Isn’t that a prerequisite for enshitification? Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders, even if that means utterly ruining their original product (Reddit, Boeing, etc.), yes? What do you think?
One of the worst companies in recent years has been Purdue Pharma, which worked with the also shitty McKinsey to get as many Americans addicted to opioids as possible, and make billions on the epidemic.
Both Purdue and McKinsey were privately held.
Koch industries is also a terrible privately held corporation.
Being public versus private doesn’t make a difference, in my opinion.
Enshittification requires two specific conditions:
- when a company can get more profit by decreasing the quality of the goods/services that it offers; and
- when the company is willing to do so.
The company being publicly traded can cause #2, as the investors won’t be as emotionally attached to the goal of the company as the founders. However, it is not a prerequisite, with Reddit being an example (it started enshittifying way, way before the IPO).
Some false premises in this thread — corporations are not required to maximize profits. Even if maximizing profit was mandatory, this is a pretty subjective topic — is short term profit while pissing off your customers “maximizing profit,” or is sacrificing short term gains for long term customer loyalty “maximizing profit”? It’s not a rhetorical question, and I think you can find examples of both.
Corporations are also not all pursuing endless growth; in addition to “growth stocks” there are “dividend stocks.” Some companies aren’t aggressively pursuing growth, but are making profit, and the stock reflects this. It feels almost antiquated in the “to the moon” era, but these companies do exist.
Every single comment here is describing symptoms but not the cause.
Enshitification is the evolution to the final form, only possible after the company, thru merger/acquisition or stock manipulation (leveraged buy outs, acquiring controlling stake, shorting a company into insolvency, etc), has achieved a commanding monopoly.
Then it flexes it’s monopoly powers, the buttons fly off its shirt and the monster shows it’s true colors.
We have laws to prevent this. Lina Khan is the first FTC chair to start holding these companies to meaningful account in my lifetime (yea, Microsoft/netscape is exponentially smaller than todays issues). Meta, Google, Apple, Microsoft, Amazon all need to be broken up into a thousand different companies, same as we did with AT&T. Uber, Angieslist, homeaglow, all the contractors pretending they’re just networking hubs (like some union hall) need to busted up and gigwork made to contend with employment law, which it can’t, because it’s all bad faith exploitation.
And for fucks sake we need to make the fine for white collar crime that extends state lines to necessitate the forfeiture of the entire C-suite’s and board of directors assets, both domestically and internationally, upon threat of seal team 6. Empty their bank accounts and leave them with nothing, like they regularly do to employees. They’re so fucking smart they can earn it all again, right? Right!? Corporations are the largest thief in the land, just in WAGE THEFT. Everything else they do that’s slimy is all BONUS. The 2nd largest thief in all the land? the fucking Police force. The lunatics have taken over the asylum, democracy doesn’t work in mental institutions. We don’t need to defund the police, we need to fire all of them and start over with transparency. If casino employees can be video taped all day, so can cops. Fuck em.
What America truly needs is another Teddy Roosevelt. We need to revive the Progressive party with the Bull Moose as the symbol. Protect the environment, protect the family by protecting the workers, end legal loopholes and trustbust the 1% back down into the 10%.
And if we don’t? The path ahead is obvious, I for one, don’t want to live in Blade Runner, but that’s where we’re going until we stop fucking around and right ship.
Meta, Google, Apple, Microsoft, Amazon all need to be broken up into a thousand different companies, same as we did with AT&T.
And unlike with AT&T, after divestiture there needs to be an order in place that perpetually prevents the divested companies from ever merging or buying each other up. At this point AT&T has almost completely re-formed from the companies it was broken into, and that should never have been allowed.
And for fucks sake we need to make the fine for white collar crime that extends state lines to necessitate the forfeiture of the entire C-suite’s and board of directors assets, both domestically and internationally, upon threat of seal team 6. Empty their bank accounts and leave them with nothing
Absolutely this. We need to abolish corporate personhood, and hold company leadership directly responsible for the company’s behavior. Since it is the people who are doing these things. The “company” isn’t some autonomous entity that has a will of its own. People drive it, and those people should be held accountable.
