This week we’re talking with Cory Doctorow (this episode contains explicit language) about how we can get back to that “new good internet.” Cory’s new book The Internet Con offers a lens to this conversation about disenshittifying the internet through anti-trust laws, limits on corporate tweaking, regulating unconstrained capitalism, and all the ways enshittification is enabled. Cory also shares his experience recording his own audio book under the direction of Gabrielle de Cuir at Skyboat Media, and what’s to come from his next Science Fiction book The Lost Cause.
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|Chapter Number||Chapter Start Time||Chapter Title|
|1||00:00||This week on The Changelog|
|3||04:44||Start the show!|
|4||06:30||Bypassing DRM will cost you|
|5||07:54||Amazon has TONS of power|
|6||09:20||I won't allow my work to have DRM|
|7||11:17||So...I Kickstarter my audiobooks|
|8||12:37||Fighting the monopolies|
|9||13:48||Pumping out books|
|10||14:28||The Lost Cause|
|11||18:14||Is this a blueprint or a dream?|
|13||29:20||Ads as notifications|
|14||31:31||The Internet Con|
|15||47:58||Unconstrained capitalistic needs|
|16||51:03||Let's talk anti-trust|
|17||58:50||Taking aim at monopolies|
|18||1:05:33||Sponsor: Changelog News|
|19||1:06:46||Capitalism and free markets|
|20||1:17:26||Was Jeff Bezos born lucky?|
|21||1:22:23||Isn't this the dream though?|
|22||1:27:01||The forces that constrain firms|
|24||1:32:46||What we've been up to|
Play the audio to listen along while you enjoy the transcript. 🎧
So Cory, your latest book, “The Internet Con: How to seize the means of computation”, your latest for now, depending on when this goes out… It may not be the latest, because you’re publishing in a frenzy right now. But this one has an audiobook component that you have a Kickstarter for, because Amazon wouldn’t take it. You want to help us understand exactly what happened there?
Yeah. Well, that Kickstarter is actually done, and it went really well. So Amazon has this policy that if you want to put your audiobooks on Audible, you have to submit to having your books wrapped in Audible’s DRM. This is unique of all of its digital offerings to Audible. So you can do a Kindle book without DRM, but you cannot do an Audible book without DRM. And Audible is an even more powerful monopolist than Kindle in terms of the space. More than 90% of audiobooks are Audible books.
Yeah, I imagine.
And so there is a mesh of laws, which I dig into in eyewatering detail in this book, all around the world, starting with section 1201 of the American Digital Millennium Copyright Act of 1998, but also the European Copyright Directive of 2001, and lots of other laws all around the world; Canada’s got one, Australia’s got one, Central America and the Andean nations and South America have them, Mexico got one in 2020… And these laws make it a crime to show someone how to bypass DRM, or do anything that would weaken DRM, like publishing volumes against it, or reporting like a [unintelligible 00:06:39.24] about a DRM system. And the crime for doing that, for weakening DRM, whether or not any infringement takes place, the punishment is a five-year prison sentence and a $500,000 fine for a first offense.
So what this means is that if you buy one of my books from Audible, and I give you a tool so that you can take this book that I wrote, that I paid for the studio to record, that I recorded with my voice, and then I paid to master, I commit a significantly worse criminal offense than you would if you just stole the book.
Like, literally, if you went into a store and shoplifted it, you would get a much lower penalty. But probably if you knocked over a truck full of CDs of this book, you would pay a lower penalty. So this is what Jay Freeman calls felony contempt of business model. It’s a way for Amazon to use its market dominance to make it a literal felony to do things that Amazon wishes you wouldn’t… So that every dollar you spend on an Audible audiobook is a dollar you will have to surrender if you leave Audible, break up with them and delete their apps. And the more power Audible has over you as my customer, the more power they have over me as a supplier. Because if they know my customers won’t follow them to another retailer, then they can turn the screws on me. And indeed, there are some pretty drastic screws they’ve turned.
[00:08:08.09] So Audible has this platform called ACX, which is the Audible Content Exchange. It’s like a self-serve platform, like Kindle Direct Publishing, or even like going to Zazzle or something, where you just upload some material and they put it in their storefront. And ACX is used by independent and small publishers to do audiobooks. And audiobooks are expensive to produce, beyond the time that it takes to write them. Making a good audiobook is quite expensive, especially if you’re paying voice talent.
So these independent authors, they’re sinking a ton of money into ACX. And Audible changed the way they did their accounting so that they could hide what has now been determined to be about $100 million worth of accounting fraud, where they stole from those authors. And the authors, even after it was disclosed – first of all, they couldn’t sue, because they’d all agreed to binding arbitration as a condition of using the platform; that was in the fine print. So they have to arbitrate those cases one at a time. But even so, they’re all stuck around… Because what are you going to do, right?
Yeah, what are you going to do?
Yeah. It’s like, Lily Tomlin used to be on Laugh-In. She’d play a bell phone operator, an AT&T phone operator doing commercials for the Bell System. And they would always end with “We don’t care. We don’t have to. We’re the phone company.”
[laughs] There you have it.
Amazon is the phone company, they don’t have to care, and they will keep your business even if they steal from you. And so I won’t allow my work to be sold with DRM. And so even though my books are New York Times bestsellers, published by Macmillan & Company, one of the big five publishers, none of my books are available on Audible. Audible refuses to carry my books on a DRM-free basis. And the problem is that because Audible is 90% of the market, no one searches anywhere else for an audiobook. So if you go to Audible and you don’t find my books, you’re like “Weird. I guess Cory doesn’t have any audiobooks.” And my audiobooks, to be clear, they’re for sale everywhere else. I really like a store called libro.fm, that sells DRM-free odd eBooks. Libro is organized as a public benefit company, and they do a rev share with a local bookseller, the way bookshop.org does. So you tell them who your local bookseller is, and they’re like “Oh, well, you’ve probably found this book by going into the store and browsing it, so we’re going to split the profits with this bookseller.”
