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Facebook begins recovery after major outage shut down apps

Facebook suffered a devastating outage that shut out many of its 2.7 billion global users, idled some of the company’s employees and prompted a public apology from the chief technology officer.

The company’s family of social media apps, including the main social network, photo-sharing app Instagram and messaging service WhatsApp, began to return online for some users about 2:45 p.m., more than six hours after the incident began. It was one of the longest failures in recent memory. Downdetector, which monitors internet problems, said the Facebook outage was the largest it had seen, with more than 10.6 million reports worldwide.

“To everyone who was affected by the outages on our platforms today: we’re sorry,” Facebook said in a statement. “We know billions of people and businesses around the world depend on our products and services to stay connected. We appreciate your patience as we come back online.”

Some internal services used by Facebook employees, including the company’s Workplace tool for communicating among teams, also were knocked out for some staff members, a spokesperson said. Some workers even struggled to use Facebook’s badge system at offices, according to a source familiar with the issues.

While it’s not uncommon for Facebook’s apps to have occasional glitches, technical issues that last more than a few minutes are rare.

“*Sincere* apologies to everyone impacted by outages of Facebook powered services right now,” Chief Technology Officer Mike Schroepfer tweeted while the platforms were offline. “We are experiencing networking issues and teams are working as fast as possible to debug and restore as fast as possible.”

The outage was the latest in a series of difficult events for Facebook. A former employee turned whistleblower appeared Sunday on CBS’ “60 Minutes” to accuse the company of prioritizing profit over user safety. The former employee, Frances Haugen, also handed over thousands of damning documents to U.S. lawmakers and the Wall Street Journal, which wrote a series of articles last month on Facebook’s struggles with content moderation and Instagram’s negative psychological effect on teenagers. Haugen is also set to testify Tuesday before a Senate subcommittee.

Facebook shares ended the day down 4.9% at $326.23. They had declined before the outage was reported, hurt by the whistleblower’s “60 Minutes” appearance.

The outage appeared to be related to Facebook’s DNS, or domain name system, records. Put simply, DNS converts domain names such as “” to the actual internet protocol addresses of the corresponding website. An error in DNS records can make it impossible to connect to a website.

The cause of the issue is “probably a bad configuration or code push to the network management system,” said Alex Stamos, former chief security officer at Facebook who is now director of Stanford University’s Internet Observatory. “This isn’t supposed to happen.”

The scale of the outage was unusual, but it wasn’t the first. Facebook’s internal apps stopped working for a time in 2019 after a dispute with Apple Inc., which halted some of the apps’ functionality on the iPhone maker’s platform.

After a user on Twitter suggested that Instagram should “stay offline forever,” Instagram boss Adam Mosseri jokingly replied, “Them fighting words … but it does feel like a snow day.”

Bloomberg writer Sebastian Tong contributed to this report.


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Early packet switching network that was one of the first to implement the protocol suite TCP/IP

For the episode of the television series The Americans, see Arpanet (The Americans).

The Advanced Research Projects Agency Network (ARPANET) was the first wide-area packet-switched network with distributed control and one of the first networks to implement the TCP/IP protocol suite. Both technologies became the technical foundation of the Internet. The ARPANET was established by the Advanced Research Projects Agency (ARPA) of the United States Department of Defense.[1]

Building on the ideas of J. C. R. Licklider, Bob Taylor initiated the ARPANET project in 1966 to enable access to remote computers.[2] Taylor appointed Larry Roberts as program manager. Roberts made the key decisions about the network design.[3] He incorporated Donald Davies’ concepts and designs for packet switching,[4] and sought input from Paul Baran.[5] ARPA awarded the contract to build the network to Bolt Beranek & Newman who developed the first protocol for the network.[6] Roberts engaged Leonard Kleinrock at UCLA to develop mathematical methods for analyzing the packet network technology.[5]

The first computers were connected in 1969 and the Network Control Program was implemented in 1970.[7][8] Further software development enabled remote login, file transfer and email.[9] The network expanded rapidly and was declared operational in 1975 when control passed to the Defense Communications Agency.

Internetworking research in the early 1970s by Bob Kahn at DARPA and Vint Cerf at Stanford University and later DARPA led to the formulation of the Transmission Control Program,[10] which incorporated concepts from the French CYCLADES project directed by Louis Pouzin.[11] As this work progressed, a protocol was developed by which multiple separate networks could be joined into a network of networks. Version 4 of TCP/IP was installed in the ARPANET for production use in January 1983 after the Department of Defense made it standard for all military computer networking.[12][13]

Access to the ARPANET was expanded in 1981, when the National Science Foundation (NSF) funded the Computer Science Network (CSNET). In the early 1980s, the NSF funded the establishment of national supercomputing centers at several universities, and provided network access and network interconnectivity with the NSFNET project in 1986. The ARPANET was formally decommissioned in 1990, after partnerships with the telecommunication and computer industry had assured private sector expansion and future commercialization of an expanded world-wide network, known as the Internet.[14]



Historically, voice and data communications were based on methods of circuit switching, as exemplified in the traditional telephone network, wherein each telephone call is allocated a dedicated, end to end, electronic connection between the two communicating stations. The connection is established by switching systems that connected multiple intermediate call legs between these systems for the duration of the call.

The traditional model of the circuit-switched telecommunication network was challenged in the early 1960s by Paul Baran at the RAND Corporation, who had been researching systems that could sustain operation during partial destruction, such as by nuclear war. He developed the theoretical model of distributed adaptive message block switching.[15] However, the telecommunication establishment rejected the development in favor of existing models. Donald Davies at the United Kingdom's National Physical Laboratory (NPL) independently arrived at a similar concept in 1965.[16][17]

The earliest ideas for a computer network intended to allow general communications among computer users were formulated by computer scientistJ. C. R. Licklider of Bolt, Beranek and Newman (BBN), in April 1963, in memoranda discussing the concept of the "Intergalactic Computer Network". Those ideas encompassed many of the features of the contemporary Internet. In October 1963, Licklider was appointed head of the Behavioral Sciences and Command and Control programs at the Defense Department's Advanced Research Projects Agency (ARPA). He convinced Ivan Sutherland and Bob Taylor that this network concept was very important and merited development, although Licklider left ARPA before any contracts were assigned for development.[18]

Sutherland and Taylor continued their interest in creating the network, in part, to allow ARPA-sponsored researchers at various corporate and academic locales to utilize computers provided by ARPA, and, in part, to quickly distribute new software and other computer science results.[19] Taylor had three computer terminals in his office, each connected to separate computers, which ARPA was funding: one for the System Development Corporation (SDC) Q-32 in Santa Monica, one for Project Genie at the University of California, Berkeley, and another for Multics at the Massachusetts Institute of Technology. Taylor recalls the circumstance: "For each of these three terminals, I had three different sets of user commands. So, if I was talking online with someone at S.D.C., and I wanted to talk to someone I knew at Berkeley, or M.I.T., about this, I had to get up from the S.D.C. terminal, go over and log into the other terminal and get in touch with them. I said, "Oh Man!", it's obvious what to do: If you have these three terminals, there ought to be one terminal that goes anywhere you want to go. That idea is the ARPANET".[20]

Donald Davies' work caught the attention of ARPANET developers at Symposium on Operating Systems Principles in October 1967.[21] He gave the first public demonstration, having coined the term packet switching, on 5 August 1968 and incorporated it into the NPL network in England.[22] The NPL network and ARPANET were the first two networks in the world to use packet switching,[23][24] and were themselves interconnected in 1973.[25][26] Roberts said the ARPANET and other packet switching networks built in the 1970s were similar "in nearly all respects" to Davies' original 1965 design.[27]


In February 1966, Bob Taylor successfully lobbied ARPA's Director Charles M. Herzfeld to fund a network project. Herzfeld redirected funds in the amount of one million dollars from a ballistic missile defense program to Taylor's budget.[28] Taylor hired Larry Roberts as a program manager in the ARPA Information Processing Techniques Office in January 1967 to work on the ARPANET.