I’m really emotionally and mentally exhausted. But what you just wrote makes me think you are my spirit animal. I guess what I’m trying to say is that it’s nice to see that other people are identifying a major issue and care about it.
I’m flattered. Thank you.
I told my wife if we ever decided on kids (which we won’t) I want to name the kid after my hero. She asked “who’s that?”.
“Mega man”
“What if it’s a girl?”
“We can call her Meg”
"Middle name?”
“No middle name. MegaBlake, that’s it.”
I’m wearing a mega man belt she bought me right now actually.🤓
'Member before publicly traded companies? We had dudes like Rockefeller and Carnegie. Company towns, rats in the sausage, kids getting caught in giant cogs…
No, it’s not because they’re publicly traded. It’s because people like money, and if they have enough they can pay to not look at the side effects of getting it - whether that’s dead kids or just no privacy and bad content.
You dont have those things not happen any more because of the stock market, you dont have to endure those things any more because regulations prevent it.
I can guarantee you 100% that if corporations could use child labor again, or dump rats in a meat grinder and sell it, they would in a heartbeat.
Yep. No disagreement.
OP was asking whether public trading causes shitty business behavior.
Ah fair enough, that makes more sense then. Read it as an argument for the free market
It wasn’t, although it wasn’t an argument against per se either. Both were/are markets.
What actually needs to happen with internet enshittification is probably some kind of regulation. People just don’t understand the magic boxes well enough to not fall prey. The EU is on it, at least. With Boeing, probably the Enron formula. We’ll see how many accidents it takes to create movement on that, considering it’s a company that makes the big banks look disposable by comparison.
The ones that are successful at enshitification have captive markets. They’re a monopoly, monopsony, or in another kind of inelastic market. https://pluralistic.net/2024/04/24/naming-names/
I don’t think that it’s a prerequisite but it’s definitely a catalyst.
Another catalyst is one company buying another. I cannot think of one example where the acquired company’s product/services got better after a M and A. OTOH, I can think of many examples of it getting worse. Confirmation bias? Absolutely. But still makes you go “hmm…”
I think there can be an intermediary step where things get a little better before they get much worse. I’m thinking of Youtube, which pre acquisiton, iirc, was getting slow and bad. Google infrastructure made it faster, but then, well…
This is really just the first step of enshitification - first they make things good for users, then introduce advertisers, then claw back all the value for themselves.
Or put another way
- "don’t worry you favourite thing will stay the same - we don’t want to mess with a winning formula!
- “these changes will benefit users!”
- “we have to comply with industry standards and best practices. please read our updated terms of service.”
- "in order to compete in a dynamic marketplace, we’re introducing an add supported tier!
- “we’ve made changes to our subscription model!”
- “we’ve made changes to our subscription model and we’re introducing adds on paid tiers! suck it!”
- “sure, you paid for it, but our agreements are expiring and we don’t value you as a human being!”
- “really, where else are you going to go? lololololol”
Another catalyst is one company buying another. I cannot think of one example where the acquired company’s product/services got better after a M and A.
I feel like there have been some positive outcomes of mergers and acquisitions but I am having trouble thinking of them. What comes to my mind is Meta acquiring Oculus, Activision merging with Blizzard, and Microsoft acquiring Minecraft. All of those have led to a shitty Russian nesting doll of launchers and DRM.
The positives might be harder to note though. There must have been a couple times where some kind of acquisition has brought a series into the mainstream.
I know a lot of people prefer the classic Fallout games but I do wonder how people would be aware of the series if it weren’t for Bethesda buying the right to Fallout for example.
After being acquired by Google, YouTube got better for years (before getting worse again). Android really improved for a decade or so after getting acquired by Google.
