<
https://www.techdirt.com/2023/01/24/how-the-friedman-doctrine-leads-to-the-enshittification-of-all-things/>
"We recently wrote about Cory Doctorow’s great article on how the
“enshittification” of social media (mainly Facebook and Twitter) was helping to
lower the “switching costs” for people to try something new. In something of a
follow up-piece on his
Pluralistic site, Doctorow explores the process
through which basically all large companies eventually hit the
“enshittification” stage, and it’s (1) super insightful (2) really useful to
think about, and (3) fit with a bunch of other ideas I’ve been thinking about
of late. The opening paragraph is one for the ages:
Here is how platforms die: first, they are good to their users; then they
abuse their users to make things better for their business customers;
finally, they abuse those business customers to claw back all the value for
themselves. Then, they die.
He provides a lot more details about this process. In the beginning, companies
need users and become successful by catering to their needs:
When a platform starts, it needs users, so it makes itself valuable to
users. Think of Amazon: for many years, it operated at a loss, using its
access to the capital markets to subsidize everything you bought. It sold
goods below cost and shipped them below cost. It operated a clean and useful
search. If you searched for a product, Amazon tried its damndest to put it
at the top of the search results.
And, especially in the venture-backed world, this is often easier to do,
because there isn’t much of a demand for profits (sometimes even for
revenue), as the focus is on user growth. So, companies take all that VC cash
and use it to subsidize things, and… that’s often really great for consumers.
But, eventually, these companies have to pay back the VCs in the form of
selling out to a bigger company or, preferably, through a big IPO, taking the
company public, giving it access to the public equity markets, and… then being
at the whims of Wall Street. This is the part that Cory doesn’t mention in his
piece, but which I’ve been thinking quite a lot about lately, and I do think is
an important piece to the puzzle."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
