In 1980s, Robert Metcalfe, the inventor of Ethernet, proposed a formulation of network value in terms of the network size (the number of nodes of the network), which was later named as Metcalfe’s law. The law states that the value V of a network is proportional to the square of the size n of the network, i.e., V ∝ n 2. Metcalfe’s law has been influential and an embodiment of the network effect concept. It also generated many controversies. Some scholars went so far as to state “Metcalfe’s law is wrong” and “dangerous”. Some other laws have been proposed, including Sarnoff’s law (V ∝ n), Odlyzko’s law (V ∝ nlog(n)), and Reed’s law (V ∝ 2n). Despite these arguments, for 30 years, no evidence based on real data was available for or against Metcalfe’s law. The situation was changed in late 2013, when Metcalfe himself used Facebook’s data over the past 10 years to show a good fit for Metcalfe’s law. In this paper, we expand Metcalfe’s results by utilizing the actual data of Tencent (China’s largest social network company) and Facebook (the world’s largest social network company). Our results show that: 1) of the four laws of network effect, Metcalfe’s law by far fits the actual data the best; 2) both Tencent and Facebook data fit Metcalfe’s law quite well; 3) the costs of Tencent and Facebook are proportional to the squares of their network sizes, not linear; and 4) the growth trends of Tencent and Facebook monthly active users fit the netoid function well.
This is a preview of subscription content, access via your institution.
Buy single article
Instant access to the full article PDF.
Price excludes VAT (USA)
Tax calculation will be finalised during checkout.
Bond R M, Fariss C J, Jones J J, Kramer A D I, Marlow C, Settle J E, Fowler J H. A 61-million-person experiment in social influence and political mobilization. Nature, 2012, 489(7415): 295–298.
Ormerod P. Social networks can spread the Olympic effect. Nature, 2012, 489(7416): 337–337.
Swann G M. The functional form of network effects. Information Economics and Policy, 2002, 14(3): 417–429.
Briscoe B, Odlyzko A, Tilly B. Metcalfe’s law is wrong. IEEE Spectrum, 2006, 43(7): 34–39.
Gilder G. Metcalf’s law and legacy. Forbes ASAP, 1993, 152(6): 158–159.
Reed D P. That Sneaky exponential — Beyond Metcalfe’s law to the power of community building. Context Magazine, 1999, 2(1). http://www.reed.com/dpr/locus/-gfn/reedslaw.html, Jan. 2015.
Madureira A, den Hartog F, Bouwman H, Baken N. Empirical validation of Metcalfe’s law: How Internet usage patterns have changed over time. Information Economics and Policy, 2013, 25(4): 246–256.
Metcalfe B. Metcalfe’s law after 40 years of Ethernet. IEEE Computer, 2013, 46(12): 26–31.
Van Hove L. Metcalfe’s law: Not so wrong after all. NET-NOMICS: Economic Research and Electronic Networking, 2014, 15(1): 1–8.
Special Section on Applications and Industry
The work was supported by the Guangdong Talents Program of China under Grant No. 201001D0104726115.
Rights and permissions
About this article
Cite this article
Zhang, XZ., Liu, JJ. & Xu, ZW. Tencent and Facebook Data Validate Metcalfe’s Law. J. Comput. Sci. Technol. 30, 246–251 (2015). https://doi.org/10.1007/s11390-015-1518-1
- network effect
- Metcalfe’s law
- netoid function