Originally published at: https://pluralistic.net/2023/10/30/markets-remaining-irrational/
- Zuck's gravity-defying metaverse money-pit: $46.5 billion incinerated and he's richer than ever.
- Hey look at this: Delights to delectate.
- This day in history: 2003, 2008, 2013, 2018
- Colophon: Recent publications, upcoming/recent appearances, current writing projects, current reading
Zuck's gravity-defying metaverse money-pit (permalink)
Think of everything that makes you miserable as being caught between two opposing, irresistible, irrefutable truths:
- "Anything that can't go on forever eventually stops" (Stein's Law)
"Markets can remain irrational longer than you can remain solvent" (Keynes)
Both of these are true, even though they seemingly contradict one another, and no one embodies that contradiction more perfectly than Mark Zuckerberg.
Take the metaverse.
Zuck's "pivot" to a virtual world he ripped off from a quarter-century old cyberpunk novel (reminder: cyberpunk is a warning, not a suggestion) was born of desperation.
Zuck fancies himself an avatar of the Emperor Augustus (that's why he has that haircut) (no, really). The emperors of antiquity are infamous for getting all weepy when they run out of lands to conquer.
But the lachrymosity of emperors has little causal relationship to the anxieties of tech monopolists! Alexander weeps because he just loves a good conquest and when he finishes conquering the world, he's terminally bored. That's not Zuck's problem at all. When Zuck attains monopoly status, his company develops an autoimmune disorder, as his vicious princelings run out of enemies to destroy and begin to knife one another.
Any monopoly faces these destructive microincentives, but tech is exceptional here because tech has the realtime flexibility and speed that brick-and-mortar businesses can never match:
Sociopaths with tech monopolies are worse for the same reason that road-rage would be worse in a flying car: adding new capacity to indiscriminate self-destructive urges turns ordinary car crashes into low-level airburst warfare:
The flexibility of digital gives tech platforms so much latitude to break things in tiny increments. A tech platform is like a Jenga tower composed of infinitely divisible blocks. The Jenga players are the product managers and executives who have run out of the ability to grow by attracting new business thanks to their monopoly dominance. Now they compete with one another to increase the yield from their respective divisions by visiting pain upon the business customers and end users their platform connects. By tiny increments, they increase the product's cost, lower its reliability, and strip it of its utility and then charge rent to restore its functionality:
This is the terminal stage of enshittification, the unstoppable autocannibalism of platforms as they seek to harvest all the value created by business customers and end users, leaving the absolute minimum of residual value needed to keep both stuck to the platform. This is a brittle equilibrium, because the difference between "I hate this service but I just can't stop using it," and "Get me the fuck out of here" is razor-thin.
All it takes is one tiny push – a whistleblower, a livestreamed mass-shooting, a Cambridge Analytica – and people bolt for the doors. This triggers the final stage: the "pivot," which is a tech euphemism for "panic."
For Zuck, the pivot got real after a disappointing earnings call triggered a mass sell-off of Facebook stock, history's worst one-day value incineration, which lopped a quarter of a trillion dollars off the company's market cap:
This was when the metaverse became the company's top priority.
Now, in my theory of enshittification, the step that follows the pivot is death: "Finally, they abuse those business customers to claw back all the value for themselves. Then, they die":
Many people have asked me about the conspicuous non-death of Facebook! That's where I have to fall back on Stein's Law: "Anything that can't go on forever eventually stops." Facebook can't continue to annihilate value, alienate its workers, harm the public, hemorrhage money in support of a mediocrity's cherished folly forever. Can it?
Admittedly, it sure seems like it can. Facebook's metaverse pivot has thus far cost the company $46,500,000,000. That is: $46.5 billion. That's even more money than Uber torched, seeking to maintain the illusion that they will be able to create monopolies on both transport and the labor market for driving and recoup the billions the Saudi royal family let them use for the con:
Don't worry: the Saudi royals are fine! They cashed out at the IPO, collecting a tidy profit at the expense of retail investors who assumed that a pile of shit as big as Uber must have a pony under it, somewhere:
Uber has doubled the cost of rides and halved drivers' wages, using illegal gimmicks like "algorithmic wage discrimination" to squeeze a little more juice out of the nearly exhausted husks of its workforce:
But Stein's Law hasn't been repealed. Drivers can't drive for sub-subsistence wages. Do that long enough and they'll literally starve: that's what "subsistence" means. We lost a decade of transit investment thanks to the Uber con, at the same time as traditional taxi drivers were forced out of the industry. Uber can't be profitable and still pay a living wage, and the fantasy of self-driving cars as a means of zeroing out the wage-bill altogether remains stubbornly, lethally unworkable:
Which means we're at the point where you can get off a commuter train at a main station and find yourself stranded: no taxis at the taxi-queue, no busses due for an hour, and no Uber cars available unless you're willing to pay $95 for a ten-minute ride in a luxury SUV (why yes, this did happen to me recently, thanks for asking).
