“If you want to kick Elon Musk in the dongle, aim for his margins”: Cory Doctorow on why the web went bad and how to fix it

Cory Doctorow's concept of "enshittification" describes how major tech platforms like Facebook and Google progressively degrade user and business experience to extract maximum value for shareholders. Initially attracting users with superior service, platforms then exploit user data for advertisers, eventually compromising service quality for both users and businesses, as exemplified by Google intentionally worsening search results to boost ad views while paying Apple to maintain default status. Doctorow advocates for revitalizing competition law, challenging restrictive IP practices like Tesla's software subscriptions, and promoting public infrastructure in sectors like telecommunications to combat these monopolies and address the underlying issue of wealth concentration.

Analysis

Cory Doctorow's "enshittification" framework posits that major tech platforms, including META (Facebook) and GOOGL (Google), systematically degrade user and business experiences to maximize shareholder value. This process involves an initial user-friendly phase, followed by exploitation of users for advertisers, and ultimately, exploitation of advertisers for pure shareholder benefit. GOOGL exemplifies this by intentionally worsening search results in 2019 to increase ad views, while paying AAPL $20 billion annually to maintain default search status.

The article highlights similar practices across other sectors, citing TRIP's ad-heavy interface causing poor user experience and TSLA's subscription model for owned hardware features, such as battery capacity, as examples of restrictive IP practices. This trend is attributed to a historical weakening of competition law in the US since the 1980s and restrictive legislation against reverse-engineering. The overall sentiment towards these companies is strongly negative, with META, GOOGL, TRIP, and TSLA all registering significant negative sentiment scores.

Doctorow suggests combating enshittification through revitalized competition law, challenging current IP interpretations, and promoting public infrastructure, particularly in monopolistic sectors like Canadian telecoms. The analysis implies that "voting with wallets" is ineffective in highly concentrated markets, underscoring the need for systemic regulatory and legislative interventions. This perspective suggests that the underlying issue is the concentration of wealth, which impacts market dynamics beyond individual company performance.

Key Decisions for Investors

• Investors should closely monitor antitrust developments and potential regulatory shifts, as increased scrutiny on platform monopolies and IP practices could significantly impact companies like META, GOOGL, and TSLA.
• Evaluate companies' long-term competitive moats beyond network effects, considering that public infrastructure initiatives or renewed competition laws could disrupt established market dominance, particularly in telecommunications and search.
• Assess the sustainability of business models that rely on "enshittification" tactics, as consumer backlash or legislative action against such practices could erode profitability and shareholder value.
• Scrutinize companies like TSLA that monetize basic hardware functionality through subscriptions, as this model faces increasing public and potentially legal challenges regarding consumer ownership rights.