Written by Srilekha Raman,
Intern- Lex Lumen Research Journal,
December 2025
INTRODUCTION:
Social media has evolved into one of the most powerful platforms for product promotion in the modern economy. Studies indicate that in 2024, an individual spent an average of 143 minutes per day on social media. [1] Brands have capitalised on this attention by paying influencers to promote products and services, often transforming them into ‘trends’ that define what is popular to buy, use, or consume. Products such as the Dyson Airwrap, Stanley cup and air fryers are prominent examples of items whose market demand surged primarily due to viral social media exposure. The cosmetics industry is most affected by such trends.
However, these trends do not merely promote products; they possess the power to fundamentally alter demand patterns, both positively and negatively. A single viral reel or recommendation can increase the demand for a particular brand drastically, while simultaneously marginalising or even eliminating its competitors from the market. Despite this, mainstream competition law continues to focus on traditional concerns such as cartels, mergers, and acquisitions, overlooking one of the most influential forces shaping modern markets and demand, i.e. trend-driven virality.
Social media trends can generate artificial demand, amplify herd behaviour, and create de facto distribution monopolies, ultimately affecting market competition. When an influencer or platform algorithm amplifies a product or brand, consumers often respond not because the product is objectively superior, but because social popularity and visibility have been artificially intensified. This challenges the very basics upon which traditional competition law is built.
In this context, the present blog seeks to analyse how influencer-driven trends and algorithmic amplification impacts competition, examine the shortcomings of the Competition Act, 2002 in light of the present digital market realities and propose measures that may help address this emerging concern.
EXAMINING TREND-DRIVEN VIRALITY AS A NEW FORM OF MARKET POWER:
Earlier, market power and demand were based on a variety of factors including price, quality, availability, brand, etc. Now, with the emergence of social media and the wide audience range, visibility and influence that it brings with it, markets opt it for marketing their product through this platform. What started as a mere marketing tool has now become one of the most important, if not the only, determinant of the demand for the product. Under these conditions, virality has become a potential form of market-power.
Therefore, most brands now prefer opting influencers to reach large, engaged audiences rather than market their product through conventional advertising or retail channels. [2] Studies show that marketing through influencers substantially affects consumer behaviour, not only in forming purchase intent, but in actual buying behaviour. [3] Consumer’s demand now does not merely depend on traditional factors such as quality, price and choice in the market; the social popularity of the product in social media and use by popular individuals (influencers) also influences the demand significantly. Hence, virality, i.e. the ability of a brand or product to quickly become popular, emerges as a critical variable in competition.
The underlying issue in such a scenario is the bandwagon effect. When many consumers observe a product’s popularity, they engage in impulse purchases not because they require the product, or that the product is good or useful, but rather because others are purchasing the product. [4] Through influencer endorsement and platform algorithmic amplification, a product can enjoy intense demand spikes, sometimes even irrespective of its quality or its other properties. This suggests that social media induces demand and that it is being shaped, not discovered.
Thus, when a popular influencer engages the product of a particular brand, there may arise situations where the seller–influencer pair can obtain a local monopoly even if the product’s quality is not superior to that of its competitors. Thus, this may result in a brand that has gone viral, potentially wiping out its competition (especially local, less-popular but good-quality brands) and occupying a dominant position. Over time, repeated cycles of such virality, by the same brand/influencer combos, can further increase and amplify dominance. Once consumer expectations are set, non-trend brands may struggle to compete, regardless of their affordable price or superior quality.
Such sudden demand changes caused by the social media trends, influence and virality may significantly affect small, local producers who may not be able to keep up with these changes. Small producers may be excluded or unable to survive a sudden demand shift, and the market may end up being dominated by a few sellers whose products may even not be worthy.
THE SHORTCOMINGS OF THE CURRENT COMPETITION LAW FRAMEWORK:
The traditional competition law does not account for such contemporary factors and is designed to cater to classical market structures, i.e. it regulates only producers, distributors, retailers and is determined by price, supply, and traditional distribution channels. Traditional competition law assesses market power in terms of market share, control over prices, barriers to entry, distribution, etc. But in the creator economy, power may come from attention, reach, and influence rather than holdings or production capacity.
Since social media platforms and influencers solely decide and control visibility, they act as gatekeepers. This gives them an unfair advantage over other sellers or brands that cannot access such means. This may potentially lead to a situation wherein firms and influencers control the purchasing behaviour of the population, independent of important factors such as price and quality. Such market dominance is completely violative of the competition law, despite not meeting the traditional market requirements of dominance.
SUGGESTIONS AND CONCLUSION:
In the present digital economy where influence is market power, the competition law fails to account for these and is restricted to traditional forms of economic power including market share, control over pricing, etc. Therefore, the Competition Law, 2002 must recognise and expand the position of market dominance to include consumer influence, product visibility and popularity through algorithmic and trend-based virality and ability to create demand for the product through social media trends under Section 4 of the Act. Additionally, a joint liability model must be introduced wherein the influencer, along with the seller, are held responsible for promoting sub-standard products through social media trends and influence, thereby creating artificial demand for the product.
In conclusion, social media and influencer culture have drastically changed how markets behave. Today, products do not become popular only because of their quality or price, but because they go viral. This creates artificial demand, unfair advantages for smaller local brands. However, the current competition law framework does not address this new type of market power. Influencers and algorithms now have the power to shape consumer choices and market outcomes, yet they remain largely unregulated under competition law. To ensure fair competition, the law must evolve and recognise digital influence as a real source of market power.
[1] Damaris Hinga, 30+ Time Spent on Instagram Statistics for [2025], Cropink, Apr 24, 2025, https://cropink.com/time-spent-on-instagram-statistics (last visited Dec 8, 2025).
[2] Lin William Cong, Siguang Li, Influencer marketing and product competition, 220 Journal of Economic Theory (2024).
[3] Yatish Joshi, Weng Marc Lim et al., Social media influencer marketing: foundations, trends, and ways forward, 23 Electron Commer Res (2023).
[4] Lin William Cong, Siguang Li, Influencer marketing and product competition, 220 Journal of Economic Theory (2024).
