Whilst social media still boasts of billions of users, many of us are increasingly opting out of it simply disappointed with the quality of experience on these platforms. Once a medium to stay in touch with friends or curate a newsfeed to inform oneself soon becomes a place for marketeers to sell their wares. There is apparently a term for it – Enshittification.
“In 2022 Cory Doctorow had perfectly encapsulated a rapid decline in the quality of internet platforms with one word – enshittification. The American Dialect Society named it the Word of the Year in 2023.
Doctorow limited his brilliant theory to social media platforms. Paul Krugman expanded this further to any tech business characterized by network effects, like Uber. Yet what we are all experiencing is Enshittification of Everything – from the basic consumer products to cars, clinics to restaurants, and Sports.
Slowly, but surely, the service is degrading, becoming more expensive, physical goods are breaking down sooner, and about everything is forcibly turned into subscription and repeat purchase.”
In this blog, Nikola Vukovic blames it on the incentives inbuilt in modern finance – “how the forces driving enshittification are baked into capital markets and finance theory that governs modern capitalism.”
A key factor has been the low interest regime which drove two elements – first market valuations favouring future growth driving companies towards growth at any cost.
“This dynamic creates a treadmill, like a hamster on a wheel, quarter after quarter, year after year, you have to grow – or you get crushed.
At some point the market gets saturated, you start running out of new users, or truly value adding new products. The only way to keep growing is to extract more value from the existing users. Let the enshittification begin!
What internet, digital services and social media enabled is enshittification at a scale and speed never seen before.”
Second, the PE industry’s leveraged buyouts: “Private equity operates on a fundamentally different model than public companies. They acquire companies in leveraged buyouts, using a lot of debt which is loaded onto the acquired company’s own balance sheet. The company now has to service debt it never asked for, which immediately creates pressure to grow, cut costs and increase cash flow.
PE hamster wheel has to keep spinning or you get crushed by the debt!
While PE companies are private, and don’t have the same pressure of quarterly updates, growth is needed to generate returns for the fund’s investors, and payday for the PE firm. Typical playbook includes raising prices and cutting staff and services.”
But the author ends on a positive note, saying there is a budding anti-enshittification wave not least because interest rates are rising but also users and notably governments have had enough. Recently the Norwegian Consumer Council posted a video about Enshittification.
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