This shell-game with surpluses is what happened to Facebook. This is why – as Cat Valente wrote in her magesterial pre-Christmas essay – platforms like Prodigy transformed themselves overnight, from a place where you went for social connection to a place where you were expected to "stop talking to each other and start buying things": From mobile app stores to Steam, from Facebook to Twitter, this is the enshittification lifecycle. This is enshittification: surpluses are first directed to users then, once they're locked in, surpluses go to suppliers then once they're locked in, the surplus is handed to shareholders and the platform becomes a useless pile of shit. All told, the first five screens of results for "cat bed" are 50% ads. Search Amazon for "cat beds" and the entire first screen is ads, including ads for products Amazon cloned from its own sellers, putting them out of business (third parties have to pay 45% in junk fees to Amazon, but Amazon doesn't charge itself these fees). Those fees are built into the cost you pay for the product, and Amazon's "Most Favored Nation" requirement sellers means that they can't sell more cheaply elsewhere, so Amazon has driven prices at every retailer. Searching Amazon doesn't produce a list of the products that most closely match your search, it brings up a list of products whose sellers have paid the most to be at the top of that search. The company's $31b "advertising" program is really a payola scheme that pits sellers against each other, forcing them to bid on the chance to be at the top of your search. Today, Marketplace sellers are handing 45%+ of the sale price to Amazon in junk fees. That's when Amazon started to harvest the surplus from its business customers and send it to Amazon's shareholders. This strategy meant that it became progressively harder for shoppers to find things anywhere except Amazon, which meant that they only searched on Amazon, which meant that sellers had to sell on Amazon.
Marketplace sellers reached huge audiences and Amazon took low commissions from them. Kindle and Audible creators got generous packages. As these sellers piled in, Amazon shifted to subsidizing suppliers. That tempted in lots of business customers – Marketplace sellers who turned Amazon into the "everything store" it had promised from the beginning. Prime customers start their shopping on Amazon, and 90% of the time, they don't search anywhere else. And Amazon sold us Prime, getting us to pre-pay for a year's worth of shipping. Amazon sold us ebooks and audiobooks that were permanently locked to its platform with DRM, so that every dollar we spent on media was a dollar we'd have to give up if we deleted Amazon and its apps. Lots of us piled in, and lots of brick-and-mortar retailers withered and died, making it hard to go elsewhere. This was a hell of a good deal for Amazon's customers. If you searched for a product, Amazon tried its damndest to put it at the top of the search results. It sold goods below cost and shipped them below cost. Think of Amazon: for many years, it operated at a loss, using its access to the capital markets to subsidize everything you bought. When a platform starts, it needs users, so it makes itself valuable to users.
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, holding each hostage to the other, raking off an ever-larger share of the value that passes between them. 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. Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading.
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