Accurate, Focused Research on Law, Technology and Knowledge Discovery Since 2002

Big Tech Won’t Let You Leave. Here’s a Way Out

Wired [read free]: “The platform is the canonical form of internet business: a two-sided market that facilitates connections between end-users and business customers. Uber connects drivers with riders; Amazon and eBay connect sellers with buyers; TikTok and YouTube connect performers with audiences; social media connects people with something to say with people who want to hear it. And yet, lax competition law has allowed companies to consolidate, cornering their markets. Consolidated sectors, meanwhile, find it easy to sing with one voice, blocking the passage of unfavorable regulation (there’s still no US national privacy law) or its enforcement (the EU’s General Data Protection Regulation shows that Ireland is even more valuable as a lawless regulation haven than it ever was as a mere tax haven). Undisciplined by competition or regulation, platforms are free to slide into “enshittification,” in which the company extracts value from both sides of the two-sided market, relying on lock-in to keep users and business customers from defecting to a rival. The year 2023 was when the platforms soured: Twitch, Reddit, Twitter, Facebook, Instagram, Google Search, and Discord all spiraled into terminal enshittification, transferring value from users to shareholders, leaving behind shambling half-dead things that were disagreeable, but un-quittable. The secret to that un-quittability is high “switching costs”—the economists’ term for the things you have to give up to leave a service. You hate Facebook, but you love connecting with your communities, friends, and customers. They’re holding you hostage on Facebook’s behalf—and you’re holding them hostage, too. Facebook literally banks on these high switching costs: The US Federal Trade Commission’s antitrust case against Facebook revealed internal memos in which a product manager explicitly sets out to design features that “make switching costs very high for users” in order to make it “very tough for a user to switch” to a rival service.”

Sorry, comments are closed for this post.