Roberts asked Frank Westervelt to explore the initial design questions for a network.[29] In April 1967, ARPA held a design session on technical standards. The initial standards for identification and authentication of users, transmission of characters, and error checking and retransmission procedures were discussed.[30] Roberts' proposal was that all mainframe computers would connect to one another directly. The other investigators were reluctant to dedicate these computing resources to network administration. Wesley Clark proposed minicomputers should be used as an interface to create a message switching network. Roberts modified the ARPANET plan to incorporate Clark's suggestion and named the minicomputers Interface Message Processors (IMPs).[31][32][33]

The plan was presented at the inaugural Symposium on Operating Systems Principles in October 1967.[34]Donald Davies' work on packet switching and the NPL network, presented by a colleague (Roger Scantlebury), came to the attention of the ARPA investigators at this conference.[35][21] Roberts applied Davies' concept of packet switching for the ARPANET,[36][37] and sought input from Paul Baran.[38] The NPL network was using line speeds of 768 kbit/s, and the proposed line speed for the ARPANET was upgraded from 2.4 kbit/s to 50 kbit/s.[39]

By mid-1968, Roberts and Barry Wessler wrote a final version of the IMP specification based on a Stanford Research Institute (SRI) report that ARPA commissioned to write detailed specifications describing the ARPANET communications network.[33] Roberts gave a report to Taylor on 3 June, who approved it on 21 June. After approval by ARPA, a Request for Quotation (RFQ) was issued for 140 potential bidders. Most computer science companies regarded the ARPA proposal as outlandish, and only twelve submitted bids to build a network; of the twelve, ARPA regarded only four as top-rank contractors. At year's end, ARPA considered only two contractors, and awarded the contract to build the network to Bolt, Beranek and Newman Inc. (BBN) on 7 April 1969.

The initial, seven-person BBN team were much aided by the technical specificity of their response to the ARPA RFQ, and thus quickly produced the first working system. This team was led by Frank Heart and included Robert Kahn.[40] The BBN-proposed network closely followed Roberts' ARPA plan: a network composed of small computers called Interface Message Processors (or IMPs), similar to the later concept of routers, that functioned as gateways interconnecting local resources. At each site, the IMPs performed store-and-forward packet switching functions, and were interconnected with leased lines via telecommunication data sets (modems), with initial data rates of 56kbit/s. The host computers were connected to the IMPs via custom serial communication interfaces. The system, including the hardware and the packet switching software, was designed and installed in nine months.[33][41][42] The BBN team continued to interact with the NPL team with meetings between them taking place in the U.S. and the U.K.[43][44]

The first-generation IMPs were built by BBN Technologies using a rugged computer version of the HoneywellDDP-516 computer, configured with 24KB of expandable magnetic-core memory, and a 16-channel Direct Multiplex Control (DMC) direct memory access unit.[45] The DMC established custom interfaces with each of the host computers and modems. In addition to the front-panel lamps, the DDP-516 computer also features a special set of 24 indicator lamps showing the status of the IMP communication channels. Each IMP could support up to four local hosts, and could communicate with up to six remote IMPs via early Digital Signal 0 leased telephone lines. The network connected one computer in Utah with three in California. Later, the Department of Defense allowed the universities to join the network for sharing hardware and software resources.

Debate on design goals[edit]

According to Charles Herzfeld, ARPA Director (1965–1967):

The ARPANET was not started to create a Command and Control System that would survive a nuclear attack, as many now claim. To build such a system was, clearly, a major military need, but it was not ARPA's mission to do this; in fact, we would have been severely criticized had we tried. Rather, the ARPANET came out of our frustration that there were only a limited number of large, powerful research computers in the country, and that many research investigators, who should have access to them, were geographically separated from them.[46]

Nonetheless, according to Stephen J. Lukasik, who as Deputy Director and Director of DARPA (1967–1974) was "the person who signed most of the checks for Arpanet's development":

The goal was to exploit new computer technologies to meet the needs of military command and control against nuclear threats, achieve survivable control of US nuclear forces, and improve military tactical and management decision making.[47]

The ARPANET incorporated distributed computation, and frequent re-computation, of routing tables. This increased the survivability of the network in the face of significant interruption. Automatic routing was technically challenging at the time. The ARPANET was designed to survive subordinate-network losses, since the principal reason was that the switching nodes and network links were unreliable, even without any nuclear attacks.[48][49]

The Internet Society agrees with Herzfeld in a footnote in their online article, A Brief History of the Internet:

It was from the RAND study that the false rumor started, claiming that the ARPANET was somehow related to building a network resistant to nuclear war. This was never true of the ARPANET, but was an aspect of the earlier RAND study of secure communication. The later work on internetworking did emphasize robustness and survivability, including the capability to withstand losses of large portions of the underlying networks.[50]

Paul Baran, the first to put forward a theoretical model for communication using packet switching, conducted the RAND study referenced above.[51][15] Though the ARPANET did not exactly share Baran's project's goal, he said his work did contribute to the development of the ARPANET.[52] Minutes taken by Elmer Shapiro of Stanford Research Institute at the ARPANET design meeting of 9–10 October 1967 indicate that a version of Baran's routing method ("hot potato") may be used,[53] consistent with the NPL team's proposal at the Symposium on Operating System Principles in Gatlinburg.[54]


The first four nodes were designated as a testbed for developing and debugging the 1822 protocol, which was a major undertaking. While they were connected electronically in 1969, network applications were not possible until the Network Control Program was implemented in 1970 enabling the first two host-host protocols, remote login (Telnet) and file transfer (FTP) which were specified and implemented between 1969 and 1973.[7][8][55] Network traffic began to grow once email was established at the majority of sites by around 1973.[9]

Initial four hosts[edit]

First ARPANET IMP log: the first message ever sent via the ARPANET, 10:30 pm PST on 29 October 1969 (6:30 UTC on 30 October 1969). This IMP Log excerpt, kept at UCLA, describes setting up a message transmission from the UCLA SDS Sigma 7 Host computer to the SRI SDS 940 Host computer.

The first four IMPs were:[1]

  • University of California, Los Angeles (UCLA), where Leonard Kleinrock had established a Network Measurement Center, with an SDSSigma 7 being the first computer attached to it;
  • The Augmentation Research Center at Stanford Research Institute (now SRI International), where Douglas Engelbart had created the new NLS system, an early hypertext system, and would run the Network Information Center (NIC), with the SDS 940 that ran NLS, named "Genie", being the first host attached;
  • University of California, Santa Barbara (UCSB), with the Culler-Fried Interactive Mathematics Center's IBM360/75, running OS/MVT being the machine attached;
  • The University of Utah School of Computing, where Ivan Sutherland had moved, running a DECPDP-10 operating on TENEX.

The first successful host to host connection on the ARPANET was made between Stanford Research Institute (SRI) and UCLA, by SRI programmer Bill Duvall and UCLA student programmer Charley Kline, at 10:30 pm PST on 29 October 1969 (6:30 UTC on 30 October 1969).[56] Kline connected from UCLA's SDS Sigma 7 Host computer (in Boelter Hall room 3420) to the Stanford Research Institute's SDS 940 Host computer. Kline typed the command "login," but initially the SDS 940 crashed after he typed two characters. About an hour later, after Duvall adjusted parameters on the machine, Kline tried again and successfully logged in. Hence, the first two characters successfully transmitted over the ARPANET were "lo".[57][58][59] The first permanent ARPANET link was established on 21 November 1969, between the IMP at UCLA and the IMP at the Stanford Research Institute. By 5 December 1969, the initial four-node network was established.

Elizabeth Feinler created the first Resource Handbook for ARPANET in 1969 which led to the development of the ARPANET directory. The directory, built by Feinler and a team made it possible to navigate the ARPANET.

Growth and evolution[edit]

Roberts engaged Howard Frank to consult on the topological design of the network. Frank made recommendations to increase throughput and reduce costs in a scaled-up network.[63] By March 1970, the ARPANET reached the East Coast of the United States, when an IMP at BBN in Cambridge, Massachusetts was connected to the network. Thereafter, the ARPANET grew: 9 IMPs by June 1970 and 13 IMPs by December 1970, then 18 by September 1971 (when the network included 23 university and government hosts); 29 IMPs by August 1972, and 40 by September 1973. By June 1974, there were 46 IMPs, and in July 1975, the network numbered 57 IMPs. By 1981, the number was 213 host computers, with another host connecting approximately every twenty days.[1]

Support for inter-IMP circuits of up to 230.4 kbit/s was added in 1970, although considerations of cost and IMP processing power meant this capability was not actively used.

Larry Roberts saw the ARPANET and NPL projects as complementary and sought in 1970 to connect them via a satellite link. Peter Kirstein's research group at University College London (UCL) was subsequently chosen in 1971 in place of NPL for the UK connection. In June 1973, a transatlantic satellite link connected ARPANET to the Norwegian Seismic Array (NORSAR), via the Tanum Earth Station in Sweden, and onward via a terrestrial circuit to a TIP at UCL. UCL provided a gateway for an interconnection with the NPL network, the first interconnected network, and subsequently the SRCnet, the forerunner of UK's JANET network.[64][65]

1971 saw the start of the use of the non-ruggedized (and therefore significantly lighter) Honeywell 316 as an IMP. It could also be configured as a Terminal Interface Processor (TIP), which provided terminal server support for up to 63 ASCII serial terminals through a multi-line controller in place of one of the hosts.[66] The 316 featured a greater degree of integration than the 516, which made it less expensive and easier to maintain. The 316 was configured with 40 kB of core memory for a TIP. The size of core memory was later increased, to 32 kB for the IMPs, and 56 kB for TIPs, in 1973.