As more and more of us are exposed to these micro-crises, the political will to do something will increase. This can't go on forever. "Don't use commuter rail" isn't a viable option. "Walk three miles each way to the commuter rail station" isn't viable either. Neither is "Pay $95 for an Uber to get to the station." Something's gotta give…eventually.
"Eventually" is the key word here. Remember the corollary of Stein's Law: Keynes's maxim that "markets can remain irrational longer than you can remain solvent." Sure, anything that can't go on forever eventually stops, but that is no guarantee of a soft landing. You can't smoke two packs a day forever – but in the absence of smoking cessation, the eventual terminus of that habit is stage-four lung cancer. Keep hammering butts into your face and your last smoke will come out a crematorium chimney.
Zuckerberg hasn't merely blown a whole-ass Twitter on the metaverse with nothing to show for it – he's gotten richer while doing it! In the past year, his net worth increased by 130%, to $59 billion, thanks to an increase in Facebook's share-price, driven by investors who stubbornly remain irrational, keeping the Boy Emperor solvent long past any reasonable assessment of his performance.
What are these investors betting on? One possibility is that the rise and rise of Facebook's share-price represents a bet on technofeudalism. Since the Communist Manifesto, Marxists have been predicting the end of capitalism. That end seems to have come, but what followed capitalism wasn't socialism, it was the return of feudalism, an economic system where elites derive their wealth from rents, not profits:
Profit is the income you get from investing in capital – machinery, systems, plant – and then harvesting the surplus value created by workers who mobilize this capital. Capitalism produces massive returns for its winners – in the Manifesto's first chapter, Marx and Engels just geek out about how productive and dynamic this system is.
But capitalism is also a Red Queen's Race, where the winners have to run faster and faster to stay in the same place. Capitalism drives competition, as other would-be winners pile into the sector, replicating the systems that the current winners are using and then improving on them. This is why the prophets of capitalist end-times like the FBI informant Peter Thiel say that "competition is for losers."
Capitalism's "profits" stand in contrast to the feudalist's "rents." Rents are income you get from owning something that other people need to produce things. The capitalist owns the coffee-shop, but the feudalist owns the building. When a rival capitalist opens a superior coffee-shop and drives the old shop out of business, the capitalist loses, but the rentier wins. Now they can rent out an empty storefront in the neighborhood everyone's coming to because of that hot new cafe.
Feudal and manorial lords also made their fortunes by extracting surplus value from workers, but these rentiers don't care about owning the means of production. The peasant in the field pays for their own agricultural equipment and livestock – control over the means of production is necessary for worker liberation, but it's not sufficient. The worker's co-op that owns its factory can still find the value it produces bled off by the landlord who owns the land the factory sits on.
The jury's still out on whether American workers really see themselves as "temporarily embarrassed millionaires," but America's capitalists have a palpable, undeniable loathing for capitalism. The dream of an American "entrepreneur" is *PassiveIncome: money you get from owning something capitalists and/or workers use to create value. Digital technology creates exciting new possibilities for rent-extraction: a taxi-operator had to buy and maintain a car that someone else drove. Uber can offload this hassle onto its drivers and rent out access to the chokepoint it created between drivers and riders, charging all the traffic can bear. This is feudalism in the cloud – or as Yannis Varoufakis calls it, cloudalism.
In Varoufakis's Technofeudalism, he describes Amazon as a feudal venture. From a distance, Amazon seems like a bustling marketplace of manic capitalism, with sellers avidly competing to offer more variety and lower costs in a million independently operated storefronts. But closer inspection reveals that Amazon is a planned economy, not a market.
