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Enshittification: The Rise and Fall of Big Tech — with Cory Doctorow
Episode 124th January 2024 • Crash Course Economics • Crash Course
00:00:00 00:58:57

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In this first Crash Course episode of the new series, we invite writer-activist Cory Doctorow to explore the rise of Rentier and Monopoly Capitalism in the tech sector. Is the platform economy in the last phase of what he calls Enshittification?

“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.” - Cory Doctorow

We will ask him:

  • How do big tech companies lock out competition and lock in users?
  • To explain his concept of Enshittification and relate it to the rise of Rentier and Monopoly Capitalism.
  • Are there historical parallels to the current trend? If so, what can we learn from them?
  • Are we entering a new phase of capitalism where the rentier is at the top of the food chain? If platform and productive capital interests are at odds, what possibilities exist for workers and consumers to exploit this rift?
  • How do we stop further corporate consolidation and monopoly power and build back a different economy?

Cory Doctorow is an activist and journalist. He writes seemingly non-stop about the internet, the future, radical changes in property rights and alternative futures. His work includes children’s books, fiction and non-fiction.

Topics include How to disassemble Big Tech, Creative labour markets and monopolies, and How to destroy surveillance capitalism. He is also known for his website, Pluralistic.net.

He works for the Electronic Frontier Foundation, is a MIT Media Lab Research Affiliate, is a Visiting Professor of Computer Science at Open University, a Visiting Professor of Practice at the University of North Carolina’s School of Library and Information Science and co-founded the UK Open Rights Group. He was born in Toronto, Canada, and now lives in Los Angeles, USA.

Check out more on Cory Doctorow on Pluralistic.net or Craphound.com

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About Crash Course Economics

Crash Course is a platform designed to open up debate on how we can move out of the current crisis and make the necessary steps towards achieving social, economic, ecological and regenerative justice.

Crash Course is inviting global experts to break down complex issues in lay terms and make them accessible to all so that we can understand how to shape our economic system for a just recovery and future.

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Music credit: "Capital G" by Nine Inch Nails, "Tribal Remix" by Imnotlouis (CC BY-NC-SA 3.0 US) 

Transcripts

Crash Course Economics started a fourth series of webinars, on Rentier and Monopoly Capitalism, and with as first guest the writer and researcher Cory Doctorow.

On Crash Course Economics

“We are a collective of engaged activists and experts from a number of organizations. And we united at the start of the pandemic, the COVID crisis, in order to understand how that crisis changes the world and to reflect on challenges we're facing and also reflect on possible solutions. We're a bit, of course, beyond Covid. So, reflecting on contemporary problems now, and we're a platform designed to open up a debate on how we can move out of the multiple crisis we're facing towards achieving social, economic and ecological justice for all. To do that, we're inviting global experts to break down complex issues and make them accessible to you all, so that we can shape our economic system in a just and democratic way. Because we first need to understand the world before we can change this, of course. And our goal is to democratize knowledge and give you the necessary tools to change the world. “ “We started out in the middle of the pandemic, and we started with a series on monetary policy and central banks and ideology, basically to try to understand how finance capitalism was saved from itself again. And then we continued with the second series on debt Crisis, the ongoing debt crisis decades long in the global south, and what type of radical solutions were circulating today. The third series, and this is basically where we continue, was a series on big tech, techno feudalism, and democracy. You can watch all of our former webinars on our website, crashcourseeconomics.org.”

This series on Rentier and Monopoly Capitalism

“So this time we'll be discussing how a few corporate giants gain significant control over market access, technology and resources, allowing them to extract increasingly substantial rents to the detriment of smaller competitors and us users, while undermining more stringent regulation and also our democracies. And we'll have a series spread over a couple of months, so there will be at least four webinars in this series, every two weeks, and in each webinar, we provide you with 1 hour of crash course on a specific subject that makes you understand our contemporary economy and society, in this case, Rentier and Monopoly Capitalism in the tech sector, a bit better.

This time, we will explore monopoly capitalism, rentier capitalism more broadly. We will look at how it is manifested across different sectors. So today we will look at Big Tech. Next time with Brett Christophers, we will look at the world of asset managers in the episode. After that we will look at Pharma, Big Pharma. And then we will continue in looking into the institutional history of competition policy in EU and how well monopoly capitalism came to be by design. “

Rodrigo, on Cory Doctorow:  “He's an activist and writer, and his writing is all over the place on the Internet, and his work includes children books, fiction, and nonfiction. He's also known for his website pluralistic.net. He works at the Electronic Frontier foundation and is affiliated to a handful of academic research centers.”