In 1975, BBN introduced IMP software running on the Pluribusmulti-processor. These appeared in a few sites. In 1981, BBN introduced IMP software running on its own C/30 processor product.

Network performance[edit]

In 1968, Roberts contracted with Kleinrock to measure the performance of the network and find areas for improvement.[38][67][68] Building on his earlier work on queueing theory, Kleinrock specified mathematical models of the performance of packet-switched networks, which underpinned the development of the ARPANET as it expanded rapidly in the early 1970s.[23][38][35]


Internetworking demonstration, linking the ARPANET, PRNET, and SATNETin 1977

The ARPANET was a research project that was communications-oriented, rather than user-oriented in design.[69] Nonetheless, in the summer of 1975, the ARPANET was declared "operational". The Defense Communications Agency took control since ARPA was intended to fund advanced research.[1] At about this time, the first ARPANET encryption devices were deployed to support classified traffic.

The transatlantic connectivity with NORSAR and UCL later evolved into the SATNET. The ARPANET, SATNET and PRNET were interconnected in 1977.

The ARPANET Completion Report, published in 1981 jointly by BBN and ARPA, concludes that:

 ... it is somewhat fitting to end on the note that the ARPANET program has had a strong and direct feedback into the support and strength of computer science, from which the network, itself, sprang.[70]

CSNET, expansion[edit]

Access to the ARPANET was expanded in 1981, when the National Science Foundation (NSF) funded the Computer Science Network (CSNET).

Adoption of TCP/IP[edit]

NORSAR and University College London left the ARPANET and began using TCP/IP over SATNET in early 1982.[71]

After the DoD made TCP/IP standard for all military computer networking.[13] On January 1, 1983, known as flag day, TCP/IP protocols became the standard for the ARPANET, replacing the earlier Network Control Program.[72]

MILNET, phasing out[edit]

In September 1984 work was completed on restructuring the ARPANET giving U.S. military sites their own Military Network (MILNET) for unclassified defense department communications.[73][74] Both networks carried unclassified information, and were connected at a small number of controlled gateways which would allow total separation in the event of an emergency. MILNET was part of the Defense Data Network (DDN).[75]

Separating the civil and military networks reduced the 113-node ARPANET by 68 nodes. After MILNET was split away, the ARPANET would continue be used as an Internet backbone for researchers, but be slowly phased out.


In 1985, the National Science Foundation (NSF) funded the establishment of national supercomputing centers at several universities, and provided network access and network interconnectivity with the NSFNET project in 1986. NSFNET became the Internet backbone for government agencies and universities.

The ARPANET project was formally decommissioned in 1990. The original IMPs and TIPs were phased out as the ARPANET was shut down after the introduction of the NSFNet, but some IMPs remained in service as late as July 1990.[76][77]

In the wake of the decommissioning of the ARPANET on 28 February 1990, Vinton Cerf wrote the following lamentation, entitled "Requiem of the ARPANET":[78]

It was the first, and being first, was best,
but now we lay it down to ever rest.
Now pause with me a moment, shed some tears.
For auld lang syne, for love, for years and years
of faithful service, duty done, I weep.
Lay down thypacket, now, O friend, and sleep.

-Vinton Cerf


ARPANET in a broader context

The ARPANET was related to many other research projects, which either influenced the ARPANET design, or which were ancillary projects or spun out of the ARPANET.

Senator Al Gore authored the High Performance Computing and Communication Act of 1991, commonly referred to as "The Gore Bill", after hearing the 1988 concept for a National Research Network submitted to Congress by a group chaired by Leonard Kleinrock. The bill was passed on 9 December 1991 and led to the National Information Infrastructure (NII) which Gore called the information superhighway.

Inter-networking protocols developed by ARPA and implemented on the ARPANET paved the way for future commercialization of a new world-wide network, known as the Internet.[79]

The ARPANET project was honored with two IEEE Milestones, both dedicated in 2009.[80][81]

Software and protocols[edit]

1822 protocol[edit]

The starting point for host-to-host communication on the ARPANET in 1969 was the 1822 protocol, which defined the transmission of messages to an IMP.[82] The message format was designed to work unambiguously with a broad range of computer architectures. An 1822 message essentially consisted of a message type, a numeric host address, and a data field. To send a data message to another host, the transmitting host formatted a data message containing the destination host's address and the data message being sent, and then transmitted the message through the 1822 hardware interface. The IMP then delivered the message to its destination address, either by delivering it to a locally connected host, or by delivering it to another IMP. When the message was ultimately delivered to the destination host, the receiving IMP would transmit a Ready for Next Message (RFNM) acknowledgement to the sending, host IMP.

Network Control Program[edit]

Unlike modern Internet datagrams, the ARPANET was designed to reliably transmit 1822 messages, and to inform the host computer when it loses a message; the contemporary IP is unreliable, whereas the TCP is reliable. Nonetheless, the 1822 protocol proved inadequate for handling multiple connections among different applications residing in a host computer. This problem was addressed with the Network Control Program (NCP), which provided a standard method to establish reliable, flow-controlled, bidirectional communications links among different processes in different host computers. The NCP interface allowed application software to connect across the ARPANET by implementing higher-level communication protocols, an early example of the protocol layering concept later incorporated in the OSI model.[55]

NCP was developed under the leadership of Stephen D. Crocker, then a graduate student at UCLA. Crocker created and led the Network Working Group (NWG) which was made up of a collection of graduate students at universities and research laboratories sponsored by ARPA to carry out the development of the ARPANET and the software for the host computers that supported applications. The various application protocols such as TELNET for remote time-sharing access, File Transfer Protocol (FTP) and rudimentary electronic mail protocols were developed and eventually ported to run over the TCP/IP protocol suite or replaced in the case of email by the Simple Mail Transport Protocol.


Steve Crocker formed a "Networking Working Group" with Vint Cerf who also joined an International Networking Working Group in the early 1970s.[83] These groups considered how to interconnect packet switching networks with different specifications, that is, internetworking. Research led by Bob Kahn at DARPA and Vint Cerf at Stanford University and later DARPA resulted in the formulation of the Transmission Control Program,[10] with its RFC 675 specification written by Cerf with Yogen Dalal and Carl Sunshine in December 1974. The following year, testing began through concurrent implementations at Stanford, BBN and University College London.[71] At first a monolithic design, the software was redesigned as a modular protocol stack in version 3 in 1978. Version 4 was installed in the ARPANET for production use in January 1983, replacing NCP. The development of the complete Internet protocol suite by 1989, as outlined in RFC 1122 and RFC 1123, and partnerships with the telecommunication and computer industry laid the foundation for the adoption of TCP/IP as a comprehensive protocol suite as the core component of the emerging Internet.[13]

Network applications[edit]

NCP provided a standard set of network services that could be shared by several applications running on a single host computer. This led to the evolution of application protocols that operated, more or less, independently of the underlying network service, and permitted independent advances in the underlying protocols.

Telnet was developed in 1969 beginning with RFC 15, extended in RFC 855.

The original specification for the File Transfer Protocol was written by Abhay Bhushan and published as RFC 114 on 16 April 1971. By 1973, the File Transfer Protocol (FTP) specification had been defined (RFC 354) and implemented, enabling file transfers over the ARPANET.

In 1971, Ray Tomlinson, of BBN sent the first network e-mail (RFC 524, RFC 561).[9][84] Within a few years, e-mail came to represent a very large part of the overall ARPANET traffic.[85]

The Network Voice Protocol (NVP) specifications were defined in 1977 (RFC 741), and implemented. But, because of technical shortcomings, conference calls over the ARPANET never worked well; the contemporary Voice over Internet Protocol (packet voice) was decades away.

Password protection[edit]

The Purdy Polynomial hash algorithm was developed for the ARPANET to protect passwords in 1971 at the request of Larry Roberts, head of ARPA at that time. It computed a polynomial of degree 224 + 17 modulo the 64-bit prime p = 264 − 59. The algorithm was later used by Digital Equipment Corporation (DEC) to hash passwords in the VMS operating system and is still being used for this purpose.[citation needed]

Rules and etiquette[edit]

Because of its government funding, certain forms of traffic were discouraged or prohibited.

Leonard Kleinrock claims to have committed the first illegal act on the Internet, having sent a request for return of his electric razor after a meeting in England in 1973. At the time, use of the ARPANET for personal reasons was unlawful.[86]

In 1978, against the rules of the network, Gary Thuerk of Digital Equipment Corporation (DEC) sent out the first mass email to approximately 400 potential clients via the ARPANET. He claims that this resulted in $13 million worth of sales in DEC products, and highlighted the potential of email marketing.

A 1982 handbook on computing at MIT's AI Lab stated regarding network etiquette:[87]

It is considered illegal to use the ARPANet for anything which is not in direct support of Government business ... personal messages to other ARPANet subscribers (for example, to arrange a get-together or check and say a friendly hello) are generally not considered harmful ... Sending electronic mail over the ARPANet for commercial profit or political purposes is both anti-social and illegal. By sending such messages, you can offend many people, and it is possible to get MIT in serious trouble with the Government agencies which manage the ARPANet.