So there’s tons of other great platforms. Yeah, Libro, and even… Google Play will sell without DRM. But Audible won’t. And so you can’t get my books on Audible. You can’t get them on Apple Audiobooks, which until recently was just a frontend for Audible. Now it’s a competing product, but they kept that DRM rule. It’s another thing that you lose if you give up your iPhone; it’s not just the blue checkmark in iMessage, it’s all of your audiobooks, at 25-30 bucks a pop.
And so I have to find a way to sell these books, because I want audiobooks. I love audio. I’m a podcast and audio person; I’ve been listening to audiobooks since I was a kid.
Like, ever since those Disneyland little long-playing records, you will know it is time to turn the page when Tinkerbell rings her little bell like this.
Yeah, the Star Wars one was like “When R2-D2 beeps like this…” So I’ve always loved audio. And I knew that I wouldn’t be happy with just not having audio. So my publishers, they’re good. They let me retain my audio rights, because they’re not going to force me to sell with DRM, but they also can’t make any money back selling without DRM on the minority platforms that are in Audible. So I hit on doing these Kickstarters. I did the first one during the early months of the pandemic lockdown. It was the highest-grossing audiobook Kickstarter of all time. $176,000. Since then, a fella you may have heard of called Brandon Sanderson beat my record by just a little bit. He raised $6 million in his audiobook Kickstarter. So…
[00:11:50.18] But I’m gonna catch up with Brandon someday. I hear he uses steroids, too… No. [laughter] He’s juicing. No, I don’t know how – he’s an amazing writer, that’s how he does it. But I’ve done this now for all the audiobooks since… And I keep dialing in how it works, because there’s a lot of logistical complexity. My co-author on the second book I did this way, which was Chokepoint Capitalism, with Rebecca Giblin - she pushed me to pre-sell hardcovers as well, which is both a blessing and a curse. That ended a year and a half ago, and I literally sent out another hardcover from someone who had only just remembered to fill in their Kickstarter survey yesterday. So it’s like the ongoing commitment that never dies.
But on the other hand, selling a couple thousand hardcovers that are pre-ordered from bookseller, that I have a relationship with and that I get to support… So an independent bookseller that makes a couple thousand book sales, that then also has a Nielsen BookScan scanner, who runs those books over the scanner on the day the book comes out, which counts towards bestseller lists… That’s all good, and it’s worth the extra effort. And when you’re bringing in six figures for each of these, even though a lot of that goes to pay for the hardcover books, or with the ebooks that I sell, I wholesale them from my publisher at a 30% discount, which is like the normal – it’s the same discount Amazon gets. Amazon has this thing where – it’s actually why the Federal Trade Commission is suing them. If you’re a vendor and you give anyone else a deeper discount than you give Amazon, Amazon kicks you off the platform. So they can’t sell me my eBooks at a better discount than they sell them to Amazon, which is fantastic.
Right. Great for Amazon.
And I can’t sell them for less than Amazon sells them either. So it’s a double-edged sword there. It’s called Most Favored Nation.
And so yeah, I’m here fighting the monopoly, and getting my books out… And as I mentioned before we went live, I write when I’m anxious, so I pumped out nine books during lockdown. And this one, Internet Con, is the - I think the third of the fourth. And then the next one that comes out is in a couple of weeks as we record this, The Lost Cause, and then the next one is in February, it’s called The bezel. And then there’s a graphic novel, another novel, a short story collection, and a collection of essays.
Prolific is the word that comes to mind.
Yeah, for sure.
And different categories. I mean, this one, that’s out now - very much in the wheelhouse of what we’ve been talking about with you recently, Chokepoint Capitalism, interoperability etc. It’s shovel-ready, as you call it. But this next one, that’s coming up in a couple weeks - what did you call it, The Lost Cause?
The Lost Cause, yeah. It’s sort of a cli-fi, hopepunk, solarpunk science fiction novel…
…about a world where we’ve actually addressed the climate emergency. Not to say that it’s over, but we’re not pretending that it’s not happening anymore… So embarking on 300-year projects to move all the coastal cities inland, and setting up permanent housing for hundreds of millions of refugees, and going all-in on addressing the wave after wave of zoonotic plagues driven by habitat loss, and so on. And it’s quite hopeful, because it’s one thing to be in a bus that’s barreling towards a cliff; that is scary. But it’s an even scarier thing if the driver and all the people in the first-class seats are saying “There’s no cliff, don’t worry about it. We’re definitely not going to turn the wheel.”
When the bus rolls and a bunch of people have broken arms and legs, that sucks, but at least you’re not going over the cliff anymore. And this is about the conflict between the people who are figuring it out, and the people who want to get back on the bus and start driving back toward the cliff. So you’ve got an anarcho-capitalist billionaire Bitcoin wreckers, who float around the sea, larping a Neil Stevenson novel, and you’ve got their frontline, white nationalist militias, and a changeover in American politics as happens, you get these swings… And it’s about what happens during the counterreformation of a just revolution. And it’s got really good early notices. Kim Stanley Robinson and Bill McKibben, who started 350.org, Rebecca Solnit, who wrote “Hope in the dark”, as well as many other very important books, and Naomi Klein, “No logo”, “The shock doctrine”, and so on. They’re all big fans of this book.
[00:16:17.26] And so I’m really excited for coming out. I’m also a little exhausted with the prep for it, and that’s hilarious, because the prep is the easy part. It’s like the part before the baby is born… And then you’re a father, and then that’s a lot more work than being a partner to someone who is pregnant, which is itself a lot of work, which is of course less work than being pregnant, just for avoidance of doubt.
Yes. By a few hundred percent, I think. Are you gonna read that one, too?
I have read it.
Oh, you have read it.
