Software Companies with Network Effects that Benefit From AI

[Saluki]

In another post I mentioned companies like VRRM (red light ticket cameras) that have physical tech and other features that would make it harder for them to be disrupted than a pure play software company. In this company I'd like to start of list of other companies that have network effects, which would make them hard to disrupt. (full disclosure, I have a large position in GOOG, mid size position in META, and very small one in DOCS) 

 

Social Networks: 

META (Facebook/Instagram/Whatsapp) is the most obvious. Even if you don't like it, everyone goes there because everyone goes there. 

DOCS (LinkedIn for Doctors). 

LInkedIn (MSFT)

TikTok (no shares public)

YouTube (not as social, but has creators and followers)

 

IBM Effect ("No one gets fired for choosing IBM" -1960s):

MSFT: even though Google Docs is very good and free, people still pay for MS Office

Cloud providers: GOOG, MSFT, Oracle, AWS. It's unlikely that a small upstart would take business from these guys

 

Regulatory Moat:

Western Union

Paypal

Remitly

 

Money services business licenses needed with FInCen and in most of the 50 states another license is required. Startups that handle money usually "rent" a license from someone like this with a joint partnership because it takes a lot of time and money to get.  Moreover, these are social networks, but they are similar because they are two sided. Paypal doesn't work unless both people have it. 

 

Can anyone think of some others?