How Network Effects Help Shape Some Of The World’s Most Powerful Companies

By helping products gain traction quickly, network effects can help companies build formidable business moats — or strong competitive advantages that set them apart.

Amazon posted $96B in revenue in Q3’20, a 37% increase over the same period last year. Google also saw a jump in revenue — 14% over Q3’19 — as it maintains its hold on over 85% of the search engine market. Meanwhile, Facebook has grown from 100M monthly active users in 2008 to over 2.7B in 2020.

What sets these companies apart?

Their business moats — or key competitive advantages.

Amazon, Google, and Facebook have used the power of network effects in particular to gain wide utility fast.

Below, we take a look at what network effects are and some of the companies that have built moats with them successfully.

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Πηγή: cbinsights.com