The Next/Apple merger made the merged company way better. Apple probably wouldn’t have survived much longer without Next.
I’d argue the Pixar acquisition was still good for a few decades after, and probably made Disney better.
A good merger tends to be forgotten, where the two different parts work together seamlessly to the point that people forget they used to be separately run.
That’s true, and also why I added that last part about it being confirmation bias on my part. Definitely not saying there aren’t good examples, but like you said, I’m also having a hard time coming up with any.
Has Valve ever bought any other company? lol They’re one of the few I could see actually making the child company better xD
I’m not sure. Portal and Team Fortress both have really interesting back stories that I think have a bit to do with Valve acquisitions
Short answer: No
Long answer: Look into the phrase “rot economy.” Basically, enshitification starts MUCH earlier in the process than an IPO or a major buy out. It happens because our financial markets value growth, not financial gain. We always here about how companies only worry about the bottom line, but they don’t, actually. They care about demonstrating growth. How do you make growth happen while not worrying about the bottom line? Easy! Operate at a loss on purpose! That way you can capture more of the market in a fiscal year, and then the next year adjust your prices a little bit and operate at slightly less loss and show investors you’ve grown. Those adjustments? That’s enshitification. It all happens from the very first moment when you decide, “We have to capture the market.” That’s not the IPO. That’s the very founding of a business.
We need to instead value sustainable businesses. Ones that have higher revenues than losses. And you’ll notice something VERY interesting about sustainable businesses: They don’t do MASSIVE 3rd quarter layoffs literally every year. Why? Because they don’t have to show the investors that they’ve made a profit, they just need to show they captured more market and then reduced costs
It’s not really direct cause and effect, but yeah. The incentives for a publicly-traded company make enshitification far more appealing then it would be for most other organizations.
Oh, also, it’s a common misconception that publicly-traded companies are required to maximize profits. They can have whatever goals their shareholders want. It’s just that the way modern publicly-traded companies work, most of their shareholders are people quickly buying and trading shares based on who they think will earn them the most money this month, so that sort of inevitably becomes the goal of any publicly-traded company.
Enshittification happens due to greed and power; It’s just the process of removing the false mask of mutually-beneficient business.
First you make users think you’re beneficial to them, so they get locked in,
then you make businesses think you are beneficial to them, and get them locked in,
then you give up that facade and admit you don’t care about benefitting anyone but yourself.
You can enshittify something even as an individual; it’s not being publicly traded that makes it easier or more likely, it’s that being a large enough business to be able to successfully enshittify without losing all your customers probably means you’re publicly-traded.
Isn’t that a prerequisite for enshitification?
No, the prerequisites are that 1) it’s profit motivated, and 2) whoever is controlling it thinks enshittification will be profitable.
Those can certainly be met for a privately held company!
Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders
That’s not true in any major market that I know of. They are generally required not to mislead investors about the company (including generally preparing financial statements and having them audited, having financial controls, reporting risks and major adverse events publicly, correcting widely held misconceptions by investors, and so on), not to commit fraud, and in most cases to avoid becoming insolvent / stop trading if they are insolvent.
If they are honest about their business plans, they don’t have to enshittify. Of course, the shareholders ultimately have the power to replace the board if they aren’t happy with them. Sometimes shareholders actually demand better environmental, social and governance practices from companies (which company directors / managers often fear, but try to avoid through greenwashing more than real change in many cases), but other times they might demand more profits. Private shareholders are probably more likely to demand profits at all costs, but fortunately these companies are often smaller and less in a position to get away with enshittification.
Any organization that’s forced to pursue endless growth is going to end up enshittifying eventually, because there’s only so much innovation and wow factor that you can do to make a product appealing before you hit a talent/demographic/creativity limit. Not to mention that infrastructure and operating costs are massive when you hit that level of scaling and that needs to be funded somehow. Eventually they’ll be forced to start extracting more value out of their existing userbase to keep the revenue growth going. Going IPO is mostly just a telegraph for how things are going behind the scenes.