Every one of those storefronts pays rent to the same landlord – Amazon – which determines which goods can be offered for sale. Amazon sets pricing for those goods, and extracts 45-51% of every dollar those sellers make. Amazon even controls which goods are shelved at eye-height when you enter the store, and which ones are banished to a dusty storeroom in a distant sub-basement you'll never find:
Zuck's metaverse is pure-play technofeudalism, Amazon taken to the logical extreme. It's easy to get distracted by the part of Zuck's vision that will convert us all into legless, sexless, heavily surveilled low-resolution cartoon characters. But the real action isn't this digitization of our fleshy wants and needs. Zuck didn't spend $46.5B to torment us.
The cruelty isn't the point of the metaverse.
The point of the metaverse is to rent us out to capitalists.
Zuck doesn't know why we would use the metaverse, but he believes that if he can convince capitalists that we all want to live there, that they'll invest the capital to figure out how to serve us there, and then he can extract rent from those capitalists and start earning "passive income." It's an Uber for Cyberpunk Dystopias play.
Zuck's done this before. Remember the "pivot to video?" Zuckerberg wanted to compete with Youtube, but he didn't want to invest in paying for video production. Videos are really expensive to produce and the media video gets zero views. So Zuck used his captive audience to trick publishers into financing his move into video. He fraudulently told publishers that videos were blowing up on Facebook, outperforming boring old text by vast margins.
Publishers borrowed billions and raised billions more in the capital markets, financing the total conversion of newsrooms from text to video and precipitating a mass extinction event for print journalists. Zuck kept the con alive by giving away (fewer) billions to some of those publishers, falsely claiming that their videos were generating fortunes in advertising revenue. These lucky, credulous publishers became judas goats for their industry, luring others into the con, the same way that the "lucky" guy a carny lets win a giant teddy-bear at the start of the day lures others into putting down $5 to see if they can sink three balls in a rigged peach-basket.
But when we stubbornly refused to watch videos on Facebook, Zuck stopped spreading around these convincer payouts, and precipitated a second mass-extinction event in news media, as the new generation of video journalists joined their predecessors in Facebook-driven unemployment. Given this history, it's surreal to see publishers continue to insist that Facebook is stealing their content, when it is so clearly stealing their money:
Metaverse is the new Pivot to Video. Zuckerberg is building a new world, which he will own, and he wants rent it to capitalists, who will compete with one another in just the way that Amazon's sellers compete. No matter who wins that competition, Zuckerberg will win. The prize for winning will be a rent increase, as Zuckerberg leverages the fact that your "successful" business relies on Facebook's metaverse to drain off all the value your workers have produced:
This can't last forever, but how long until Zuck's reality distortion field runs out of battery? That's the $46.5B question.
The market can certainly remain irrational for a hell of a long time. But the market isn't the only force that regulates corporate outcomes. Regulators also regulate. Europe's GDPR is now seven years old, and it plainly outlaws Facebook's surveillance.
For nearly a decade, Facebook has pretended that this wasn't true, and they got away with it. Mostly, that's thanks to the fact that Ireland is a corporate crime-haven with a worse-than-useless Data Protection Commission:
But anything that can't go on forever will eventually stop. Facebook has finally been dragged into EU federal jurisdiction, where it will face exterminatory fines if it continues to spy on Europeans:
In response, Facebook has rolled out a subscription version of its main service and its anticompetitive acquisition, Instagram:
For €10/month, Facebook will give you an ad-free experience across its service offerings (it's €13/month if you pay through an app, as Facebook recoups the 30% #AdTax rents that the feudal Google/Apple mobile duopoly extracts).
But this doesn't come close to satisfying Facebook's legal obligations under the GDPR. The GDPR doesn't ban ads, it bans spying. Facebook spies on every single internet user, all the time. The apps we use are built with "free" Facebook toolkits that extract rent from the capitalists who make them by harvesting our data as we use their apps. The web-pages we visit have embedded Facebook libraries that do the same thing for web publishers. Facebook buys our data from brokers. Facebook has so many ways of spying on us that there's almost certainly no way for Facebook to stop spying on you, without radically transforming it operation.
To comply with the GDPR, Facebook must halt surveillance advertising altogether. There's no way to square "spying on users" with "you can't surveil without explicit consent, and you can't punish people for refusing."
