The theory of why the Internet goes down the toilet

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A few years ago, Corey Doctorow coined a word that caused quite a stir on the Internet. It showed up everywhere, including in our analyzed newsletter Why do dating apps break the hearts of their users?. The American Dialect Society named it Word of the Year in 2023. Merriam-Webster even added it to their dictionary — despite it containing an expletive.

The word Doctorow coined is “ecstasy.” Of course, this is also a title His new book.

Enshittification is more than just a catchy word for when companies go haywire. For Doctorow, a longtime Internet activist and journalist, he describes a specific process he sees in the evolution — or, indeed, the transition — of online platforms like Facebook, Google, Uber, and Amazon. (Disclosure: Google and Amazon are financial supporters of NPR and Amazon pays for distribution of some of our programming.)

Stages of simile

In his new book, Doctorow argues that there is a pattern in how these platforms work. The companies behind these platforms are essentially intermediaries, connecting their users with companies that want to make money from those users. So, for example, Facebook and Google connect their users with advertisers. Amazon connects its users with third-party merchants on its marketplace.

The first stage is when these platforms are new and want to attract users to their platforms. They are flush with investor money, face less pressure from shareholders to make immediate profits, and are in a race to convince people to sign up. This is when platforms are really good for their users.

For example, in its early days, Facebook told users it would not spy on them and collect their data the way they said MySpace did. They provided “a feed of things users want to see, rather than things companies will pay to display,” Doctorow wrote. For a while at least, Facebook was “fun, useful, and valuable.”

Amazon and Uber offered consumers amazing offers during the first phase Others Before him, Doctorow argued that these deals were so good that they amounted to “predatory pricing,” or when companies charge below-cost prices, which are unsustainably low prices intended to put their competitors out of business.

The first phase is about achieving scale and securing users. Platforms want to grow and benefit from what economists call “network effects.” That is, the more users they have, the more valuable their platform becomes. These platforms also benefit from “high switching costs,” Doctorow writes, meaning their users find it difficult to leave and switch services.

With Facebook, for example, leaving the platform and moving to another social network means trying to convince your friends and family that they should leave and go somewhere else, too. With Prime, Amazon makes consumers pay for free shipping upfront, which incentivizes them to keep using their platform. And if you’ve purchased e-books or movies on their platform, you won’t be able to take them with you when you leave.

The second stage: dealing well with business clients

After these platforms achieve scale and maintain a large user base, they enter the second phase. That’s when companies start trying to attract business customers to their platforms by being nice to them — at the expense of their users.

For Facebook, Doctorow wrote, this meant changing the feeds users viewed. Facebook has begun using user data to target them with precise ads. Advertisers loved it. They also forced publishers to publish short excerpts of their articles, and Facebook was “non-consensually cramming those excerpts into the eyeballs of users who never asked to see them.” This was a great deal for publishers, who had become increasingly dependent on Facebook for traffic.

Likewise, Amazon has done a lot for its business customers. “Amazon paid full price for its goods, then sold them to its customers at below cost,” Doctorow writes. “It supported returns and customer service as well. It ran a clean search engine, placing the best matches of shoppers’ queries at the top of the page, creating a path to glory that merchants could take by simply selling high-quality items at fair prices.”

As users and companies limit their platforms, it reaches the third stage, when companies start trying to recoup their investors’ money and actually start trying to make a lot of money.

Stage Three: When everything turns to crap

The third stage is when these platforms tighten their grip on business customers, extracting money from them.

Doctorow wrote that Facebook began forcing advertisers to pay more for advertising services and provided those advertisers with lower-quality ad targeting. Wanting to maintain online traffic on their platform, they began forcing publishers to post longer and longer excerpts of their articles to appear in user feeds. They began charging them to “boost” their content so that a large number of users could see it, even when the users had explicitly followed those publishers and signed up to see that content.

“Meanwhile, for users, things continued to get worse,” Doctorow wrote. They were fed an algorithm that was not the stuff they signed up to see, but one filled with “content that people paid to put there: ads and boosted content.”

We reached out to Facebook (Meta), and they did not respond for comment.