So yeah, that audiobook just closed as well. That audiobook Kickstarter just closed as well. So after I finished the Internet Con, the director I recorded it with is this woman Gabrielle de Cuir. She’s this award-winning amazing directors who’s directed thousands of audiobooks. She is the co-owner of a studio called Sky Vote Media, with her husband Stefan Rudnicki, who’s also won every award under the sun… Like Hugos, and Audies, and Grammys, and just all of it.
So I finished reading Internet Con, which - I knew I could do a good job reading, because it’s sort of anchored around these applause lines from speeches I’ve given hundreds of times. I know that material really well. And Gabrielle came into the studio afterwards and said “Look, I have never said this to an author before, but I think you should read your novel.” We had been auditioning little demo loops from other narrators all week, while I’d been recording the Internet Con, because we were going back in the studio in a couple of months to record Lost Cause… And she was like “You just nailed it. And I don’t direct anyone anymore, except for LeVar Burton and Wil Wheaton. But I will come and direct you if you want to try this.”
So we went back in the studio for a week and we recorded this. It came out fantastic. It is now loaded up in everyone’s CMS. It goes live on the 14th of November, including on my own site, at CrapHound.com, and you’ll be able to buy it everywhere audiobooks are sold, except for Audible and Apple. And it’s good.
When you wrote about this, I guess plausible future of actually admitting if we’re on the bus that there is a cliff, did you treat this exercise as a simulation of what we should do, so it’s kind of a blueprint in a way? Or is it truly fiction, where it’s like not really plausible in a sort of wishy-washy-dreamy. I’m not trying to degrade your work by any means by saying that, but I mean, to what degree is it accurate?
So I’ll tell you the hypothetical that I lean into here, that I think is technically interesting… Which is the idea that the more IT we have, the more computers and networks we have, the more just-in-time coordination we can do. And that means we can do things like – say we need to manufacture just an ungodly number of prefab construction elements to do things like relocate whole cities, or house tens or hundreds of millions of refugees. That itself is an energy-intensive process, and it’s kind of an own goal to do that in a way that that produces more carbon than you’re offsetting here.
And so I imagine things like solar factories in the Mojave, which is not – this book is all set in the suburb of Los Angeles I live in, in Burbank, which I decided to do before lock down. I started writing the book before lock down, but then I found myself stuck in Burbank. Normally, I’m on the road four to six months a year; I found myself stuck in Burbank for a couple of years while writing this book. It was actually really good. I was able to really nail the terroir as it were.
So if you’ve got a factory out in the Mojave that’s solar-powered, people can work that factory when the sun is shining, and when doing low-clinker solar centering is available to you. And then when it’s not a great day to do it, they can find people to hang out and party with… Because we have this coordinative capacity with our networks that is not present in the earlier world.
[00:20:12.12] When I was a kid, if you wanted to meet up with your friends on a Friday night and go to a movie downtown, you took the subway downtown, and you would call their house from a payphone with a quarter. And you’d either leave a message with their parents or on their answering machine saying “Can you tell Zach that Cory is downtown, and if he wants to get a movie, he should leave a message with you and I’ll call back? Or call my mom. She’s at home. And I’ll call back and find out. We’ll arrange a place to meet.” That was how we used to coordinate; it was really hard. And now it’s just like, you’re in a group chat, and you’re like “Who’s up for doing something?” and then a few seconds later you all converge.
So we have this incredible group forming and coordination capacity that we’ve never had before, and I ripple that out through the whole society. You know, there’s all this panic right now about the great reset, and this idea that no one’s going to own anything, and it’s kind of this right wing talking point… But there’s a version of that that’s really quite utopian, right? Because for my sins, I’m now a 52-year-old suburban homeowner. And that means that three or four times a year I’ve got to put a hole in a wall. So I need to own a drill. So I have the minimum viable drill, right? The $18 drill from the hardware store, whose signal virtue is that it doesn’t explode in white hot shrapnel every time I turn it on. And that drill is not an asset, it’s a liability. I have to store it, I have to use it, I have to risk my life with it all the time… But economically, it doesn’t make any sense for me to go and buy the kind of drill that someone who makes a lot of holes has.
So what if we just had a lot of stochastically circulating, high-quality drills, that were location-aware, measure their usage, gather telemetry constantly for continuous improvement, were designed with the non-economic imperative of gracefully degrading back into the material stream when they reach the end of their duty cycle… All of this stuff that markets wouldn’t do, but that planning could, that would end up with a world in which you have significantly more material abundance. Like, anytime you need a thing, whether that’s – we’ve got like a couple of big folding tables and a whole bunch of extra plates for the one to two times a year that we have a ton of people over in the backyard when we set up a table and we have like a dinner party. And again, the square footage in this house is not free. The fact that I’m giving it over to this incredibly rare usage is not an asset, it is a liability.
So what if all of this stuff was just in circulation all the time? It could be in your neighbor’s house, it could be at the library, it could be somewhere else… And there’s just this kind of constant circulating abundance. I call it library socialism. And so this is all like IT-driven, telecoms-driven, communications technology-driven, smart coordination. It’s IoT without the terrible extractive business models and the planned obsolescence. It’s like what a people’s IoT would look. An IoT designed for sustainability, and not for extraction and enshitification. And that, I think, is quite an exciting way to think about the future.