And of course, "not spying" isn't the same as "not advertising." "Contextual advertising" – where ads are placed based on the thing you're looking at, not who you are and what you do – is hundreds of years old. Context ads underperform surveillance ads by a slim margin – about 5% – but they're vastly more profitable for publishers. That's because surveillance ads are feudal, controlled by rentiers like Facebook, who own vast troves of the surveillance data needed to run these ads. Traditional ad intermediaries (agencies, brokers) took 10-15% out of the total advertising market. Ad-tech companies – the Google/Facebook duopoly – take 51% out of every ad dollar spent.
Eliminate surveillance ads and you torch their feudal estates. Facebook will always know more about someone reading a news article than the publisher – but the publisher will always know more about the article than Facebook does:
There are rents under capitalism, just as there are profits under feudalism. The defining characteristic of a system is what happens when rents and profits come into conflict. If profits win – for example, if productive companies beat patent trolls, or if news publishers escape Facebook's rent-extraction – then the system is capitalist. If rents win – if investors continue to bet large on the metaverse as its losses pass $50 billion and head for the $100 billion mark – then the system is feudal.
Anything that can't go on forever will eventually stop. The question isn't whether the platforms will eventually become so enshittified that they die – the question is whether they will go down in an all-consuming fireball, or whether they'll go down in a controlled demolition that lets us evacuate the people they've trapped inside them first:
Hey look at this (permalink)
- When Stocks Go Up, Who Benefits? https://economicsfromthetopdown.com/2023/10/28/when-stocks-go-up-who-benefits/
End of a Journalism Experiment https://newscollab.org/2023/10/27/end-of-a-journalism-experiment/ (h/t Dan Gillmor)
Seasonal Cryptosystem PSA https://www.jwz.org/blog/2023/10/seasonal-cryptosystem-psa/
This day in history (permalink)
#20yrsago Google to create searchable archive of 60,000 books https://web.archive.org/web/20031203032926/http://rss.com.com/2110-1032_3-5098683.html
#20yrsago RIP, Hal Clement https://web.archive.org/web/20041028024514/http://www.livejournal.com/users/redbird/341244.html
#15yrsago Alan’s War: extraordinary graphic novel memoir of a US GI who arrived in Europe at the end of WWII and stayed https://memex.craphound.com/2008/10/28/alans-war-extraordinary-graphic-novel-memoir-of-a-us-gi-who-arrived-in-europe-at-the-end-of-wwii-and-stayed/
#10yrsago Dead Set: a supernatural punk YA novel from Richard “Sandman Slim” Kadrey https://memex.craphound.com/2013/10/29/dead-set-a-supernatural-punk-ya-novel-from-richard-sandman-slim-kadrey/
#10yrsago Web Literacy Standard 1.0 from Mozilla https://dougbelshaw.com/blog/2013/10/28/announcing-the-web-literacy-standard-specification/
#10yrsago Neil Gaiman interviews Lou Reed https://neilgaiman.com/Cool_Stuff/Interviews/Waiting_for_the_Man_-_Lou_Reed
#10yrsago Hyperbole and a Half: now in book form! https://memex.craphound.com/2013/10/28/hyperbole-and-a-half-now-in-book-form/
#10yrsago How the Koch Brothers laundered illegal campaign contributions https://www.motherjones.com/politics/2013/10/california-koch-brothers-network-settlement-15-million-dark-money/
#5yrsago As Wisconsin’s corporate welfare to Foxconn keeps rising, the number of jobs to be created keeps falling https://www.theverge.com/2018/10/29/18027032/foxconn-wisconsin-plant-jobs-deal-subsidy-governor-scott-walker
#5yrsago The EU’s new Link Tax bans the use of Creative Commons and open access for news https://www.eff.org/deeplinks/2018/10/eus-link-tax-will-kill-open-access-and-creative-commons-news
#5yrsago Bernie Sanders and Yanis Varoufakis announce Progressives International, to counter rising ultra-nationalism https://www.buzzfeednews.com/article/lesterfeder/bernie-sanders-yanis-varoufakis-european-spring-movement
#5yrsago Economists reverse claims that $15 Seattle minimum wage hurt workers, admit it was largely beneficial https://web.archive.org/web/20181028193123/https://www.bloombergquint.com/view/what-minimum-wage-foes-got-wrong-about-seattle
Today's top sources: Naked Capitalism (https://www.nakedcapitalism.com/).
