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?
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…”
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
Interesting. I’ve never played TF but Portal is one of my all-time favorites (I’m not much of a gamer lol). Will try to look into that when I have time because it’s definitely interesting if true (and can be my token good example lol).
I’ve followed that for a while :) Saw it on Hack a Day early in its development and thought it was one of the coolest ports I’ve ever seen. Sadly, I think he got D&D’d. Best I recall, I think it was unlicensed use of the N64 SDK or something like that.
I recently discovered the excellent suite of Affinity Photo, Publisher and Designer. Not open source, but very good and they sell them at a reasonable price with no subscription. Seemed pretty ideal. Then a week or two ago they sent out an email saying they had been bought by Canva. I kind of hate Canva because it functions like one big infuriating ad for their subscription service. They promised Affinity would not change, but I have never known such promises to be kept after an acquisition. It’s pretty disappointing.
As someone with industry experience working with VR, I can tell you it’s a mixed bag. I think there’s certainly no way Oculus (and consumer VR in general) takes off the way it did without Facebook’s dollars behind it, and it’s certainly paved the way to the outstanding quality of standalone HMDs that are on offer today. However, it killed the initiative for PCVR hardware with the non-consolation that Meta, Pico, and HTC offer “Link mode” on all their headsets and it’s iffy on good days, which makes B2B PCVR very difficult to facilitate without some serious legwork on lowering latency over the air connections. Would that we could revive the Rift S, that headset was perfect for our needs.
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”
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.
I’ve worked for a couple startups and you’re absolutely right. If you make a profit you pay taxes on that money, so startups like to spend most of the money they bring in. They also want to show revenue growth, since that’s what investors like to see. You grow revenue by getting more paying customers. And you do that by doing what your customers want.
When you go public, your goal is to increase shareholder value. So you do this by reducing costs and finding ways to wring customers out of revenue. You find ways to nickle and dime customers out of revenue so much you develop an entire branch of law devoted to you suing your customers
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.
Enshitification is about monetization, getting more money from the same customer base.
If the product you are providing isn’t paying for itself with a sustainable margin then the prerequisites are in place for the wheels of enshitification to start moving.
Putting the foot on the accelerator is achieved by going public, selling the company, or pivoting to some random marketing weenie wet dream.
Most of this is fuelled by “free” products that become “fremium” when companies realise that monetizing you isn’t nearly as sustainable as the marketing department would have you believe. “You just need to grow!” - nevermind that the costs of running the infrastructure grow faster than the income generated by new customers. This is exacerbated by the silo mentality exhibited in many companies, the marketing department has no insight into the costs of the infrastructure team.
I think that we’re going to see much more of this before it gets any better. What better looks like is yet to be determined, since much of this is driven by the likes of Google, Apple, Microsoft, Amazon and IBM.
I mention IBM in that list because it’s been buying up “free” software companies and changing their business models.
I’m a little bit confused by your post. Publicly-traded companies, by and large, place extraordinary emphasis on short term, quarter by quarter profit. Seems like a very strong contender for the root cause if the issue?
Enshitification is about monetization, getting more money from the same customer base.
Doesn’t this statement support publicly traded status being a riot cause, though?
I must assume I’m misunderstanding your argument…?
I’ve always figured a company will go public before enshitification truly gets underway. It’s kinda the first step of the process.
I guess my argument is that until that pressure to appease the stockholders exists, there’s not a whole lot of motive to justify enshitification. It’s hard for me to imagine the process happening any other way.
So, I suppose you can count my vote as being that going public will likely come first. Just my two cents, though, and I don’t know anything anyway! :-p
I don’t think it’s required by law for a publicly traded company to increase profits. I think that’s a side effect of shareholders voting.
If Microsoft held a vote on whether or not disclose a report covering diversity I feel like the board would recommend against it and a majority of voters would agree because it could mean decreasing their stock’s value.
There is a thing called ethical investing but that can mean investing in stocks that will see lower gains.
All-in-all I feel like it depends a lot on the core of the company and what percentage of the company belongs to different people.
To be clear: I am not a professional and am drunk. This is just my two cents on the topic.
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).
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.