[00:23:22.25] It’s easy to – look at all the stuff that we have that’s so bad in our technological realm. Everything has undergone such regression since 10-15 years ago. The quality of our goods, the reliability of them, the likelihood that they can be maintained, and so on. There’s just such incredible regression in product and service quality. And imagining that we didn’t have to have this entropic force of extractive capitalism bearing down on every technology that we use and rely on, so that like each new update isn’t potentially a way to smuggle a downgrade into a security update, like HP keeps doing, where it’s like “Oh yeah, this is a new important security patch for your printer. The security that it patches is that your printer can currently use third party ink. And once it’s patched, your printer won’t use third party ink. That’s about safeguarding our security; we don’t distinguish those. And by the way, we might also ship you a patch that keeps your printer from being infected with malware, and also call that a security patch. So if you don’t want to install security patches, you just go ahead, but don’t come crying to us when you print a rotten document and it rewrites the firmware on your printer, which then starts to like NMAP your LAN, run zero days on your computers and open a reverse shell to a command and control server that runs your whole network”, right? Which is an actual demo that [unintelligible 00:24:44.08] at one point. I saw him do that demo at CCC once.
The presentation was called “Print me if you dare.” It turns out that for a lot of printers, the way that you flash their firmware is you just embed a meta tag in the postscript that says “New firmware starts here.” And when the interpreter encounters that, it’s just like “Oh yeah, I’ll just install it.” So you can send a job called like “resume.doc to a printer”, and the hidden postscript in the file takes over the printer, and rejects all future updates…
…so the only way to get rid of this printer is to send it to a landfill. Like, there’s no way to ever rehabilitate it. It’s pretty gnarly.
It sounds like notifications, too… I know you’re not an iPhone user; at least I can assume that based upon the fact that you’re on Linux right this second. You’re obviously rejecting, to some degree, mainstream operating systems. On the iPhone I feel that way about notifications. Notifications are not meant to be advertisements, but yet, Uber in particular will advertise to me. Southwest… I want to know my flights; I’m trying to get to my flight on time, but yet Southwest is like “Hey, Get away this weekend.” I’m like “No, that’s not a notification. That’s an advertisement.” That’s of financial benefit to you…
Even Apple doesn’t it now, themselves.
Yeah, I can’t believe Apple lets it happen.
Let it happen? They’re doing it.
Well, I’m just saying –
Apple will send you advertisements as push notifications, from Apple.
I haven’t had that personally, but I do see like in my settings to buy iCloud storage is like a bubble; that red dot that says “You’ve got something to check. Uncheck it.” And it’s an ad; it’s an ad to upgrade your services, or do something…
There you go.
So that’s an ad to me, too. I cannot believe that.
I like the thing where you open your dialer, or maps, or some other thing that you are using because like you have an immediate need to use it, and it’s like “We’ve added the ability to find french fries. Click here to learn more about french fries in GMaps.” That’s like, fuck all the way off, until you reach the edge of the field where there’s this sign that says “No fucking off beyond this point. Climb that fence and continue fucking off until you reach the horizon, and then fuck off some more.” Right? I’m like on the highway, trying to reroute myself at 40-50 miles an hour, because I just saw a sign that says there’s a lane closed ahead. I don’t want to know about french fries.
Yeah, the Uber one is particularly heinous, because you do want their notifications when you actually want their notifications. Like, you can’t just turn off notifications, because there’s times when you want to know “Is it here?” or whatever. But then they’ll just use that exact same system, which they know you can’t turn off, to be like “Hey, 10% off Uber Eats today.” And you’re like “What?”
Well, we are segueing very smoothly here into the Internet Con, my last nonfiction book, which is a book about how platforms went sour, and what to do about it. And my thesis is that basically, there’s three things that discipline companies that might do something bad to you. And I think all companies might do something that to you, right?
[00:31:49.21] There’s always like a product manager who’s like “My bonus depends on figuring out how to extract a few more points out of this feature, or whatever; or hit some KPI. And there are lots of ways that I can do that. And some of them come at an expense to my users. And if I can, I might be tempted to do it”, especially if it’s like “Well, either you do that, or we’re gonna cut the headcount in your department”, and that guy who’s got a kid that was a preemie, and is in the [unintelligible 00:32:16.20] is gonna get fired and won’t have health insurance, and they’ll take his preemie baby out of the incubator, and… You know, it’s very easy to talk yourself into doing bad things.
So there’s three things that stop companies from hurting you. One is the fear that you might go to a competitor. And one prerequisite for that is there have to be competitors. And the competition has to be meaningful. So we talked about how Audible doesn’t really have meaningful competition… If you’re like an app developer, there’s no real meaningful competition between Apple and Android. Like, what is the commission they charge you for in-app payments in Apple? 30%. What’s the commission their dire competitor Android charges you? 30%. Like, if Burger King and McDonald’s charge the same price for a hamburger, are they really competing? They’re certainly not competing on price, right? So you need to have meaningful competition. And these firms have gobbled up all of their competitors.
So Google is a company that made a really kickass search engine a quarter of a century ago. And I don’t want to undersell it. It was magic, compared to like Ask Jeeves, and Yahoo, and AltaVista. It was amazing. And then nothing else. Everything they try in-house almost without exception crashes and burns.
Well, they bought some cool stuff, right?
They bought everyone else’s ideas and operationalized them. Now, those mergers historically would have been prohibited. Right up until like the Reagan era, you weren’t allowed to buy your nascent competitors to create vertical monopolies. You would have had to compete with them, or source them as a supplier.
So imagine if the entire ad stack or the mobile stack was not underneath Google, right? Because Google couldn’t build an ad stack on its own. It had to buy it from someone else. So imagine if that was not underneath Google. And then you would have multiple competing vendors, all using that ad stack. And because they were all competing with each other, you would have multiple competing ad stacks as well.
So right now, Google, because it’s stitched up the ads stack, because it’s the demand side platform, the sell side platform, the marketplace, an advertiser and a publisher… Right? They represent the seller, the buyer, they are the marketplace where they meet, and they compete with both of them… This is like when you go for a divorce and your lawyer is also your partner’s lawyer, and they’re also the judge, and they’re also trying to match with both of you on Tinder… And then when the whole transaction is done, who gets the house? Oh, it turns out the lawyer got the house.
