Fixing Digital Platforms

If digital platforms are bound to be monopolies and prone to enshittification, why not let the government handle them?

Google’s searches have been getting worse for years, the most visible degradation is the new AI overviews, but make no mistake it has been on a downward trajectory for a long time. One of the most serious economic issues of our time is how the digital commons we used to rely on like Google’s search engine, YouTube, social media, and so on are getting worse over time in contrast to what economic theory would suggest. How do we make sure our platforms do not degrade further?

One of the most useful concepts for understanding the digital economy is Cory Doctorow’s term “enshittification”. It is in short the journey platform businesses almost inevitably undertake in order to increase profits and power. The process starts by building a very useful tool like say Google’s search engine, which is then launched to consumers at a very low price, ideally for free. As it becomes more and more dominant and beloved by consumers the platform is then changed in order to make it less convenient for end users in order to benefit the platforms’ customers, most commonly advertisers. The next stage is to make the service worse for customers and to make the platform as profitable for its owners as possible.

There is a logic and ruthless elegance to the enshittification formula, and it is a clear example of a market failure. The promise of capitalism is that of creative destruction; that companies can only survive if they are useful and liked by customers and other stakeholders. Enshittification is a great formula for the capitalists who own the shares of their digital monopoly but it inconveniences and hurts everyone else. How can a liberal society design a policy to stop enshittification?

To do so by legislation is essentially a mug’s game. It would be impossible to craft a law which effectively stops enshittification without also hurting other businesses. Instead, the alternative is to return to an age where the state had a greater say in the economy. If search engines and taxi apps always tend towards monopolies due to the power of inherent network effects, is there really a point to resistance? Would it not be simpler just to let the government have a monopoly designed to benefit end users instead of letting monopoly rents accrue to private capital holders?

I realise that what I am saying is radical in some circles, especially in Silicon Valley. And there are real trade-offs and risks of enlisting the state in the struggle against enshittification. How can one be sure that the underhanded methods private platforms use to boost profitability is not just redeployed towards political ends? How can one make sure that the state stays neutral and does not try to corruptly benefit a particular company?

The solutions are the norms and processes already common in modern states. Norms regarding transparency, public tender processes, and access for journalists and academics are already common forms of accountability which would neatly transfer over to state-run digital platforms. I suffer no illusions that this is a perfect system, but I do think it is a preferable one to the current system. Returning the state to its pre-market revolution role of referee in the markets would bring benefits in all manner of sectors, but most obviously in digital platforms.

If you liked this post you can read a previous post about Trump's meeting with Putin here or the rest of my writings here. I also have a section for longer reads I call essays here, I particularly recommend my essay on Silicon Valley and AI called 'No Acoustic Guitars in Silicon Valley'. It'd mean a lot to me if you recommended the blog to a friend or coworker. Come back next Monday for a new post!

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I've always been interested in politics, economics, and the interplay between. The blog is a place for me to explore different ideas and concepts relating to economics or politics, be that national or international. The goal for the blog is to make you think; to provide new perspectives.

Written by Karl Johansson

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Cover photo by Suzy Hazelwood from Pexels, edited by Karl Johansson