Cory Doctorow  explains why his latest book with Verso, The Internet Con, How to Seize the Means of Computation has tales of some very old technologies, such as cable tv, VCR, and even roman chariots: From all of these different stories, you basically deduct some sort of a theory of interoperability. The technological world we inhabit today was profoundly shaped by the ability of newcomers to hack interoperable add ons, plugins and features into the technologies that came before them. With digital technology, there's a kind of interoperability that's quite profound, because there is only one kind of computer we know how to make, and that is the Turing complete universal von Neumann machine. It's a computer that can run every program. And that means that historically, under conditions in which that interoperability that was latent in digital technology was not constrained by regulation, firms always had their hands stayed by the prospect that their customers in digital worlds might avail themselves of interoperable alternatives to the official offerings and therefore improve their experience at the expense of the company's shareholders.  And so what has happened in the years since you have seen tech companies create durable advantages that historically would have been broken by interops. (in the talk Cory gives many examples). When IBM was selling mainframes, they sold the mainframes below cost, and then they gouged their customers on printers and tape drives and keyboards and screens and all the other stuff that plugged into the mainframe. And six little companies, or seven little companies, they called them seven dwarves, Fujitsu and Panasonic and so on, they started making what were called plug compatible printers and drives and whatever, and it turned them into tech giants, and it broke IBM's ability to harm its customers through these proprietary interfaces. And that doesn't happen anymore.

Martin Luther King said the law might not make a racist love me, but it can stop him from lynching me. And that's important.

own business strategy. So in:

(Q: you state that the fight for a free and fair and opal digital future for us all, that's equitable and democratic, it's not more important than any of the other fights to achieve social justice, but that it is foundational. So it's primordial. It becomes before the other fights, so to say. )

(…) The one thing that the Internet has been historically very good at is that and even if progressives were to abandon the Internet and go back to wheat pasting posters around town with our bicycles, our enemies wouldn't. And they would have the advantage of this incredible tool that is so efficient at locating people who share the same views as you and allowing you to coordinate your offline action to affect change that we would just lose. So it is the terrain on which we're going to fight all these other fights.  If you want to be able to go to a protest without Google being able to enumerate all the people who attended it because they have location data being gathered up by your devices. Even if you use iOS, Google is used to build many of the its APIs are used to build many of the tools in your apps, in your phone, and so they're able to get that location telemetry as well. Then you really want to have a free, fair, and open digital infrastructure. Otherwise, your adversaries, the fascists in the town square who are working with the police, enjoy the anonymity of protest, and you find yourself not just identified, but as the protesters in the euromaidan found. When they got home from the protest, they had sms waiting for them from the government saying, dear person, we know that you were at this protest, and next time we might reach into your Internet of things, thermostat and shut off your furnace in the middle of February in Kiev. (…) We can't hope to make social progress unless we can seize the means of computation.

Enshittification

(…) First you have platforms that are good to their end users. So think of Facebook, right? When Facebook kicked off, they said, yeah, everybody who uses social media is over there on Myspace. But Myspace users, has it ever occurred to you that the service you're using is owned by Rupert Murdoch and he's an evil, crapulent, sinister Australian billionaire who's spying on you with every hour that God sends. Tell you what, come to Facebook! We are the privacy respecting social media network that will never spy on you. (…) And so the users piled in, and when users join social media networks, they lock themselves in. So technology has lots of ways of locking people in. (…) (many examples in the recording) (…) once those users are locked in, Facebook knows that they can treat them worse and they won't leave. Right. So long as the worst treatment is better than leaving behind all the people you love and matter to you, they can treat you worse. And so they start to take away that surplus from you and they give it to business. 

Switching costs

 (…) switching costs are a really important way to attain lock in. (…) And so once the switching costs are high enough, Facebook turns to its business customers, it turns to advertisers and says, we lied to these people when we said we weren't going to spy on them. We're spying on them from asshole to appetite. Give us a few dollars and we will target exactly the people you want to target. (...)

One of the things about digital platforms is that they're very flexible in a way that analog platforms are not. And this allows the firms that run digital platforms to change the underlying business logic. So with Uber, every ride that a driver is booked for pays a different rate, right? And they're titrating the rate based on their expectation that the driver is willing to drive based on previous experience and observation of all the driver pool. And so two drivers might get paid a totally different amount for the same ride because this driver is more selective. And Uber wants to make them less selective. (Cory proceeds explaining how they achieve that) (…)

Q: You also seem to suggest it is sort of a life cycle. It's also part of the, sort of the rise and fall. What role does it play in the fall?