So Google and Facebook - which, again, are a non-competing duopoly - they take 51 cents out of every ad dollar. Historically, it was like 10% was the rake that intermediaries in ads used to get. So that’s money out of the pockets of publishers, right? So you have to have competition, and we don’t have that when companies buy their competitors. As Mark Zuckerberg once said in a breathtaking act of self-incrimination, “It is better to buy than to compete.”
And then the next thing that happens when companies get this concentrated is you lose the second way that companies are disciplined, which is regulation. So companies that break the law, if they’re small, generally get punished pretty bad. We saw that when the GDPR passed in Europe - all the little European ad tech startups, they all went out of business, because they either couldn’t comply with the rules, or when they failed to comply with the rules got slapped around by the commission and put out of business. Google and Facebook just ignored the rules, and 10 years now they’re still ignoring them. Maybe they’ll eventually get brought up, but they can just like delay, move venue, move forums… They keep insisting all evidence to the contrary that they’re Irish companies, because Ireland is a crime haven, where they don’t really have a working data commissioner… There is a guy who has that job, but most days he doesn’t get out of bed, and when he does, he doesn’t put on his pants. He just sits around in his underwear, eating breakfast cereal and watching cartoons. So Google and Facebook get away with breaking the law forever in Europe. And so they’re not disciplined by regulation. So the historic contours of privacy, labor, fair trading - they’re just not in there.
[00:36:16.13] Like, if you walked into a store, and you said “Give me part number XYZ for my dryer filter”, and they give you a different part, or they handed you five parts, none of which were that part, and then when you bought one of them and walked out of the store, they didn’t mention that none of them were that part, that would be fraud. That’s how Amazon works. Amazon makes $31 billion a year letting people pay to match your queries when they wouldn’t be the best match otherwise. That’s Amazon advertising. And so we throw away consumer protection, and we throw away labor protection, which is the other thing that would discipline companies. So if you think about Uber, Uber does this thing called algorithmic wage discrimination, where Uber drivers, they sort themselves into these two buckets; they call themselves either ants or pickers. So an ant is indiscriminate, they take any job, and a picker is very choosy. And if you’re a picker, that is to say if the wage offer algorithm notices that you’re highly selective, it offers you a higher wage per mile than you would get if you were an ant. But as your selectivity goes down, the algorithm starts pricing your labor lower and lower. If you back off from that algorithm, the wage starts to climb up again until you’re back in. This is like a fisherman playing a fish on a hook. Reeling them out, reeling them in, reeling them out, reeling them in. In traditional labor markets, this is illegal. But when your boss is an app, it’s not.
And so this is the second realm… They’re unconstrained by regulation. So they’re not constrained by competition, they’re not constrained by regulation. And then there’s the third bucket of constraint, which is self-help. So historically, when browsers were a cesspool of popup ads, 20 of which would spawn every time you open a new window, and they would be one pixel square, and they would run away from your cursor, and they’d autoplay music, or they’d go full-screen, and show porn… I mean, these just awful, awful popup ads; we didn’t ban them. It’s just that browser vendors started to ship popup blockers that were on by default. It started with Opera, then Mozilla, and then because it was a competitive market, everybody started doing it. And so that was the end of it, right? Why pay for a pop-up ad if the pop-up ads never show up? So if you’ve been thinking about that Uber wage discrimination deal, it might have reminded you of something. Like, maybe it reminds you of exponential back-off in TCP/IP, or maybe it reminds you of how bids and puts are done by liquidity provision stock trading bots, where they notice that the price is going up, so they reduce the frequency with which they’re bidding until the price comes back down… So there’s no reason to imagine that you couldn’t like make an app that was like a meta Uber app for drivers, that noticed when the price was going down for labor, and coordinated among multiple drivers to not have that happen, to reject jobs until the price goes back up. Or you know, what you were just talking about - your app is giving you notifications you don’t want to see. There’s no reason why you couldn’t pop-up-block that. The reason that you can’t do it is not technical, it’s that section 1201 of the Digital Millennium Copyright Act. The same law that bans you from removing DRM from an Audible audiobook also makes it a felony to reverse engineer those apps, because they’re encrypted.
And so one in four web users has installed an ad blocker. It’s the largest consumer boycott in human history. Zero app users have installed an ad blocker, because the first step to installing that ad blocker is to reverse-engineer the app, which can land you in jail for five years. And so this is the third area of constraint that firms are removed from. Their regulatory capture allows them to exercise unlimited discretion in how they reconfigure these infinitely flexible digital tools, and it allows them to confiscate the discretion that we would have to reconfigure those tools, so they serve us instead of their shareholders.
[00:40:08.10] Even when nothing unlawful takes place, if bypassing DRM or violating Terms of Service, or Apple, the subcomponents on iPhones have tiny microscopic Apple logos engraved on them, so that when they’re refurbed, or harvested in the Far East, and then sent back across the US border to be used in refurbs, they argue that that’s a trademark tarnishment and they have them stopped at the border, so you can’t get the parts, so you can’t fix the phone… So even the kinds of repairs you can do on an iPhone without bypassing DRM, and risking criminal prosecution, importing the parts to do it from old phones is potentially a trademark violation.
So you have this incredible regulatory leeway in preventing business customers and end users from altering the business logic of the service to serve them. You also have the same leeway in undertaking those same alterations on your own behalf as the OEM. And no one competes with you, so even if you could beat those other two forces, there’d be nowhere to go. And the reason nobody competes with you is because of those two things. And so it’s all sewn up.
So how do we get everything back? Well, the first thing we’ve got to do is just antitrust. And that’s amazing. There’s a lot going on right now with antitrust. Google’s in court, Amazon’s in court, Apple’s got an investigation pending in the EU; Salesforce, they say they’re gonna go after the Microsoft Activision merger again in the US… You name it, this is a historically unprecedented time. It hasn’t looked like this since I was in diapers. You have to go back before the Carter administration to find this degree of antitrust. And not just here in the EU, in the UK, in Australia, in Canada, and even in China, where the Chinese cyberspace regulation actually bans companies from reconfiguring their services to block interoperability.