- A Little Brother short story about DIY insulin PLANNING
Picks and Shovels, a Martin Hench noir thriller about the heroic era of the PC. FORTHCOMING TOR BOOKS JAN 2025
The Bezzle, a Martin Hench noir thriller novel about the prison-tech industry. FORTHCOMING TOR BOOKS FEB 2024
Vigilant, Little Brother short story about remote invigilation. FORTHCOMING ON TOR.COM
Moral Hazard, a short story for MIT Tech Review's 12 Tomorrows. FIRST DRAFT COMPLETE, ACCEPTED FOR PUBLICATION
Spill, a Little Brother short story about pipeline protests. FORTHCOMING ON TOR.COM
Latest podcast: Microincentives and Enshittification https://craphound.com/news/2023/10/23/microincentives-and-enshittification/
- The Internet Con at the Internet Archive (virtual), Oct 31
Hackaday Supercon, Nov 4 (Pasadena)
CBC IDEAS, Nov 16 (Stratford, ON)
Inspiring the Next Generation, Nov 16 (Stratford, ON)
Generation of Lost Causes (Toronto, Nov 22)
Who Is Watching Big Tech? (Toronto, Nov 27)
The Lost Cause at The Strand (NYC), Nov 29
The Lost Cause at Flyleaf Books (Chapel Hill), Dec 7
- Reclaiming the Internet (Firewalls Don't Stop Dragons)
A Drink with Cory Doctorow (The Idler)
Equity Mates Investing podcast
- "The Internet Con": A nonfiction book about interoperability and Big Tech (Verso) September 2023 (http://seizethemeansofcomputation.org). Signed copies at Book Soup (https://www.booksoup.com/book/9781804291245).
"Red Team Blues": "A grabby, compulsive thriller that will leave you knowing more about how the world works than you did before." Tor Books http://redteamblues.com. Signed copies at Dark Delicacies (US): and Forbidden Planet (UK): https://forbiddenplanet.com/385004-red-team-blues-signed-edition-hardcover/.
"Chokepoint Capitalism: How to Beat Big Tech, Tame Big Content, and Get Artists Paid, with Rebecca Giblin", on how to unrig the markets for creative labor, Beacon Press/Scribe 2022 https://chokepointcapitalism.com
"Attack Surface": The third Little Brother novel, a standalone technothriller for adults. The Washington Post called it "a political cyberthriller, vigorous, bold and savvy about the limits of revolution and resistance." Order signed, personalized copies from Dark Delicacies https://www.darkdel.com/store/p1840/Available_Now%3A_Attack_Surface.html
"How to Destroy Surveillance Capitalism": an anti-monopoly pamphlet analyzing the true harms of surveillance capitalism and proposing a solution. https://onezero.medium.com/how-to-destroy-surveillance-capitalism-8135e6744d59?sk=f6cd10e54e20a07d4c6d0f3ac011af6b) (signed copies: https://www.darkdel.com/store/p2024/Available_Now%3A__How_to_Destroy_Surveillance_Capitalism.html)
"Little Brother/Homeland": A reissue omnibus edition with a new introduction by Edward Snowden: https://us.macmillan.com/books/9781250774583; personalized/signed copies here: https://www.darkdel.com/store/p1750/July%3A__Little_Brother_%26_Homeland.html
"Poesy the Monster Slayer" a picture book about monsters, bedtime, gender, and kicking ass. Order here: https://us.macmillan.com/books/9781626723627. Get a personalized, signed copy here: https://www.darkdel.com/store/p2682/Corey_Doctorow%3A_Poesy_the_Monster_Slayer_HB.html#/.
- The Lost Cause: a post-Green New Deal eco-topian novel about truth and reconciliation with white nationalist militias, Tor Books, November 2023
The Bezzle: a sequel to "Red Team Blues," about prison-tech and other grifts, Tor Books, February 2024
Picks and Shovels: a sequel to "Red Team Blues," about the heroic era of the PC, Tor Books, February 2025
Unauthorized Bread: a graphic novel adapted from my novella about refugees, toasters and DRM, FirstSecond, 2025
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