The chain of influence between government, retail, and consumers is immense and takes different forms. The growth of the internet, specifically social media, has amplified the chain of influence. Governments influence on social media retail businesses, which influences the manner in which retailers influence their consumers. The chain of influence may come from either way and may begin with consumers or retailers to influence the government. However, the government`s engagement in social media has been in different forms, including governments as participants, governments as a regulator and government as an investor. Either of these approaches influence the manner in which the retail sector engages its consumers. This paper explores government policies that impact social media in the retail business. First, it will explore the influence of social media on retailers. It is then that government policies can be built on these influences to determine the chain of influence. The paper will consider issues of taxation, consumer rights, laws of quality, and government`s infrastructure policies.