I think the real root cause is governments allowing corporations to grow so large that any competitive effects are removed. In the absense of real regulation there’s no way for competition to occur, allowing corporations to squeeze every dime they can from their customers.
While I think shareholders can be a driving factor, I see it way more often with VC-funded companies. The “2.5x year over year” growth mantra that places like YCombinator stipulate have disastrous effects on small tech companies. Often, these startups have an incentive to keep taking additional funding rounds, which appears to tighten the grip the VC has over them.
Try growing the next Microsoft or Google or Amazon out of that model. I’m not convinced that it’s possible. At least if you bootstrap your own company, you don’t have the same binding obligations…even if it takes way longer to get to a place that’s self-sustaining.
IIRC most successful VCs invest very early and get out often early-ish too. The real enshittification that dangers the actual position of the company often happen much later. At that point the company is traded publicly and there’s a large anonymous body of shareholders - they only care about profits. VCs are actually a little smarter and care about longer time frames as in that early stage often much larger (relative) growth rates are possible.
At a late stage (think Google, Twitter, Facebook, Reddit etc today) growth is much more difficult. How could Google grow today? They’ve saturated the search market years ago. So the only way of making more money is by sucking more money out of their existing user base. And they absolutely need to do it, as there’s huge pressure on the managerial class to do it, because the shareholders demand it. If the managerial class doesn’t do this (because often some older idealistic people know it would compromise the quality of the product), or they aren’t capable of doing it - they will get replaced by people who are more willing or capable - even if it’s detrimental for the company when viewed longer-term. VCs i would argue care all about profits, “but”. (they are smart enough to see the big picture. They are also small enough or “few enough” that they can communicate among themselves in order to agree on a more wise plan. That’s why they often get out once most of the possible (easy) growth has been achieved. They either know that now growth is much more difficult, or that the company’s value is much more stagnant - ow might decrease even. They can get out and invest their money in other more promising endeavours.
The shareholders of large publicly traded companies are not that coordinated as they cannot really agree on anything other than just “growth”. More sophisticated strategies would have to be negotiated (and communicated) among thousands. The only unifying bond among shareholders is that they want profits. Think about it: many shareholders often don’t even know what companies they own as they are often part of other investment packages. Maybe you’re retirement plan has invested in stocks of 50 different companies, or 10 different fonds that have invested in others still. That is a form of dilution (?). It’s very difficult to communicate any strategy more sophisticated than “profits”. (a side effect is also that many people have invested indirectly or wothout knowing in endeavours that make their life more shitty/expensive when they retire - without knowing it.) There isn’t enough nuance in the wants of the masses as to want any more sophisticated strategy than simply “growth”. That’s why only short term growth can be thought.
Of course sometimes also large companies can grow 2.5x or something like that. But it’s rare and takes more time. The exception makes the rule here. Early stage growth that VCs bank on is much more explosive i think. More like 10x or 100x.
EDIT: sorry i typed this on mobile and it shows.
Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders,
The is not true, stop spreading misinformation
They may not have to maximise profits but the shareholders will question every decision that doesn’t maximise profits so the result is the same. That’s why activist investors that push companies to more ethical behaviour are important.
They may not have to maximise profits but the shareholders will question every decision that doesn’t maximise profits so the result is the same.
If that were true, we wouldn’t see the obscene salaries of C-suite level execs skyrocket… That money cuts into the profits as well, you know?
They are ok squeezing their workers while giving themselves the sweet life on the company’s dime
That’s why activist investors that push companies to more ethical behaviour are important.
This is a fairy tale force, like Santa or the boogie man. You’ll never get ethical behavior from profit seeking entities
Yeah, but we’ve had countless examples of loss-making tech companies with sky-high valuations. Amazon didn’t make a profit for something like 20 years. Investors of course want returns, but they can differ on the timeframe they’re willing to wait for them.