In popular culture[edit]

  • Computer Networks: The Heralds of Resource Sharing, a 30-minute documentary film[88] featuring Fernando J. Corbató, J. C. R. Licklider, Lawrence G. Roberts, Robert Kahn, Frank Heart, William R. Sutherland, Richard W. Watson, John R. Pasta, Donald W. Davies, and economist, George W. Mitchell.
  • "Scenario", an episode of the U.S. television sitcom Benson (season 6, episode 20—dated February 1985), was the first incidence of a popular TV show directly referencing the Internet or its progenitors. The show includes a scene in which the ARPANET is accessed.[89]
  • There is an electronic music artist known as "Arpanet", Gerald Donald, one of the members of Drexciya. The artist's 2002 album Wireless Internet features commentary on the expansion of the internet via wireless communication, with songs such as NTT DoCoMo, dedicated to the mobile communications giant based in Japan.[citation needed]
  • Thomas Pynchon mentions the ARPANET in his 2009 novel Inherent Vice, which is set in Los Angeles in 1970, and in his 2013 novel Bleeding Edge.[citation needed]
  • The 1993 television series The X-Files featured the ARPANET in a season 5 episode, titled "Unusual Suspects". John Fitzgerald Byers offers to help Susan Modeski (known as Holly ... "just like the sugar") by hacking into the ARPANET to obtain sensitive information.[90]
  • In the spy-drama television series The Americans, a Russian scientist defector offers access to ARPANET to the Russians in a plea to not be repatriated (Season 2 Episode 5 "The Deal"). Episode 7 of Season 2 is named 'ARPANET' and features Russian infiltration to bug the network.
  • In the television series Person of Interest, main character Harold Finch hacked the ARPANET in 1980 using a homemade computer during his first efforts to build a prototype of the Machine.[91][92] This corresponds with the real life virus that occurred in October of that year that temporarily halted ARPANET functions.[93][94] The ARPANET hack was first discussed in the episode 2PiR (stylised 2\pi R) where a computer science teacher called it the most famous hack in history and one that was never solved. Finch later mentioned it to Person of Interest Caleb Phipps and his role was first indicated when he showed knowledge that it was done by "a kid with a homemade computer" which Phipps, who had researched the hack, had never heard before.
  • In the third season of the television series Halt and Catch Fire, the character Joe MacMillan explores the potential commercialization of the ARPANET.

See also[edit]


