How Platform Businesses Work

02 Feb 2023

I don’t know that the term enshittification adds anything to the debate, but I understand why Cory Doctorow is trying to come up with a term that encapsulates most of the dynamics of platform capitalism – a term I had not encountered before but find really useful. The essence of Doctorow’s argument is that platforms begin by being “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.”

Most readers are familiar with the idea that “if you aren’t paying for it, then you’re the product.”1 Doctorow builds on this idea to demonstrate how, repeatedly, platforms like Amazon, Facebook, Youtube, and now TikTok have first ensured a user base; then captured businesses seeking to sell to those users – or, in a Russian doll moment, influencers seeking to build a following so that they can sell themselves to businesses; and then having captured the entire ecosystem, proceed to raise the rent on the now-dependent businesses. In Amazon’s case, they actually auction off placement in search results, driving up business costs, which raises prices to consumers, but then allows Amazon, which sees all, to offer their own products in the more profitable segments at lower prices precisely because they do not charge themselves for placement.

Doctorow’s hope is that eventually this amounts to self-strangulation. My take is that, like Mark Twain, the news of Facebook’s imminent demise is exaggerated. Moreover, as it dies, and for however long it dies, Facebook will still make an enormous amount of money.

  1. I wanted to credit the originator of this truism, if there was one. Like a lot of such sayings, this one does appear to have an origin but it has been, like any folklore artifact, been refined over the years. According to Quote Investigator, the saying began as “Television Delivers People,” the title of a short video by Richard Serra and Carlota Fay Schoolman which pointed out that television “consumers” were in fact what was consumed by advertisers. In an interested development, Claire Wolfe wrote “Little Brother Is Watching You: The Menace of Corporate America” in 1999, where she anticipated the rise of surveillance capitalism: “Perhaps because you’re not the customer any more. You’re simply a ‘resource’ to be managed for profit.” Readers of Doctorow will, I think, note that the title of Wolfe’s essay is also the title of one of Doctorow’s most successful novels, Little Brother. (For more from Quote Investigator: And, FTR, 1973 is also the year that Soylent Green came out, for those familiar not only with the plot and its most famous line, the resonance with Serra and Schoolman’s project will be quite compelling.) 

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