“Because” often doesn’t make sense in the real world where anything that happens is the sum total of multiple factors. Especially a trend as broad as enshitification.
Being publicly traded seems like a contributing factor, but a sole owner can still enshitify through greed or incompetence.
I would guess that market consolidation and low competition are more of a factor.
It’s also the anti commodity stuff IP has been allowing. If Hershey makes crap chocolate, there is little stopping you from buying Lidnt say. But if Microsoft makes a bad OS, there’s a lot stopping you from using Linux or whatever.
What’s worse is stuff like DRM and computers getting into equipment that otherwise you could use any of a bevy of products for. Think ink cartridges.
Then there’s the secret formulas like for transmission fluid now where say Honda says in the manual you have to get Honda fluid for it to keep working. Idk if it’s actually true, but I l’m loathe to do the 8k USD experiment with my transmission.
You’d think the government could mandate standards but we don’t have stuff like that.
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.
The company I work for has acquired a number of small companies over the years; the result has been a mixed bag. In one case, the original product and employees were dropped completely, only retaining the IP. In a number of other cases, the original teams and products were kept intact with cross-over between products plus a huge boost in funding and customers over the years. In most cases, the companies were absorbed into existing management structures and the employees and technologies deployed inside the existing product line, sometimes with a few things that didn’t match the company strategy sold off or spun off into their own company.
Personally, I consider all the acquisitions except the single case where everything was abandoned to be a success; in that case, the exec in charge of acquisition was made redundant when everything else shut down.
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.
'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.
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.
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Reddit was shit before it went public or even before they were talking about making it public, so no.
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 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
Interesting. I’ve never played TF but Portal is one of my all-time favorites (I’m not much of a gamer lol). Will try to look into that when I have time because it’s definitely interesting if true (and can be my token good example lol).
You might be interested in Portal on the N64 while you’re at it.
I’d check out Narbacular Drop. Pretty sure that’s the game that I’m talking about that became Portal, in a way, later.
There was a good YouTube video about it a while ago but I think it had a clickbait title that makes it hard to find.
I’ve followed that for a while :) Saw it on Hack a Day early in its development and thought it was one of the coolest ports I’ve ever seen. Sadly, I think he got D&D’d. Best I recall, I think it was unlicensed use of the N64 SDK or something like that.
They would bring other game developers or mod developers in house.
Wasn’t Turtle Rock (or whomever made L4D) basically acquired?
I recently discovered the excellent suite of Affinity Photo, Publisher and Designer. Not open source, but very good and they sell them at a reasonable price with no subscription. Seemed pretty ideal. Then a week or two ago they sent out an email saying they had been bought by Canva. I kind of hate Canva because it functions like one big infuriating ad for their subscription service. They promised Affinity would not change, but I have never known such promises to be kept after an acquisition. It’s pretty disappointing.
As someone with industry experience working with VR, I can tell you it’s a mixed bag. I think there’s certainly no way Oculus (and consumer VR in general) takes off the way it did without Facebook’s dollars behind it, and it’s certainly paved the way to the outstanding quality of standalone HMDs that are on offer today. However, it killed the initiative for PCVR hardware with the non-consolation that Meta, Pico, and HTC offer “Link mode” on all their headsets and it’s iffy on good days, which makes B2B PCVR very difficult to facilitate without some serious legwork on lowering latency over the air connections. Would that we could revive the Rift S, that headset was perfect for our needs.
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
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.
I’ve worked for a couple startups and you’re absolutely right. If you make a profit you pay taxes on that money, so startups like to spend most of the money they bring in. They also want to show revenue growth, since that’s what investors like to see. You grow revenue by getting more paying customers. And you do that by doing what your customers want.
When you go public, your goal is to increase shareholder value. So you do this by reducing costs and finding ways to wring customers out of revenue. You find ways to nickle and dime customers out of revenue so much you develop an entire branch of law devoted to you suing your customers
I knew that link was going to be something related to Oracle, and I was not wrong. xD
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.
Also the reason they focus entirely on unrealistic quarterly measures and don’t value long term stability.
Publicly traded companies are not compelled by law to maximize profits. That’s a long standing myth.
Yes, that is the root of many problems facing the general population. Environmental, monopolistic, and enshitification.
