Companies are increasingly using algorithms to improve the user experience. One prominent example is that of Netflix and how it now automatically queues the next show for viewers before the current episode is finished, thus making it easier to continue watching new episodes. Another company, Instagram, has completely tailored its ‘Explore tab’ to its users, displaying only images that the app determines are related to a user’s personal interests and updates itself if one’s interests change. Additionally, it has improved the search functionality for pictures, added videos and trending tags and made it easier to view pictures by location. These improvements have seen Instagram’s engagement levels increase by 400%.

How does the use of algorithms impact the cost structure for companies, and what are the economic implications for competitors who do not use this technology in the market?




edited question
Add a Comment