Amazon has begun using its merchant sales data to “clone” their products, Doctorow wrote. He asserts that Amazon has begun to manipulate its search algorithm to its advantage. Doctorow confirms that Amazon has begun imposing unwanted fees on merchants. “Add all the unwanted fees together, and an Amazon seller is excluded 45 to 51 cents per dollar “Doctoro claims that he earns on the platform. “Even if he is a trader required To absorb the “Amazon tax” for you, it was not possible. “Dealers do not get 51% profit margins.” Therefore, merchants have to raise their prices. (We reached out to Doctorow about where he got these numbers, he cites This study is 2023 From the Institute for Local Self-Reliance, a non-profit research and advocacy organization).

Phase 3 is also worse for consumers in other ways, such as search quality, he writes. “On average, the first result in an Amazon search is 29 percent “More expensive than the best result for your search,” claims Doctorow. “Click any of the first four links at the top of your screen, and you’ll pay on average 25 percent more than you would for the best match. On average, the best match is found seventeen It is placed in the Amazon search result. (Doctor cites This study and This study).

From the perspective of these platforms and their contributors, you can call the third stage enrichment. But for users and business clients, Doctorow writes, this is “the final stretch of suspense, the point where the platform turns into a pile of crap.”

Naturally, we reached out to Amazon about Doctorow’s arguments and claims. “The book’s entire theory about Amazon is incorrect,” an Amazon spokesperson says. “Even a cursory glance will show that the value Amazon delivers to customers has gotten better and better over time.”

Regarding Doctorow’s assertion that Amazon is “cloneing” small business products, the spokesperson responded: “We follow the same practices as countless other retailers to communicate our private brands, and prohibit employees from using non-public, seller-specific data to determine which private-label products to launch.” Regarding the research, they said they do not favor their products in the results. They say Amazon charging “unsolicited fees” is “completely false.” The spokesman says Docotrow’s numbers are “false and misleading because they confuse required selling fees with the cost of optional services — such as logistics, customer service, and advertising — that some sellers choose to purchase from Amazon or other providers. Selling on Amazon fees are 15 percent or less in most product categories.” The spokesman stressed that the additional fees are optional. “Sellers who choose to purchase optional services from Amazon do so because Amazon provides greater value than they can get anywhere else.”

Why does Doctorow think platforms deteriorate over time?

Most of Doctorow’s explanations for why online platforms collapse are not new. While he offers some interesting technical nuances and solutions, his analysis is largely due to two big factors: lack of competition and the absence of proper pro-consumer regulations.

Doctorow argues that these internet platforms have been treating their users and business customers like crap because… He can Treat them like crap. They can act this way because they do not fear that their users will defect to competitors or that they will be subject to significant penalties by the government.

In other words, the citadels of these companies’ profit engines are protected by moats. Each moat consists of things like network effects and switching costs. Their clients either don’t want to leave en masse or find it difficult to escape. Until recently at least, the government has proven unwilling or unable to attempt to storm the castles.

To increase competition, Doctorow calls for stronger antitrust enforcement and the abandonment of an influential legal principle known as the “consumer welfare standard.” This standard was adopted by the courts in the late twentieth century. It judges whether firms are monopolistic or anticompetitive, not on their size or power, but on whether they measurably harm consumers, usually through significantly higher prices (we tell the original story of this standard, and explore the new movement to change it in this Money planet series About antitrust. Listen to her.)

When it comes to improving organization, Doctorow offers a number of interesting ideas. The first is, essentially, to make it easier for users to leave the platforms. For example, passing regulations that would allow Amazon Kindle users to take their e-books with them. He argues that this “right to exit” would be easy to administer. It would create real incentives for platforms to be better for their users.

Doctorow also spends a lot of time praising “interoperability.” It is a technical computer term that basically means allowing products or services to work with other products or services. One example of this is printer ink cartridges. In his ideal world, any competitor would be able to make ink cartridges that are compatible—or interoperable—with a particular printer. However, in the current system, printer manufacturers can manufacture them so that users must use only very expensive, special ink cartridges in their printers. This exclusivity is clearly a money-making scheme.

Technology companies have made many of their products and services non-interoperable with each other. iPhones will not run Android apps. Bluesky users cannot send a direct message to their old Twitter contacts. Doctorow points out that these are artificial barriers created by companies to maintain their market power, and that regulations have helped them do this.

And yes, left-wing consumer advocates like Doctorow seem to be mostly losing ground in America today. But he points out that the anti-technology monopoly movement has gained real momentum in recent years, including abroad. He believes there are clear policy solutions that are popular, including with many conservatives, and can “reverse the gravity of the Internet.”

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