区块链芝士 | Network effect examples

Modern-day examples of network effects are present in a number of different product categories. One obvious one is social media, where users tend to join services that their pre-existing social networks are using. This incentivizes people to join the same platforms, and a few services get into monopolistic positions.

If new companies want to start a new social network platform, they’re going to have a hard time gaining critical mass. Why? The network effects the market leaders have built up give them a significant competitive advantage.

Another good example of network effects is ridesharing. The network effects that Uber or Lyft have built up over the years are difficult to compete with for newer services with a smaller user base.

The same applies to Ebay and Amazon with online sales, Google with internet search, AirBNB with online renting, Microsoft in enterprise operating systems, and Apple with the iPhone. Even so, can only for-profit companies with well-defined business models achieve a network effect? No. Wikipedia is a good example of an open-source project that has built up a significant network effect.

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