How the Internet Got Worse: Masters in Business with Cory Doctorow

The 'enshittification' theory, popularized by Cory Doctorow, describes a three-stage decline for digital platforms. Initially, platforms offer significant value, often at a loss, to attract users and third-party developers. Once a critical mass is achieved, these platforms leverage network effects and high switching costs to lock in their audience. The final stage involves monetizing this captive audience and supplier base, frequently by degrading the user experience and increasing friction, thereby maximizing shareholder value at the expense of quality and utility. From an investor's perspective, this cycle highlights a precarious long-term strategy. While initially boosting short-term shareholder returns, this 'monetization via friction' risks alienating users and inviting regulatory scrutiny. The erosion of trust, coupled with the rise of AI-generated content and the 'dead internet theory'—where much online content is AI-created—challenges the perceived value and sustainability of these platforms. This trend suggests that the traditional moat of network effects is becoming less about genuine value and more about coercive lock-ins. Investors should therefore reassess the long-term viability of platforms that aggressively pursue this extraction model. The future could favor 'interoperability' as a disruptor, challenging entrenched monopolies. Watch for increased antitrust enforcement in key markets like the US and EU, which aims to reduce switching costs and promote competition. Such regulatory intervention could significantly de-rate dominant platforms, forcing a return to innovation over pure extraction.