So you have this incredible moment where people are recognizing that antitrust matters, and it’s happening across lots of different markets, and lots of different agencies. The Consumer Financial Protection Bureau just promulgated a proposed regulation that will force your bank to interoperably port your data out, either to comparison shopping sites that will say “Oh yeah, this is your mortgage, this is your APR on your credit card. This is how often you get hit by overdraft charges. This is how much you’ve got in your savings, and what interest rate you’re getting. You should be at this other bank.” And then, one click, port all your data to the other bank, including all your transaction history, your pays, and everything. That’s coming out of that Consumer Financial Protection Bureau, not out of the consumer protection agencies, not out of the DOJ, not out of the Federal Communications Commission… It’s like the bank regulators is getting in on the act. So this is great. So this is step one, antitrust.
Step two, constrain the way that the firms twiddle the knobs on the backend. Make them respect and obey privacy, labor and consumer protection laws. And the book gets into, as you said before, shovel-ready proposals for this. Ways that you can actually hold them to certain codes of conduct, where breaches are easy to detect… Because a lot of the codes of conduct that people want to impose on tech are really hard to prove when there’s a violation. You have to stop people from harassing people on your platform. It’s like “Alright, now we have to agree on what harassment is. Then we have to take some instance of a user doing something bad to some other user, and agree on whether that was harassment. Then we have to depose your engineers and figure out whether you did enough to stop the harassment.” And now it’s like five years later, and there’s been 50,000 more, 50 million more harassment complaints. What’s the point? It’s just not going to work. Even if you really think harassment is a problem, as I do, this is just not a workable remedy.
[00:44:01.02] But the book goes into some other remedies… In Mastodon, there’s a one-click facility to export an XML file - or maybe it was a JSON file - that has all of the people you follow, all the people who follow you, as well as your blocks and mutes and whatever. With one click, you can export that, and with one click you can export it somewhere else, and everything just shifts over. The same way – if you know the RSS spec at all, there’s like a directive in RSS where you can say “This feed has moved”, and just like the next time the RSS reader hits it, it just redirects somewhere else. So if you’re using Feedly, or whatever, and they start charging you money for something that used to be free, or they start spying on your users, or they, I don’t know, start [unintelligible 00:44:39.04] spotted owls as an internal corporate initiative to find a youth serum, or something… You can just like upload the redirect directive and then all the people who subscribe to your RSS go wherever you’ve gone to; some WordPress feed, stuff like that.
Right. Switching costs dropped very low.
Yeah. So we could just say to all the platforms “You have to support this” right? Facebook, Twitter, Threads, BlueSky… You just have to support this, and you have to have interoperable messaging between it, and community, and media between them… So that if someone gets pissed off with Twitter, if someone’s being harassed on Twitter – we have to ask ourselves, if I get harassed on Twitter, why do I try and get the government to make people stop harassing me rather than leaving? And the answer is “It’s expensive to leave Twitter.” Your friends are there, your customers are there, your communities are there… And so what if we just made it easier for people to leave the places where they are mistreated, rather than trying to police the conduct in those places, at least to the extent that that’s our first line of defense. And the thing about this is it’s really easy to administer. If I call up the California Attorney General’s Office and say “Jerod kicked me off his service and didn’t give me the data I need to get set up on Adam’s server”, and you say “No, no, no, I gave Cory his data”, the Attorney General can just say “Jerod, rather than resolving this dispute as to who is lying, just give him the data again and CC me this time, so I know it happened.” And then we’re done. There’s no evidentiary burden, there’s no lengthy hearing, there’s no – it doesn’t cost you anything to run this service, it’s kind of built in, so it’s not a capital moat, where it’s like only giant companies can afford to comply with the rules, so the future of tech has to be big… It’s just really straightforward.
So these kinds of shovel-ready ideas are ways of seizing the moment in which crises erupt… Because if there’s one thing tech has given us, it’s absolute abundance of crises. And when these crises erupt in the absence of a good idea, we just do the same bad idea we did last time and hope for a different outcome, and it never works. So if we’ve got these ideas, these shovel-ready ideas kind of floating around in the ether, the next time it happens everyone can go “Do the thing. Do that thing we’ve all been talking about. Give people a right to exit.” And the regulator can go “Right to exit? What’s that?” And you can go “Well, here’s a bunch of Hacker News threads about it, and here’s an academic presentation about it, and here’s something from USENIX about it, and here’s some proof of concept code on GitHub”, and the regulator can go “Oh, yeah, this is a thing that might work. Maybe we try that instead of the same thing we tried last time.”
And so that’s how the book is constructed - it’s constructed as an analysis of how we got here, and then an analysis or a set of proposals for what we can do, that will make it really easy for you to leave the places where you aren’t honored and treated well, which in turn will make those places, which are after all always a mixed bag… I know nice people who work for every tech company. I know great people at TikTok. I know great people at Microsoft. I knew great people at Microsoft during the Steve Ballmer and Bill Gates eras, when those companies were just – it was not just evil, but like an incompetent and terrible company… I knew great people at those companies. There’s great people at Apple.
[00:47:58.10] And that’s the shame, too. You’ve got these great people at these places that are trying to do good, at companies that say they’re trying to do good, but are obviously not doing the greatest they could be, because of capitalistic needs and concerns or, you know…
Well, unconstrained needs, right? It’s not just capitalism, because capitalism usually – when people talk about it, they think about competition as well. It’s about a little more like feudalism. The idea here is not to build a service that other people use, but to build something that other people have to use to build their services. Right? That’s what a platform really is. It’s like “I’m not providing the value, I’m capturing the value.” And as a tech worker, if you’re listening to this and thinking about where you sit in this world, think about how your world has shrunk. When I entered the tech industry, the dream everyone had was “I’m going to work for this big dumb tech company for three years, and then I’m going to start my own tech company and I’m going to bankrupt them.” And then Compaq buying DEC. Or SGI buying Cray, right? And then it was like “Okay, well, that’s not gonna happen… But I’m gonna work for this big dumb company for three years, I’m going to do a fake startup, we’re going to make a proof of concept product, then we’re going to get acquihired by the same company again… It’s a super-inefficient way of getting a promotion and a bonus, but I’ll get to call myself a founder.”