  1. ^ abcd"ARPANET – The First Internet". Living Internet. Retrieved 19 March 2021.
  2. ^"An Internet Pioneer Ponders the Next Revolution". The New York Times. 20 December 1999. Retrieved 20 February 2020.
  3. ^Hafner, Katie (30 December 2018). "Lawrence Roberts, Who Helped Design Internet's Precursor, Dies at 81". The New York Times. ISSN 0362-4331. Retrieved 20 February 2020.
  4. ^"Computer Pioneers - Donald W. Davies". IEEE Computer Society. Retrieved 20 February 2020. ; "A Flaw In The Design". The Washington Post. 30 May 2015.
  5. ^ abAbbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. pp. 39, 57–58. ISBN .
  6. ^Roberts, Dr. Lawrence G. (November 1978). "The Evolution of Packet Switching"(PDF). IEEE Invited Paper. Archived from the original(PDF) on 31 December 2018. Retrieved 10 September 2017.
  7. ^ abBidgoli, Hossein (11 May 2004). The Internet Encyclopedia, Volume 2 (G - O). John Wiley & Sons. p. 39. ISBN .
  8. ^ abCoffman, K. G.; Odlyzco, A. M. (2002). "Growth of the Internet". In Kaminow, I.; Li, T. (eds.). Optical Fiber Telecommunications IV-B: Systems and Impairments. Academic Press. ISBN . Retrieved 15 August 2015.
  9. ^ abcLievrouw, L. A. (2006). Lievrouw, L. A.; Livingstone, S. M. (eds.). Handbook of New Media: Student Edition. SAGE. p. 253. ISBN . Retrieved 15 August 2015.
  10. ^ abCerf, V.; Kahn, R. (1974). "A Protocol for Packet Network Intercommunication"(PDF). IEEE Transactions on Communications. 22 (5): 637–648. doi:10.1109/TCOM.1974.1092259. ISSN 1558-0857.
  11. ^"The internet's fifth man". The Economist. 30 November 2013. ISSN 0013-0613. Retrieved 22 April 2020.
  12. ^R. Oppliger (2001). Internet and Intranet Security. Artech House. p. 12. ISBN . Retrieved 15 August 2015.
  13. ^ abc"TCP/IP Internet Protocol". Living Internet. Retrieved 19 March 2021.
  14. ^Fidler, Bradley; Mundy, Russ (November 2020). The Creation and Administration of Unique Identifiers, 1967-2017(PDF). 1.2: ICANN. p. 8. Retrieved 14 May 2021.CS1 maint: location (link)
  15. ^ ab"Paul Baran and the Origins of the Internet". RAND corporation. Retrieved 29 March 2011.
  16. ^Scantlebury, Roger (25 June 2013). "Internet pioneers airbrushed from history". The Guardian. Retrieved 1 August 2015.
  17. ^"Packets of data were the key...". NPL. Retrieved 1 August 2015.
  18. ^"J.C.R. Licklider And The Universal Network"". Living Internet. Retrieved 19 March 2021.
  19. ^"IPTO – Information Processing Techniques Office"". Living Internet. Retrieved 19 March 2021.
  20. ^John Markoff (20 December 1999). "An Internet Pioneer Ponders the Next Revolution". The New York Times. Archived from the original on 22 September 2008. Retrieved 20 September 2008.
  21. ^ abIsaacson, Walter (2014). The Innovators: How a Group of Hackers, Geniuses, and Geeks Created the Digital Revolution. Simon & Schuster. p. 237. ISBN .
  22. ^"The accelerator of the modern age". BBC News. 5 August 2008. Retrieved 19 May 2009.
  23. ^ abRoberts, Lawrence G. (November 1978). "The Evolution of Packet Switching". Archived from the original on 24 March 2016. Retrieved 9 April 2016.
  24. ^"Donald Davies". Archived from the original on 5 November 2020. Retrieved 29 August 2012; "Donald Davies".
  25. ^C. Hempstead; W. Worthington (8 August 2005). Encyclopedia of 20th-Century Technology. Routledge 8 August 2005, 992 pages, (edited by C. Hempstead, W. Worthington). ISBN . Retrieved 15 August 2015.(source: Gatlinburg, ... Association for Computing Machinery)
  26. ^M. Ziewitz & I. Brown (2013). Research Handbook on Governance of the Internet. Edward Elgar Publishing. p. 7. ISBN .
  27. ^Roberts, Dr. Lawrence G. (November 1978). "The Evolution of Packet Switching"(PDF). IEEE Invited Paper. Archived from the original(PDF) on 31 December 2018. Retrieved 10 September 2017.
  28. ^Markoff, John, Innovator who helped create PC, Internet and the mouse, New York Times, 15 April 2017, p.A1
  29. ^"Planning the ARPANET: 1967-1968" in Chapter 2 on Networking: Vision and Packet Switching 1959-1968 Intergalactic Vision to Arpanet, Entrepreneurial Capitalism and Innovation: A History of Computer Communications 1968-1988, James Pelkey, 2007
  30. ^"Lawrence Roberts Manages The ARPANET Program". Living Internet. 7 January 2000. Retrieved 19 March 2021.
  31. ^Press, Gil. "A Very Short History Of The Internet And The Web". Forbes. Retrieved 7 February 2020.
  32. ^"SRI Project 5890-1; Networking (Reports on Meetings).[1967]". Retrieved 15 February 2020.
  33. ^ abc"IMP – Interface Message Processor". Living Internet. 7 January 2000. Retrieved 19 March 2021.
  34. ^Roberts, Lawrence (1967). "Multiple computer networks and intercomputer communication"(PDF). Multiple Computer Networks and Intercomputer Communications. pp. 3.1–3.6. doi:10.1145/800001.811680. S2CID 17409102.
  35. ^ abGillies, James; Cailliau, Robert (2000). How the Web was Born: The Story of the World Wide Web. Oxford University Press. p. 25. ISBN .
  36. ^"Inductee Details – Donald Watts Davies". National Inventors Hall of Fame. Archived from the original on 6 September 2017. Retrieved 6 September 2017.
  37. ^Cambell-Kelly, Martin (Autumn 2008). "Pioneer Profiles: Donald Davies". Computer Resurrection (44). ISSN 0958-7403.
  38. ^ abcAbbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. pp. 37–38, 58–59. ISBN .
  39. ^"Brief History of the Internet". Internet Society. Retrieved 12 July 2017.
  40. ^Hafner, Katie (25 June 2018). "Frank Heart, Who Linked Computers Before the Internet, Dies at 89". The New York Times. ISSN 0362-4331. Retrieved 3 April 2020.
  41. ^"Looking back at the ARPANET effort, 34 years later". February 2003. Retrieved 19 March 2021.
  42. ^Roberts, Lawrence G. Dr (November 1978). "The Evolution of Packet Switching". Archived from the original on 24 March 2016. Retrieved 5 September 2017.
  43. ^Abbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. p. 38. ISBN .
  44. ^Heart, Frank; Kahn, Robert; Ornstein, Severo; Crowther, William; Walden, David (1970). The Interface Message Processor for the ARPA Computer Network(PDF). 1970 Spring Joint Computer Conference. p. 565. doi:10.1145/1476936.1477021. S2CID 9647377.
  45. ^Wise, Adrian. "Honeywell DDP-516". Retrieved 6 June 2020.
  46. ^"Charles Herzfeld on the ARPANET and Computers". Retrieved 21 December 2008.
  47. ^Lukasik, Stephen J. (2011). "Why the Arpanet Was Built". IEEE Annals of the History of Computing. 33 (3): 4–20. doi:10.1109/MAHC.2010.11. S2CID 16076315.
  48. ^Abbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. pp. 194–195. ISBN .
  49. ^Vernon W. Ruttan (2005) Is War Necessary for Economic Growth? p.125
  50. ^"Brief History of the Internet". Internet Society. Retrieved 12 July 2017. (footnote 5)
  51. ^Baran, Paul (2002). "The beginnings of packet switching: some underlying concepts"(PDF). IEEE Communications Magazine. 40 (7): 42–48. doi:10.1109/MCOM.2002.1018006. ISSN 0163-6804.
  52. ^Brand, Stewart (March 2001). "Founding Father". Wired. 9 (3). Retrieved 31 December 2011.
  53. ^"Shapiro: Computer Network Meeting of October 9–10, 1967".
  54. ^Cambell-Kelly, Martin (1987). "Data Communications at the National Physical Laboratory (1965-1975)". Annals of the History of Computing. 9 (3/4): 239.
  55. ^ ab"NCP, Network Control Program". Living Internet. Retrieved 19 March 2021.
  56. ^Jessica Savio (1 April 2011). "Browsing history: A heritage site has been set up in Boelter Hall 3420, the room the first Internet message originated in". Daily Bruin. UCLA. Retrieved 6 June 2020.
  57. ^McMillan, Carolyn; Newsroom, U. C. (29 October 2019). "Lo and behold: The internet". University of California. Retrieved 2 March 2021.
  58. ^Chris Sutton (2 September 2004). "Internet Began 35 Years Ago at UCLA with First Message Ever Sent Between Two Computers". UCLA. Archived from the original on 8 March 2008.
  59. ^Weber, Marc (25 October 2019). "The First 50 Years Of Living Online: ARPANET and Internet". Computer History Museum blog.
  60. ^"Howard Frank Looks Back on His Role as an ARPAnet Designer". Internet Hall of Fame. 25 April 2016. Retrieved 3 April 2020.
  61. ^Kirstein, P.T. (1999). "Early experiences with the Arpanet and Internet in the United Kingdom". IEEE Annals of the History of Computing. 21 (1): 38–44. doi:10.1109/85.759368. ISSN 1934-1547. S2CID 1558618.
  62. ^"NORSAR becomes the first non-US node on ARPANET, the predecessor to today's Internet". NORSAR (Norway Seismic Array Research). Retrieved 6 June 2020.
  63. ^Kirstein, Peter T. (July–September 2009). "The Early Days of the Arpanet". IEEE Annals of the History of Computing. 31 (3): 67. doi:10.1109/mahc.2009.35. ISSN 1058-6180.
  64. ^"Leonard Kleinrock Helps Build The ARPANET". Living Internet. Retrieved 19 March 2021.
  65. ^"Hobbes' Internet Timeline - the definitive ARPAnet & Internet history"(PDF). Retrieved 11 February 2020.
  66. ^Frank, Ronald A. (22 October 1975). "Security Problems Still Plague Packet-Switched Nets". Computerworld. IDG Enterprise: 18.
  67. ^"III". A History of the ARPANET: The First Decade (Report). Arlington, VA: Bolt, Beranek & Newman Inc. 1 April 1981. p. 132. section 2.3.4
  68. ^ abby Vinton Cerf, as told to Bernard Aboba (1993). "How the Internet Came to Be". Archived from the original on 26 September 2017. Retrieved 25 September 2017.
  69. ^Jon Postel, NCP/TCP Transition Plan, RFC 801
  71. ^ARPANET INFORMATION BROCHURE (NIC 50003) Defense Communications Agency, December 1985.
  72. ^Alex McKenzie; Dave Walden (1991). "ARPANET, the Defense Data Network, and Internet". The Froehlich/Kent Encyclopedia of Telecommunications. 1. CRC Press. pp. 341–375. ISBN .
  73. ^"NSFNET – National Science Foundation Network". Living Internet. Retrieved 19 March 2021.
  74. ^Meinel, Christoph; Sack, Harald (21 February 2014). Digital Communication. ISBN .
  75. ^Abbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. ISBN .
  76. ^G. Schneider; J. Evans; K. Pinard (2009). The Internet – Illustrated. Cengage Learning. ISBN . Retrieved 15 August 2015.
  77. ^"Milestones:Birthplace of the Internet, 1969". IEEE Global History Network. IEEE. Retrieved 4 August 2011.
  78. ^"Milestones:Inception of the ARPANET, 1969". IEEE Global History Network. IEEE. Retrieved 4 August 2011.
  79. ^Interface Message Processor: Specifications for the Interconnection of a Host and an IMP, Report No. 1822, Bolt Beranek and Newman, Inc. (BBN)
  80. ^McKenzie, Alexander (2011). "INWG and the Conception of the Internet: An Eyewitness Account". IEEE Annals of the History of Computing. 33 (1): 66–71. doi:10.1109/MAHC.2011.9. ISSN 1934-1547. S2CID 206443072.
  81. ^Tomlinson, Ray. "The First Network Email". BBN. Archived from the original on 6 May 2006. Retrieved 6 March 2012.
  82. ^Abbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. pp. 106–111. ISBN . OCLC 44962566.
  83. ^Still, tapping into the ARPANET to fetch a shaver across international lines was a bit like being a stowaway on an aircraft carrier. The ARPANET was an official federal research facility, after all, and not something to be toyed with. Kleinrock had the feeling that the stunt he'd pulled was slightly out of bounds. 'It was a thrill. I felt I was stretching the Net'. – "Where Wizards Stay Up Late: The Origins of the Internet", Chapter 7.
  84. ^Stacy, Christopher C. (7 September 1982). "Getting Started Computing at the AI Lab". hdl:1721.1/41180.
  85. ^Steven King (Producer), Peter Chvany (Director/Editor) (1972). Computer Networks: The Heralds of Resource Sharing. Archived from the original on 15 April 2013. Retrieved 20 December 2011.
  86. ^"Scenario", Benson, Season 6, Episode 132 of 158, American Broadcasting Company (ABC), Witt/Thomas/Harris Productions, 22 February 1985
  87. ^The X-Files Season 5, Ep. 3 "Unusual Suspects".[better source needed]
  88. ^Season 2, Episode 11 "2PiR" (stylised "2\pi R")
  89. ^Season 3, Episode 12 "Aletheia"
  90. ^"BBC News – SCI/TECH – Hacking: A history". BBC.
  91. ^"Hobbes' Internet Timeline – the definitive ARPAnet & Internet history".


Further reading[edit]

  • Norberg, Arthur L.; O'Neill, Judy E. (1996). Transforming Computer Technology: Information Processing for the Pentagon, 1962–1982. Johns Hopkins University. pp. 153–196. ISBN .
  • A History of the ARPANET: The First Decade (Report). Arlington, VA: Bolt, Beranek & Newman Inc. 1 April 1981.
  • Hafner, Katie; Lyon, Matthew (1996). Where Wizards Stay Up Late: The Origins of the Internet. Simon and Schuster. ISBN .
  • Abbate, Janet (2000). Inventing the Internet. Cambridge, MA: MIT Press. pp. 36–111. ISBN .
  • Banks, Michael A. (2008). On the Way to the Web: The Secret History of the Internet and Its Founders. APress/Springer Verlag. ISBN .
  • Salus, Peter H. (1 May 1995). Casting the Net: from ARPANET to Internet and Beyond. Addison-Wesley. ISBN .
  • Waldrop, M. Mitchell (23 August 2001). The Dream Machine: J. C. R. Licklider and the Revolution That Made Computing Personal. New York: Viking. ISBN .
  • "The Computer History Museum, SRI International, and BBN Celebrate the 40th Anniversary of First ARPANET Transmission". Computer History Museum. 27 October 2009.