Private companies also seek to maximize profits…
True but they dont have a knee to their neck from share holders to increase profits year over year.
Private companies still have investors and board members they’re accountable to.
Cough: Blackstone KKR etc.
I don’t believe that it’s the root cause.
Enshitification is about monetization, getting more money from the same customer base.
If the product you are providing isn’t paying for itself with a sustainable margin then the prerequisites are in place for the wheels of enshitification to start moving.
Putting the foot on the accelerator is achieved by going public, selling the company, or pivoting to some random marketing weenie wet dream.
Most of this is fuelled by “free” products that become “fremium” when companies realise that monetizing you isn’t nearly as sustainable as the marketing department would have you believe. “You just need to grow!” - nevermind that the costs of running the infrastructure grow faster than the income generated by new customers. This is exacerbated by the silo mentality exhibited in many companies, the marketing department has no insight into the costs of the infrastructure team.
I think that we’re going to see much more of this before it gets any better. What better looks like is yet to be determined, since much of this is driven by the likes of Google, Apple, Microsoft, Amazon and IBM.
I mention IBM in that list because it’s been buying up “free” software companies and changing their business models.
We live in interesting times…
I’m a little bit confused by your post. Publicly-traded companies, by and large, place extraordinary emphasis on short term, quarter by quarter profit. Seems like a very strong contender for the root cause if the issue?
Doesn’t this statement support publicly traded status being a riot cause, though?
I must assume I’m misunderstanding your argument…?
The vast majority of companies don’t start by being publicly traded. They begin life as a good idea, an itch to scratch, or how to make money fast.
The public trading happens when the founders run out of money or get stars in their eyes about “the fortune” they’re sitting on.
That’s where the wheels come off, but the process is well and truly in motion by that stage.
I’ve always figured a company will go public before enshitification truly gets underway. It’s kinda the first step of the process.
I guess my argument is that until that pressure to appease the stockholders exists, there’s not a whole lot of motive to justify enshitification. It’s hard for me to imagine the process happening any other way.
So, I suppose you can count my vote as being that going public will likely come first. Just my two cents, though, and I don’t know anything anyway! :-p
I don’t think it’s required by law for a publicly traded company to increase profits. I think that’s a side effect of shareholders voting.
If Microsoft held a vote on whether or not disclose a report covering diversity I feel like the board would recommend against it and a majority of voters would agree because it could mean decreasing their stock’s value.
There is a thing called ethical investing but that can mean investing in stocks that will see lower gains.
All-in-all I feel like it depends a lot on the core of the company and what percentage of the company belongs to different people.
To be clear: I am not a professional and am drunk. This is just my two cents on the topic.
Enshittification requires two specific conditions:
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).
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.
“Because” often doesn’t make sense in the real world where anything that happens is the sum total of multiple factors. Especially a trend as broad as enshitification.
Being publicly traded seems like a contributing factor, but a sole owner can still enshitify through greed or incompetence.
I would guess that market consolidation and low competition are more of a factor.
It’s also the anti commodity stuff IP has been allowing. If Hershey makes crap chocolate, there is little stopping you from buying Lidnt say. But if Microsoft makes a bad OS, there’s a lot stopping you from using Linux or whatever.
What’s worse is stuff like DRM and computers getting into equipment that otherwise you could use any of a bevy of products for. Think ink cartridges.
Then there’s the secret formulas like for transmission fluid now where say Honda says in the manual you have to get Honda fluid for it to keep working. Idk if it’s actually true, but I l’m loathe to do the 8k USD experiment with my transmission.
You’d think the government could mandate standards but we don’t have stuff like that.
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.
The company I work for has acquired a number of small companies over the years; the result has been a mixed bag. In one case, the original product and employees were dropped completely, only retaining the IP. In a number of other cases, the original teams and products were kept intact with cross-over between products plus a huge boost in funding and customers over the years. In most cases, the companies were absorbed into existing management structures and the employees and technologies deployed inside the existing product line, sometimes with a few things that didn’t match the company strategy sold off or spun off into their own company.
Personally, I consider all the acquisitions except the single case where everything was abandoned to be a success; in that case, the exec in charge of acquisition was made redundant when everything else shut down.
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!
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.
'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.