[laughs] There you go.
And then and then that dream shrunk again, and it was like “I guess I’ll work for this company for life. They pay me really well. I get free massages on Wednesday, there’s kombucha in the staff cafeteria…” And now if you’re a Googler, it’s like “I’ll work for this company until they lay off 12,000 of me and my colleagues, within months of having done a stock buyback that would have paid all of our wages for the next 27 years.” And the reason they can do that to the people that they used to court with such ardor, because they thought that their future lay in talent markets, is because they’re the phone company, and they don’t have to care. Right? The way that you get to make a dent in the universe again, the way that you get to dream big about doing stuff that matters is by having some controlled fire in these big, overgrown, fire-indebted, old forests that we stopped allowing to burn down periodically. And when that good fire opens up some space in the canopy, when we let them fail, rather than propping them up over and over again, with more and more regulatory capture, with more and more acquisition of the bonafide threats, then you personally, the tech worker who knows how to do stuff, you get to escape the inexorable proletarianization that you’re living through now, where all you can hope for is to work until you’re fired, and to enter back into that amazing dream that we once all had, of really changing the world and doing things that make ourselves memorialized in the annals of tech forever.
That sounds pretty good. You should read that in like an audiobook format… [laughter] You’ve got a great voice, great delivery… Let’s go back to your first point, the antitrust one, because that seems like the unnecessary thing to happen. My impression is what’s going on right now - and I don’t watch closely, so feel free to provide more data points… Is that it seems like the US regulators are basically losing all these lawsuits though. The one that comes to mind right now is the Activision/Microsoft one, but it seems like the FTC hasn’t been able to get anything done, even though they’re trying more than they’ve ever tried before. That’s my impression. Is that fair?
It’s not quite true. So they’ve managed to make a whole lot stick not through these high-profile lawsuits, but by promulgating rules. So Tim Wu was the White House [unintelligible 00:51:40.16] until pretty recently. He is the guy who coined the term net neutrality; he’s a really great guy. I’ve actually known him all my life; we went to elementary school together randomly, and lost touch for 20 years…
[00:51:53.08] …and it turned out we were working on the same stuff. So Tim is like a very good, technical person. He’s a lawyer. A very good technical lawyer. He’s also like a techie. And he just like went and looked really hard at the enabling statutory instruments of the administrative agencies, and was like “There’s so much that the agencies, that the administration has the power to do, that they just don’t do. They just have these powers that they never use.” And so they drafted an executive order that came out in July of 2020, that listed 72 different things that the administrative agencies could do to curb monopoly power in like really profound ways, that would immediately return value to the American public. And they’ve been working their way down that checklist. They’ve hit every one of those.
Lena Khan, who’s running the Federal Trade Commission - you know, the high profile cases she’s taken on have really slowed the pace of acquisitions. There are lots of people who told me “We were an acquisition target, and the acquisition stopped when the big tech company (Microsoft, or Meta, or whatever) took a look at the regulatory environment and said “We’re not going to roll the dice on this one.” So you’re seeing a lot more competition in the market as a result of this.
And then finally, you’re getting a lot – or not finally; there’s two more things. One is that you’re getting a lot more administrative action under the Federal Trade Commission Act, that’s more than just blocking mergers. So I mentioned that there are all these powers the agencies have that they haven’t used in decades. One of those is the Section 5 powers the Federal Trade Commission Act, which haven’t been used, again, really since the Carter administration… Although they’re not exactly obscure; you’ll find them between section four and section six, right there. And what they are is an empowerment by the agency to promulgate rules to block any unfair and deceptive business practice, period. So that doesn’t mean they can just like wave a wand and say “This practice is unfair, cut it out.” There is an administrative procedure that they have to go through. So first, they have to have – usually they do a market study. Sometimes they jump straight from the market study to what’s called a notice of inquiry, where they say “We think this is a problem. What do you think?” Then there’s a round of comments from the public, there’s a round of reply to comments from the public… They absorb those comments, and then they make a rule, a proposed rule, and they have something called an NPRM, a Notice of Proposed Rulemaking. So they make the NPRM. There’s comments, and there’s reply to comments. And then they make the rule. And provided that the rule is supported by the record, the NOI and the NPRM, the rule stands, provided it’s within their regulatory remit.
So Section Five is very broad. So Khan has used section five to promulgate rules blocking non-compete agreements. She wants to do a national privacy regulation… So Congress – like, we haven’t gotten a broadly-applicable privacy law, one that’s beyond just like kids, or health, or whatever, just like a general privacy law in this country, since the VCR era. The last broadly-applicable privacy law we got in this country was a law that bans VCR clerks from telling reporters what porn you rent. And it was passed because congressmen were worried that their local video [unintelligible 00:55:06.07] clerks were gonna start disclosing their porn watching habits, right?
That is the – like, we are in the year of our Lord 2023, where we have distraction rectangles in our pockets that spy on us from asshole to appetite, and we do not have a federal privacy law. It’s been a quarter of a century, and we still don’t have one. So here’s Kahn, and she’s like “Spying on people this way is clearly unfair. And it’s often deceptive. I’m just gonna make a federal privacy regulation. Not a law.” So that is like government officials doing good for you. It’s pretty great.