Oral histories[edit]

  • Kahn, Robert E. (24 April 1990). "Oral history interview with Robert E. Kahn". University of Minnesota, Minneapolis: Charles Babbage Institute. Retrieved 15 May 2008. Focuses on Kahn's role in the development of computer networking from 1967 through the early 1980s. Beginning with his work at Bolt Beranek and Newman (BBN), Kahn discusses his involvement as the ARPANET proposal was being written and then implemented, and his role in the public demonstration of the ARPANET. The interview continues into Kahn's involvement with networking when he moves to IPTO in 1972, where he was responsible for the administrative and technical evolution of the ARPANET, including programs in packet radio, the development of a new network protocol (TCP/IP), and the switch to TCP/IP to connect multiple networks.
  • Cerf, Vinton G. (24 April 1990). "Oral history interview with Vinton Cerf". University of Minnesota, Minneapolis: Charles Babbage Institute. Retrieved 1 July 2008. Cerf describes his involvement with the ARPA network, and his relationships with Bolt Beranek and Newman, Robert Kahn, Lawrence Roberts, and the Network Working Group.
  • Baran, Paul (5 March 1990). "Oral history interview with Paul Baran". University of Minnesota, Minneapolis: Charles Babbage Institute. Retrieved 1 July 2008. Baran describes his work at RAND, and discusses his interaction with the group at ARPA who were responsible for the later development of the ARPANET.
An introvert's guide to networking - Rick Turoczy - TEDxPortland

Network effect

Increasing value with increasing participation

Diagram illustrating the network effect in a few simple phone networks. The lines represent potential calls between phones. As the number of phones connected to the network grows, the number of potential calls available to each phone grows and increases the utility of each phone, new and existing.

In economics, a network effect (also called network externality or demand-side economies of scale) is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. Network effects are typically positive, resulting in a given user deriving more value from a product as other users join the same network. The adoption of a product by an additional user can be broken into two effects: an increase in the value to all other users ( "total effect") and also the enhancement of other non-users' motivation for using the product ("marginal effect").[1]

Network effects can be direct or indirect. Direct network effects arise when a given user's utility increases with the number of other users of the same product or technology, meaning that adoption of a product by different users is complementary.[2] This effect is separate from effects related to price, such as a benefit to existing users resulting from price decreases as more users join. Direct network effects can be seen with social networking services, including Twitter, Facebook, Airbnb, Uber, and LinkedIn; telecommunications devices like the telephone; and instant messaging services such as MSN, AIM or QQ.[3] Indirect (or cross-group) network effects arise when there are "at least two different customer groups that are interdependent, and the utility of at least one group grows as the other group(s) grow".[4] For example, hardware may become more valuable to consumers with the growth of compatible software.

Network effects are commonly mistaken for economies of scale, which describe decreasing average production costs in relation to the total volume of units produced. Economies of scale are a common phenomenon in traditional industries such as manufacturing, whereas network effects are most prevalent in new economy industries, particularly information and communication technologies. Network effects are the demand side counterpart of economies of scale, as they function by increasing a customer's willingness to pay due rather than decreasing the supplier's average cost.[5]

Upon reaching critical mass, a bandwagon effect can result. As the network continues to become more valuable with each new adopter, more people are incentivised to adopt, resulting in a positive feedback loop. Multiple equilibria and market tipping are two key potential outcomes in markets that exhibit network effects. Consumer expectations are key in determining which outcomes will result.


Network effects were a central theme in the arguments of Theodore Vail, the first post-patent president of Bell Telephone, in gaining a monopoly on US telephone services. In 1908, when he presented the concept in Bell's annual report, there were over 4,000 local and regional telephone exchanges, most of which were eventually merged into the Bell System.

Network effects were popularized by Robert Metcalfe, stated as Metcalfe's law. Metcalfe was one of the co-inventors of Ethernet and a co-founder of the company 3Com. In selling the product, Metcalfe argued that customers needed Ethernet cards to grow above a certain critical mass if they were to reap the benefits of their network.[6] According to Metcalfe, the rationale behind the sale of networking cards was that the cost of the network was directly proportional to the number of cards installed, but the value of the network was proportional to the square of the number of users. This was expressed algebraically as having a cost of N, and a value of N2. While the actual numbers behind this proposition were never firm, the concept allowed customers to share access to expensive resources like disk drives and printers, send e-mail, and eventually access the Internet.[7]

The economic theory of the network effect was advanced significantly between 1985 and 1995 by researchers Michael L. Katz, Carl Shapiro, Joseph Farrell, and Garth Saloner.[8] Author, high-tech entrepreneur Rod Beckstrom presented a mathematical model for describing networks that are in a state of positive network effect at BlackHat and Defcon in 2009 and also presented the "inverse network effect" with an economic model for defining it as well.[9] Because of the positive feedback often associated with the network effect, system dynamics can be used as a modelling method to describe the phenomena.[10]Word of mouth and the Bass diffusion model are also potentially applicable.[11] The next major advance occurred between 2000 and 2003 when researchers Geoffrey G Parker, Marshall Van Alstyne,[12] Jean-Charles Rochet and Jean Tirole[13] independently developed the two-sided market literature showing how network externalities that cross distinct groups can lead to free pricing for one of those groups.

Evidence and Consequences[edit]

Dynamics of activity on online platforms, as indicated via posts in social media platforms reveal long term economic consequences of network effects in both the offline and online economy.
Clues about the long term results of network effects on the global economy are reveled in new research into Online Diversity.

New research addresses an apparent paradox: the web is a source of continual innovation, and yet it appears increasingly dominated by a small number of dominant players - one of the most visible consequences of network effects.[14] We now know the impact on economic diversity is due to a variety of network effects with the variety of online players worldwide shrinking rapidly, despite the fact that the overall size of the worldwide web continues to expand and new categories of services offered online continues to rise.[15]

This research tackles this paradox by using large-scale longitudinal data sets from social media to measure the distribution of attention across the whole online economy over more than a decade from 2006 until 2017.[16]

While the diversity of sources is in decline, there is a countervailing force of continually increasing functionality with new services, products and applications — such as music streaming services (Spotify), file sharing programs (Dropbox) and messaging platforms (Messenger, Whatsapp and Snapchat). Another major finding was the dramatic increase in the “infant mortality” rate of websites — with the dominant players in each functional niche - once established guarding their turf more staunchly than ever.


See also: Network economy

Network economics refers to business economics that benefit from the network effect. This is when the value of a good or service increases when others buy the same good or service. Examples are website such as EBay, or iVillage where the community comes together and shares thoughts to help the website become a better business organization.

In sustainability, network economics refers to multiple professionals (architects, designers, or related businesses) all working together to develop sustainable products and technologies. The more companies are involved in environmentally friendly production, the easier and cheaper it becomes to produce new sustainable products.[citation needed][17] For instance, if no one produces sustainable products, it is difficult and expensive to design a sustainable house with custom materials and technology. But due to network economics, the more industries are involved in creating such products, the easier it is to design an environmentally sustainable building.

Another benefit of network economics in a certain field is improvement that results from competition and networking within an industry.

Adoption and competition[edit]

Critical mass[edit]

In the early phases of a network technology, incentives to adopt the new technology are low. After a certain number of people have adopted the technology, network effects become significant enough that adoption becomes a dominant strategy. This point is called critical mass. At the critical mass point, the value obtained from the good or service is greater than or equal to the price paid for the good or service.[18]

When a product reaches critical mass, network effects will drive subsequent growth until a stable balance is reached.[19] Therefore, a key business concern must then be how to attract users prior to reaching critical mass. Critical quality is closely related to consumer expectations, which will be affected by price and quality of products or services, the company's reputation and the growth path of the network.[2] Thus, one way is to rely on extrinsic motivation, such as a payment, a fee waiver, or a request for friends to sign up.[20] A more natural strategy is to build a system that has enough value without network effects, at least to early adopters. Then, as the number of users increases, the system becomes even more valuable and is able to attract a wider user base.[21]

Beyond critical mass, the increasing number of subscribers generally cannot continue indefinitely. After a certain point, most networks become either congested or saturated, stopping future uptake. Congestion occurs due to overuse. The applicable analogy is that of a telephone network. While the number of users is below the congestion point, each additional user adds additional value to every other customer. However, at some point, the addition of an extra user exceeds the capacity of the existing system. After this point, each additional user decreases the value obtained by every other user. In practical terms, each additional user increases the total system load, leading to busy signals, the inability to get a dial tone, and poor customer support. Assuming the congestion point is below the potential market size, the next critical point is where the value obtained again equals the price paid. The network will cease to grow at this point if system capacity is not improved. Peer-to-peer (P2P) systems are networks designed to distribute load among their user pool. This theoretically allows P2P networks to scale indefinitely. The P2P based telephony service Skype benefits from this effect and its growth is limited primarily by market saturation.[22]

Market tipping[edit]

Network effects give rise to the potential outcome of market tipping, defined as "the tendency of one system to pull away from its rivals in popularity once it has gained an initial edge".[23] Tipping results in a market in which only one good or service dominates and competition is stifled. This is because network effects tend to incentivise users to coordinate their adoption of a single product. Therefore, tipping can result in a natural form of market concentration in markets that display network effects.[24] However, the presence of network effects does not necessarily imply that a market will tip; the following additional conditions must be met:

  1. The utility derived by users from network effects must exceed the utility they derive from differentiation
  2. Users must have high costs of multihoming (i.e. adopting more than one competing networks)
  3. Users must have high switching costs

If any of these three conditions are not satisfied, the market may fail to tip and multiple products with significant market shares may coexist.[4] One such example is the U.S. instant messaging market, which remained an oligopoly despite significant network effects. This can be attributed to the low multi-homing and switching costs faced by users.

