What is competitive moat?

A competitive moat is a durable structural advantage that protects a business from competitors over the long term — the corporate equivalent of the water around a castle. Common moats include network effects, high switching costs, proprietary data, economies of scale, brand, and regulatory licenses.

A moat differs from a feature advantage in that it widens with use: every new customer makes a network-effect product more valuable, while a clever feature merely waits to be copied. Investors and founders use the concept to judge how defensible a position really is.