Scale, like network effects, is an important defensibility in the digital era. Scale effects are often confused with network effects because both scale effects and network effects become stronger with more users.

However, they work very differently. The best way to understand scale is that as well-run companies get bigger, their per unit production costs get cheaper. As a scale effect starts to kick in, the company with a scale advantage becomes the obvious mathematical choice for customers.

In other words, more users means greater volume, which means cheaper prices from suppliers, which means lower prices for customers, which means higher conversion rates for ads, which makes advertising more effective than the competition, and so on and so forth.

With scale, the numbers all begin to move in your favor and math is hard to compete with. This concept is known in the academic literature as "economies of scale." In short, per unitproduction costs get cheaper. Amazon is the tech world's leading scale effects company (and now they are adding network effects… watch out).