According to network effect theory, the benefit from using standards depends on the number of its users. In this article we examine, whether XML/EDI will replace traditional EDI and thus provide its users with positive network effects. Our contribution is based upon both network theory and the results of an empirical study among 130 major European companies. We conclude that most companies expect increasing diffusion of XML/EDI, with traditional EDI becoming less important at the same time. In addition, we believe that due to low setup and operating costs, XML/EDI will become increasingly attractive to small and medium-sized enterprises (SME). We reckon that the „penguin effect” will not circumvent the transition from traditional EDI to XML/EDI and that the latter will be the key technology for exchanging business data in the future.