Microsoft Direct Network Effect vs Google Indirect Effect

July 05, 2008

Microsoft Direct Network Effect:

Microsoft attracted consumers and software developers to use its technology, the software that controls the basic operations of a personal computer. The more that people used Microsoft’s operating system, the more that third-party developers built products to run on Windows, which attracted more users. So Microsoft’s success snowballed, and the company owned the essential technology, making it harder for users and developers to switch to alternatives.

Google Indirect Network Effect:

The direct effects includes software document formats and technology standards that are owned by one company and that are incompatible with a rival’s technology. The indirect effects include large numbers of users, the ability to learn from those users, the power of a well-known brand and user inertia. For Google, the indirect network effects are very powerful.

Google, Zen Master of the Market