Market tipping does not imply permanent success in a given market. Competition can be reintroduced into the market due to shocks such as the development of new technologies. Additionally, if the price is raised above customers' willingness to pay, this may reverse market tipping.[4]

Multiple equilibria and expectations[edit]

Networks effects often result in multiple potential market equilibrium outcomes. The key determinant in which equilibrium will manifest are the expectations of the market participants, which are self-fulfilling.[2] Because users are incentivised to coordinate their adoption, user will tend to adopt the product that they expect to draw the largest number of users. These expectations may be shaped by path dependence, such as a perceived first-mover advantage, which can result in lock-in. The most commonly cited example of path dependence is the QWERTY keyboard, which owes its ubiquity to its establishment of an early lead in the keyboard layout industry and high switching costs, rather than any inherent advantage over competitors. Other key influences of adoption expectations can be reputational (e.g. a firm that has previously produced high quality products may be favoured over a new firm).[25]

Markets with network effects may result in inefficient equilibrium outcomes. With simultaneous adoption, users may fail to coordinate towards a single agreed-upon product, resulting in splintering among different networks, or may coordinate to lock-in to a different product than the one that is best for them.[2]

Technology lifecycle[edit]

See also: Technology lifecycle

If some existing technology or company whose benefits are largely based on network effects starts to lose market share against a challenger such as a disruptive technology or open standards based competition, the benefits of network effects will reduce for the incumbent, and increase for the challenger. In this model, a tipping point is eventually reached at which the network effects of the challenger dominate those of the former incumbent, and the incumbent is forced into an accelerating decline, whilst the challenger takes over the incumbent's former position.[26]

Sony's Betamax and Victor Company of Japan (JVC)'s video home system (VHS) can both be used for video cassette recorders (VCR), but the two technologies are not compatible. Therefore, the VCR that is suitable for one type of cassette cannot fit in another. VHS's technology gradually surpassed Betamax in the competition. In the end, Betamax lost its original market share and was replaced by VHS.[27]

Negative network externalities[edit]

See also: Negative feedback

Negative network externalities, in the mathematical sense, are those that have a negative effect compared to normal (positive) network effects. Just as positive network externalities (network effects) cause positive feedback and exponential growth, negative network externalities create negative feedback and exponential decay. In nature, negative network externalities are the forces that pull towards equilibrium, are responsible for stability, and represent physical limitations keeping systems bounded.

Besides, Negative network externalities has four characteristics, which are namely, more login retries, longer query times, longer download times and more download attempts.[28] Therefore, congestion occurs when the efficiency of a network decreases as more people use it, and this reduces the value to people already using it. Traffic congestion that overloads the freeway and network congestion on connections with limited bandwidth both display negative network externalities.[29]

Braess's paradox suggests that adding paths through a network can have a negative effect on performance of the network.[30]


Interoperability has the effect of making the network bigger and thus increases the external value of the network to consumers. Interoperability achieves this primarily by increasing potential connections and secondarily by attracting new participants to the network. Other benefits of interoperability include reduced uncertainty, reduced lock-in, commoditization and competition based on price.[31]

Interoperability can be achieved through standardization or other cooperation. Companies involved in fostering interoperability face a tension between cooperating with their competitors to grow the potential market for products and competing for market share.[32]

Compatibility and incompatibility[edit]

Product compatibility is closely related to network externalities in company's competition, which refers to two systems that can be operated together without changing. Compatible products are characterized by better matching with customers, so they can enjoy all the benefits of the network without having to purchase products from the same company. However, not only products of compatibility will intensify competition between companies, this will make users who had purchased products lose their advantages, but also proprietary networks may raise the industry entry standards. Compared to large companies with better reputation or strength, weaker companies or small networks will more inclined to choose compatible products.[33]

Besides, the compatibility of products is conducive to the company's increase in market share. For example, the Windows system is famous for its operating compatibility, thereby satisfying consumers' diversification of other applications. As the supplier of Windows systems, Microsoft benefits from indirect network effects, which cause the growing of the company's market share.[34]

Incompatibility is the opposite of compatibility. Because incompatibility of products will aggravate market segmentation and reduce efficiency, and also harm consumer interests and enhance competition. The result of the competition between incompatible networks depends on the complete sequential of adoption and the early preferences of the adopters.[35] Effective competition determines the market share of companies, which is historically important.[36] Since the installed base can directly bring more network profit and increase the consumers' expectations, which will have a positive impact on the smooth implementation of subsequent network effects.

Open versus closed standards[edit]

In communication and information technologies, open standards and interfaces are often developed through the participation of multiple companies and are usually perceived to provide mutual benefit. But, in cases in which the relevant communication protocols or interfaces are closed standards, the network effect can give the company controlling those standards monopoly power. The Microsoft corporation is widely seen by computer professionals as maintaining its monopoly through these means. One observed method Microsoft uses to put the network effect to its advantage is called Embrace, extend and extinguish.[37]

Mirabilis is an Israeli start-up which pioneered instant messaging (IM) and was bought by America Online. By giving away their ICQ product for free and preventing interoperability between their client software and other products, they were able to temporarily dominate the market for instant messaging. The IM technology has completed the use from the home to the workplace, because of its faster processing speed and simplified process characteristics. Because of the network effect, new IM users gained much more value by choosing to use the Mirabilis system (and join its large network of users) than they would use a competing system. As was typical for that era, the company never made any attempt to generate profits from its dominant position before selling the company.[38]


The Telephone[edit]

Network effects are the incremental benefit gained by each user for each new user that joins a network.[39] An example of a direct network effect is the telephone. Originally when only a small number of people owned a telephone the value it provided was minimal. Not only did other people need to own a telephone for it to be useful, but it also had to be connected to the network through the users home. As technology advanced it became more affordable for people to own a telephone. This created more value and utility due to the increase in users. Eventually increased usage through exponential growth led to the telephone is used by almost every household adding more value to the network for all users. Without the network effect and technological advances the telephone would have no where near the amount of value or utility as it does today.[40]

Financial exchanges[edit]

Stock exchanges and derivatives exchanges feature a network effect. Market liquidity is a major determinant of transaction cost in the sale or purchase of a security, as a bid–ask spread exists between the price at which a purchase can be made versus the price at which the sale of the same security can be made. As the number of sellers and buyers in the exchange, who have the symmetric information increases, liquidity increases, and transaction costs decrease.[41] This then attracts a larger number of buyers and sellers to the exchange.

The network advantage of financial exchanges is apparent in the difficulty that startup exchanges have in dislodging a dominant exchange. For example, the Chicago Board of Trade has retained overwhelming dominance of trading in US Treasury bond futures despite the startup of Eurex US trading of identical futures contracts. Similarly, the Chicago Mercantile Exchange has maintained dominance in trading of Eurobond interest rate futures despite a challenge from Euronext.Liffe.


Cryptocurrencies such as Bitcoin, also feature network effects. Bitcoin's unique properties make it an attractive asset to users and investors. The more users that join the network, the more valuable and secure it becomes. This method creates incentive for users to join so that when the network and community grows, a network effect occurs, making it more likely that new people will also join. Bitcoin provides it users with financial value through the network effect which may lead to more investors due to the appeal of financial gain. This is an example of an indirect network effect as the value only increases due to the initial network being created.[42]


The widely used computer software benefits from powerful network effects. The software-purchase characteristic is that it is easily influenced by the opinions of others, so the customer base of the software is the key to realizing a positive network effect. Although customers' motivation for choosing software is related to the product itself, media interaction and word-of-mouth recommendations from purchased customers can still increase the possibility of software being applied to other customers who have not purchased it, thereby resulting in network effects.[43]

In 2007 Apple released the iPhone followed by the app store. Most iPhone apps rely heavily on the existence of strong network effects. This enables the software to grow in popularity very quickly and spread to a large userbase with very limited marketing needed. The Freemium business model has evolved to take advantage of these network effects by releasing a free version that will not limit the adoption or any users and then charge for premium features as the primary source of revenue. Furthermore, some software companies will launch free trial versions during the trial period to attract buyers and reduce their uncertainty. The duration of free time is related to the network effect. The more positive feedback the company received, the shorter the free trial time will be.[44]

Web sites[edit]

Many web sites benefit from a network effect. One example is web marketplaces and exchanges. For example, eBay would not be a particularly useful site if auctions were not competitive. As the number of users grows on eBay, auctions grow more competitive, pushing up the prices of bids on items. This makes it more worthwhile to sell on eBay and brings more sellers onto eBay, which, in turn, drives prices down again due to increased supply. Increased supply brings even more buyers to eBay. Essentially, as the number of users of eBay grows, prices fall and supply increases, and more and more people find the site to be useful.

