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https://pluralistic.net/2023/01/21/potemkin-ai/#hey-guys
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. Then, they die.
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, hold each hostage to the other, raking off an ever-larger share of the value that passes between them.
[...] 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). All told, the first five screens of results for "cat bed" are 50% ads.
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. From mobile app stores to Steam, from Facebook to Twitter, this is the enshittification lifecycle.
(Score: 2) by JoeMerchant on Wednesday January 25 2023, @07:08PM
I worked at a (exceedingly rare) mid-sized medical device manufacturer for a while. It's a rare bird because most medical device companies start in some garage-warehouse somewhere and if they have any promise at all, they get bought out by a big player and merged into the Fortune 500 level of things. This company ended up where it was, with ~1000 employees, because it got a relatively large early stage investor who dug their heels in in the usual buyout negotiations, and when that ploy failed they ended up running the company themselves - something they were honestly rather ill equipped to do, but given who they were and where they were coming from, they didn't screw it up entirely, which is far better than the median performance delivered in that arena of growing startups to profitability.
Point of all that background was: in their rather narrow focused management style (shifting focus periodically to whatever Wall Street told them their problem du-trimestre was), they ignored many obvious problems for a rather long time, particularly during my brief 2.5 year tenure: management bonus awards. KISS, right? Well, when you keep management bonus awards simple, you end up with stupid behaviors like: managers taking bonuses away from their reports because that makes their department more profitable on the bottom line, thus increasing the manager's own personal bonus. This was in operation at all levels of the company and had uneven results... my Director had married rich - maybe that had something to do with why he would give everyone who reported to him as much bonus as they possibly earned even if it meant his own bonus would dip by 5-10%. Other departments weren't so lucky and their managers would be so crass as to first change the rules for earning bonuses too near to the end of the quarter for any of their reports to actually earn a bonus, then they'd throw the suggested "morale boosting" party at their home where they'd do things like mention that the new billiards table was paid for by their recent quarterly bonus... not the greatest morale booster I've ever encountered.
Simple lack of enough "games theory" being applied to the bonus structure rules when created, followed by the lassie-faire attitude of "Well, we're making money right? Why change things?" Really, "games theory" does explain most of economics, but you have to factor in all the things that are important to the 8 billion+ actors in the equation, and for many of them just getting more money isn't the primary motivator.
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