Once the advertisers are locked in, once the publishers are locked in, this twiddling starts to shift the value in the system, the surpluses that had accrued or had been allocated to publishers and advertisers back to the platform so that the advertisers pay more. But their ads are worse targeted. (…) Advertisers and publishers who are paying those fees to fill up your feed are getting less and less value for it, and the shareholders are extracting as much as they can based on their estimation of just what minimum quantum of value needs to remain as a residue in the platform to stop those users from saying, hang the switching costs, I'm leaving. (Cory proceeds explaining how the equilibrium on these platforms to pay and stay or to leave is razor thin, and what makes people decide to start leaving, and what corporations like Facebook do to prevent people from leaving)

Combined with the regulatory capture that prevents new market entrants or users themselves from altering that business logic back to install ad blockers to let them scrape the stuff that's in the platform they've left and put it in the platform they've joined to put third party spares in their device to unlock the diagnostic codes in their car so independent mechanics can fix them to disable the anti features that claw value away from them and hand it to shareholders or business customers. So that's the pathology. Which then brings us to the solution.

A heavily concentrated industry has monopsony power, buyer power over the sellers of labor, over their workforce. And so the workforce now finds themselves in a world where, like Google, for example, fired 12,000 engineers just months after doing a stock buyback that would have paid their salary for 27 years.

Solutions

Q: could you say a bit more about the agents of change who will drive the demise of enshittification? So where does that process begin? Is it with the users? Is it with policy?

The answer is to reconstrain these firms. Remember Martin Luther King's quote, you can't make them like you, but you can make them not harm you, right? And that's important. Like, they still might view you as a chicken to be plucked. But if they can't do that without it costing them more than they get, and if you have available to you self help measures that allow you to directly resist the bad choices they make, then you will live in a better Internet, an Internet better suited as a staging ground for all the other fights that we need to fight than we live in now.

And so these are systemic problems. They require systemic solutions. And the four systemic solutions that we need address those four factors, competition, regulations, self help and labor.

1) So competition, we're actually seeing historic changes in the enforcement of competition law. (Cory proceeds to explain the roots of US and EU competition laws, which are basically the same). And so we effectively stopped enforcing antitrust law in the early eighty s. And now we have monopolies in every sector. (…) o the good news about this is that on the one hand, all we have to do is enforce the law. And on the other hand, the constituency for enforcing the law is very broad because you might not care about big tech, but you might care about beer or professional wrestling or eyeglasses or whether ships keep getting stuck in the Suez canal. Right? (…) when enforcers all wake up and put on their big boy pants and start doing stuff at the same time, it's not just a reflection of their moral character, it's a reflection of the political moment that we're living in.

2) we need to make sure that when we build regulations that they're fit for purpose and can be administered. (With the example of Ireland, because they have this tax haven status, they don't want companies to leave, so they become a regulatory haven. So the irish data commissioner just ignores privacy claims against big tech. )

 3) Three, we need to restore the right of individuals to change the way their technology works. That's an area where we could do a lot of work. It's not on the radar of enforcers so far, but that reverse engineering and unilateral modification of technology is a really important piece of it.

4) Reinvigorating tech unions. And in Europe, we're a lot further than we are in the United States. Anyone who's watching the solidarity strikes just destroy Elon Musk in the nordic countries knows the role that tech unions can play, and so do these four things. Competition law, regulation that's designed for administrative ability under conditions of monopoly, and restore the right of reverse engineers and build worker power. Those four forces will resist the four underlying forces that create the pathology of big tech.

Questions from participants: (Anabella Arias):  I would like to know if you have an opinion about the lawsuits that were filed last year against meta by some states in the US

Cory: Yeah, so this is the theory that meta is harming its users through sort of quasi mystical mind control technologies. That's basically the theory that by using big tech, they can figure out how to stick you to the platform, or using big data, they can stick you to the platform by analyzing your psychiatric characteristics and then targeting you for certain things.(…) All of those things share a common nexus, which is privacy. Right?  And the cool thing about this being a privacy matter rather than these sort of mystical things that we attribute to Facebook, is that the constituency for fighting for a privacy law in the United States is much larger than the constituency for stopping Facebook from showing young girls the wrong content.

There's a question from an anonymous user here who states, any advice on steps to take for people working for one of the big tech companies to solve these problems?

Cory: Join a union. My only advice, join a union. And if you don't have organize a union. Whatever internal reforms are possible will require worker power, not individual power. The age when you could go to your boss and say, I will quit. If you make me make our technology evil, that's over. What you need to do is have you and your colleagues all have the legal right to down tools and prevent your employer from building that technology through strikes and not through you individually going and bargaining with your boss. Your boss will just fire you. You need a union.

And do you see good examples of that currently?

The Kickstarter union has done a whole bunch. We're seeing some of the big one, of course, would be not in tech, but in entertainment, where the screenwriters just kicked the studio's ass and they did it. This is really important. Not through copyright, which is really just kind of a neoliberal alternative to labor rights, where we say, hey, artist, you're a small business person. And so you have a right that you can sell like this vendable right, and that's how you'll maximize your utility or your benefits from this economic arrangement. (…) Whereas labor rights, the ability to take collective action, actually brought bosses to the table and effectively banned AI.

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