Enshittification

· 3 min read

I came across the term ’enshittification’ coined by the great Cory Doctorow.

It’s the idea that things/platforms decay overtime. This is because the incentive structures we’ve created mean that you need to increase output with less input in order to maximise profits to shareholders. This leads to worse quality.

With digital platforms, companies do this by offering useful services for free to lock in users, and then the suppliers. Once they are both locked in, they shift the focus to the shareholders, and the incentive structure means that they no longer need to provide quality for the user (you’ve already locked them in with high switching costs).

Doctorow says its a ‘3 stage process’

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. I call this enshittification, and it is a seemingly inevitable consequence arising from the combination of the ease of changing how a platform allocates value, combined with the nature of a “two sided market,” where a platform sits between buyers and sellers, hold each hostage to the other, raking off an ever-larger share of the value that passes between them.

Examples

Along with many other services and goods.

Exit Voice and Loyalty

Exit, Voice, Loyalty is a book with the idea that in response to declining quality, customers have three options. Exit (leave), or voice (complain to try and repair or improve the quality) or loyalty (stay).

This applies to much more than enshittification, and it is a broad framework for the options we have when market dynamics are at play.

The issue with digital platforms is that you can’t take your data and migrate to a less enshittified platform. I remember I deleted my facebook account sometime in 2014, and I had no option to take my data with me.

With people locked into digital ecosystems, like the google cloud or apple’s services, it becomes much harder to ’exit’. Most users just put up with it and don’t voice there concerns, so they’re stuck.

I quite liked ’twitter’ as a platform, but over the past years, it’s enshittified to the point where I can no longer use it and remain sane - Sam Harriss said the biggest ’life hack’ he’s experienced in the last few years has been leaving twitter.

Sadly enshittification is everywhere, and with AI I suspect it will only get worse.

The whole concept reminds me of the power of incentives.

Show me the incentive and I’ll show you the outcome Charlie Munger

When we have maligned or perverse incentives, don’t be surprised at the outcome.