Network effects were used as justification in business models by some of the dot-com companies in the late 1990s. These firms operated under the belief that when a new market comes into being which contains strong network effects, firms should care more about growing their market share than about becoming profitable. The justification was that market share would determine which firm could set technical and marketing standards and giving these companies a first-mover advantage.[45]

Social networking websites are good examples. The more people register onto a social networking website, the more useful the website is to its registrants.[46]

Google uses the network effect in its advertising business with its Google AdSense service. AdSense places ads on many small sites, such as blogs, using Google technology to determine which ads are relevant to which blogs. Thus, the service appears to aim to serve as an exchange (or ad network) for matching many advertisers with many small sites. In general, the more blogs AdSense can reach, the more advertisers it will attract, making it the most attractive option for more blogs.

By contrast, the value of a news site is primarily proportional to the quality of the articles, not to the number of other people using the site. Similarly, the first generation of search engines experienced little network effect, as the value of the site was based on the value of the search results. This allowed Google to win users away from Yahoo! without much trouble, once users believed that Google's search results were superior. Some commentators mistook the value of the Yahoo! brand (which does increase as more people know of it) for a network effect protecting its advertising business.

Rail gauge[edit]

The dominant rail gauge in each country shown

There are strong network effects in the initial choice of rail gauge, and in gauge conversion decisions. Even when placing isolated rails not connected to any other lines, track layers usually choose a standard rail gauge so they can use off-the-shelf rolling stock. Although a few manufacturers make rolling stock that can adjust to different rail gauges, most manufacturers make rolling stock that only works with one of the standard rail gauges. This even applies to urban rail systems where historically tramways and to a lesser extent metros would come in a wide array of different gauges, nowadays virtually all new networks are built to a handful of gauges and overwhelmingly standard gauge.

Credit cards[edit]

For credit cards that are now widely used, large-scale applications on the market are closely related to network effects. Credit card, as one of the currency payment methods in the current economy,[47] which was originated in 1949. Early research on the circulation of credit cards at the retail level found that credit card interest rates were not affected by macroeconomic interest rates and remained almost unchanged. Later, credit cards gradually entered the network level due to changes in policy priorities and became a popular trend in payment in the 1980s.[45] Different levels of credit cards separate benefit from two types of network effects. The application of credit cards related to external network effects, which is because when this has become a payment method, and more people use credit cards. Each additional person uses the same credit card, the value of rest people who use the credit card will increase.[27] Besides, the credit card system at the network level could be seen as a two-sided market. On the one hand, the number of cardholders attracts merchants to use credit cards as a payment method. On the other hand, an increasing number of merchants can also attract more new cardholders. In other words, the use of credit cards has increased significantly among merchants which leads to increased value. This can conversely increase the cardholder's credit card value and the number of users. Moreover, credit card services also display a network effect between merchant discounts and credit accessibility. When credit accessibility increases which greater sales can be obtained, merchants are willing to be charged more discounts by credit card issuers.[48]

Visa has become a leader in the electronic payment industry through the network effect of credit cards as its competitive advantage. Till 2016, Visa's credit card market share has risen from a quarter to as much as half in four years. Visa is benefit from the network effect. Since every additional Visa cardholder is more attractive to merchants, and merchants can also attract more new cardholders through the brand. In other words, the popularity and convenience of Visa in the electronic payment market, lead more people and merchants choose to use Visa, which greatly increases the value of Visa.[49]

See also[edit]


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External links[edit]


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Microsoft shutting down LinkedIn in China

REDMOND, Wash. — 

Microsoft is shutting down its LinkedIn service in China later this year after censorship rules were tightened by Beijing.

The company said in a blog post Thursday it has faced “a significantly more challenging operating environment and greater compliance requirements in China.”

LinkedIn will replace its localized platform in China with a new app called InJobs that has some of LinkedIn’s career-networking features but “will not include a social feed or the ability to share posts or articles.”

China’s internet watchdog in May said it had found LinkedIn as well as Microsoft’s Bing search engine and about 100 other apps were engaged in improper collection and use of data and ordered them to fix the problem.

In 2014, LinkedIn launched a site in simplified Chinese, the written characters used on the mainland, to expand its reach in the country. It said at the time that expanding in China raised “difficult questions” because it would be required to censor content, but that it would be clear about how it conducted business in China and would undertake “extensive measures” to protect members’ rights and data.

Microsoft bought LinkedIn in 2016.


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One of the most common pieces of wisdom more experienced business people have shared with me is that business networking is the fast track to success.  It’s also one of the most commonly ignored pieces of advice.  That’s a shame, because that advice holds true.  People will do business with other people they know long before they’ll do business with people they find through an advertisement.

Business networking isn’t about making direct sales, though direct sales invariably occur as a result.  Rather, business networking gives you professional connections, establishes trust, and lends business through new opportunities, increased knowledge, and the ever-so-valuable word-of-mouth advertising.

Like many others, I was at first hesitant to join business networking groups.  First, I hate public speaking.  Second, I felt I wouldn’t be taken seriously – mostly because I was so nervous speaking in public.  Third, I found it difficult to justify the time investment required to network effectively; thinking instead that I was better off working and making money.  Still, a colleague convinced me to give a local BNI group a try, and I found that:

  • Nearly everyone is nervous speaking publicly, and
  • Rather than hold that against me, they were empathetic and willing to help me do so more effectively, and
  • I landed an amazing amount of business with minimal effort and next-to-nothing investment

Thus, I’m a huge proponent of business networking groups; and if you join the right organizations, you will be, too.  Here’s a list of my top 10 business networking groups you should join.

1. BNI – Business Networking International

BNI is the world’s largest networking group, and one I highly recommend.  BNI operates on the philosophy of “giver’s gain,” in which the more referrals you give to fellow members, the more referrals will be given back to you.  BNI costs right around $400 per year; I clear about 20 times that investment every year from my membership alone.

2. MasterMind Groups

MasterMind groups bring people together for a shared goal, or shared set of goals, such as better business.  MasterMind groups allow you to tap into other perspectives, get support to achieve your goals, and create a level of accountability for taking action to do so.  Learn more about joining or starting a MasterMind group here.

3. LeTip

LeTip is smaller than BNI, but works off the same principle:  referrals instead of leads.  How do they differ?  A referral happens when someone you know gives you the name of someone they know who is already interested in buying from you.  The customer already trusts you, because their friend recommended you.  A lead is a cold call.  Which would you prefer to invest your time in pursuing?

4. Women In Business Networking

If you’re a business woman, don’t pass up an opportunity to join WIB.  Women In Business allows you to work with others to achieve your goals.  Being a man, I do not have personal involvement in WIB, but many of my women colleagues and clients swear by it.

5. Chamber of Commerce

OK, so almost everyone joins their local Chamber; but how active are you in it?  Do you attend meetings, volunteer for committees or otherwise play a role as an active member of the group?  If not, you’re undoubtedly missing local opportunities and connections that can propel your business.

6. CVB

Your local Convention and Visitor’s Bureau is tasked with catering to tourism, so if you do not own a business that likewise serves tourists you might not be a member.  Join anyway, and become active, for two reasons:  first, you’ll make local business connections that can lead to new business for you.  Second, an improved tourist industry means an improved local economy, which means more profits for you.

7. Local Merchant Associations

Be on the lookout for local trade, merchant and industry-specific associations you can join.  My area has a Young Professionals Association in which we meet monthly to listen to a business speaker.  That’s all good, but the true value of membership is realized over beers after the presentation, when we get to meet, discuss, network and grow.

8. Rotary

Rotary International is a service organization, but look at the membership list of your local chapter and you’ll see it’s packed with the movers and shakers you need to connect with to grow your business exponentially.

9. Kiwanis

Just like Rotary, Kiwanis is a service organization whose membership is often comprised of the “powers-that-be,” those people whose testimonials are iron-clad.  Join, get involved and reap the rewards.


Optimists are another powerful group of service-oriented professionals.  Like the other groups mentioned here, don’t just show up and expect business referrals.  Show up, get involved and believe in the cause.  Over time, your reputation will be gold; and so will your bank account.


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