The Network Effect occurs when a product or service becomes more valuable as more people use it. For example, social media platforms like Facebook or Twitter become increasingly useful as more friends and connections join, allowing users to interact and share content with a larger audience. This phenomenon can lead to a competitive advantage for companies that successfully harness it. As user numbers grow, it can create a barrier for new entrants, making it difficult for them to compete. Services like Uber and Airbnb also benefit from the network effect, as more users attract more providers, enhancing the overall experience for everyone involved.