but neither Facebook nor Apple needs to do much innovation these days: Facebook can copy its trendiest services from Snapchat (Stories) and Youtube (Watch), while Apple feels comfortable aping the moves of Samsung and other Android phone makers (bezel-less screens, dual cameras). With captive users, experimentation is a needless risk — let rivals try things out first, then Apple and Facebook can come in and capture the profit. Samsung will be the first to release foldable screens, but so what? Apple captures 86% of all global smartphone profit because its user base isn’t going away, held back by the Apple universe of apps, services and cross-product convenience, which Samsung can’t match because it’s merely a part of the Google universe, within which users feel free to switch among producers. It’s the same with Facebook: Even as its user base has stopped growing, its profit is healthy enough to outperform market expectations.

Google and Amazon, two other powerful platforms, aren’t protected by network effects in the same way Apple and Facebook are. Google wanted the power that comes with owning people’s contact networks but failed with Google Plus, the social network it recently closed to outside users. Amazon’s network effects largely come from its recommendation and reputation systems, but these are a secondary factor in choosing where to buy stuff online — price and convenience are more important.

Facebook may be more vulnerable after all its recent scandals. But it’s possible that the company will find better ways to exploit its network effect advantage while exposing itself less to public anger. Messaging and Stories, where content is private or disappears before anyone can make a fuss, are two areas Zuckerberg appears to like. Confident Applelike milking of the user base is a more likely scenario for Facebook going forward than any cataclysmic losses; it won’t be about explosive growth, but it’ll be reliable.