Now, on these lawsuits, when the antitrust changed in the Carter administration, and then mostly in Reagan - Carter pulled out one or two Jenga blocks, and Reagan was just like pulling them by the fistful. And when that happened, all the precedent went against the action those administrations were taking. And they had to create a new edifice of law in order to support these actions. They had to lose a lot in order to reverse and overturn all the precedents that had existed to that point.
[00:56:19.09] It’s not like Brown v. Board of Ed or something, where one day segregation is legal and the next day it’s not, right? It was a bunch of wins here, wins there, big swings and little swings, that built up this presidential edifice that eventually became the edifice that Kahn is now chipping away at. It is brittle, it’s ossified, it runs counter to the public interest, people are getting angrier about it… It’s not just tech antitrust that Kahn is fighting, and it’s not just tech antitrust we need to care about. Pharma antitrust is pretty goddamn important. The fact that Wall Street landlords are colluding to rig rents across the country - that’s pretty important. Like, all of this stuff is really important. And Kahn is now chipping away at this stuff from every point of fracture, in the hopes of bringing the whole cliff face down.
And when you start taking swings that no one has taken for two generations, for more than 40 years, you’re gonna wiffle a bunch, right? Like, you’re gonna hit a lot of fouls. I hope those sports metaphors are good. I don’t exactly know how many baskets you need to win a baseball game…
But she’s taking the swings. And one of the things that happens when you lose cases that are fundamentally just, is that I can prompt legislative reform as well. So in the history of antitrust law, there are like four or five major antitrust laws, and most of them came about after attorneys general or enforcers took a case to court that they lost because the judges said “That’s not what Congress intended.” And Congress said “Oh, yes, we did”, and made a new law. So that’s also how you get new law, right? Losing isn’t necessarily losing. Losing might be the step that you need on the way to winning. If the court says the law doesn’t prohibit this plainly destructive conduct, then the legislature should say “Great, we are going to take action for avoidance of doubt, and we’re going to phrase this in words so small even judges can understand them.”
Well, I don’t know about your sports references, but I was waiting for a Wrath of Khan drop on that one…
I figured that would have been appropriate. [laughs] It sounds like she’s working. It sounds like she’s doing stuff.
So you’re saying it takes time, and there’s a lot to tear down…
I’d imagine a large backlog too, with 40 years, right? Like, if there’s 40 years between change, there’s probably a lot to dig through to even consider what to fight… And then the fight’s still big once you consider fighting.
And you know, one of the reasons that we historically took aim at monopoly formation, which is – this is the really the change that we had, is we used to… Until Carter and Reagan, we used to say “Don’t let monopolies form.” And then afterwards, this thing called the consumer welfare doctrine said “Well, maybe monopolies are good. What about the monopoly that occurs because people just love what the company is selling? Do you really want to punish people by taking away the thing they love best? Let’s allow monopolies to form, and then afterwards, if they’re bad, we’ll stop them.” Well, the problem with that is that it’s very hard to stop a monopoly once it exists. I told you about how Google and Facebook are able to ignore the GDPR.
In 1970, the DOJ took action against IBM, which had been just kneeling on the throat of the American tech industry for like a generation, stopping anything from getting off the ground. And for each year for the next 12 years, until 1982, IBM spent more on outside lawyers to fight the DOJ than all of the lawyers in the Department of Justice antitrust division, fighting every case in America accounted for. They outspent the US government for 12 consecutive years. They call it antitrust’s Vietnam.
[01:00:11.29] So once the monopoly exists, it’s really hard to stop, or to check. This is why we prevent monopoly formation. And look, if you’re a small government, kind of Ayn Rand-reading libertarian, you should want anti-monopoly laws. Because even if the only thing that you think a government should ever do is enforce a contract, the only way the government can enforce a contract is if it is larger and more powerful than the contracting parties. The referee has to have more power than the teams. And that means that the smallest government that you can have has to be bigger than the biggest company you’re allowed to form. And so the secret to a small government is smaller companies. One way or the other, there’s no good case for this oligarchic arrangement of economics.
Yeah. How do you measure size in that? What do you mean by bigger than? Because I always look at the government as like “Well, they have the military, and Microsoft doesn’t have a military.”
I mean, I guess it’s conceivable that the Air Force might strafe Redmond…
But I don’t think that’s – I think that it’s far more likely that these firms will be able to outmaneuver attorneys general…
Right. So skilled participants in whatever the battlefield is; if it’s law, then –
Yeah. The contestation. And you mentioned the military… In David Dayen’s book Monopolized he’s got quite a parable about the military. So under Obama – I can’t stress exactly enough how bipartisan the favor for monopoly has been. So R&D from Carter up to but not including Biden - and Biden’s not my guy. I gave money to four Democratic nominees in that primary, and none of them were Biden. So I’m not saying this because I love him. I’m a Biden “I guess, if I must”, kind of guy here… But under Obama, the Secretary of Defense insisted that the primary defense contractors merge down to about five giant firms, to streamline procurement. And a bunch of hedge fund guys looked at that and they said, “Okay, well all these firms have subcontractors… Let’s identify the subcontractors that are sole-source suppliers for components that go into aerospace, military aerospace, buy those, and lower the price of those single-source components, so that primary contractors like North Ripper or Boeing load up on them when they’re building new platforms, new vehicles, because they’re free; they’re sold at a loss. And then as a replacement part to Uncle Sam, we’re going to charge 10,000% markups.” So I don’t know if the military can beat the tech sector. That seems to be like the tech sector is beating the military like a drum
And one of the things I talk about in this book, when I’m getting into the theory of change and how – like what is the actual path that we get to from here to there, one of the levers I think we can pull on is government procurement. Because the government is the biggest buyer of many technologies, and even on technologies where they’re not the biggest buyer, they’re such an economically significant buyer that without their business, a lot of firms would fail. And as just a matter of like sound public administration, governments could and should say “If you sell us something, and then we try to buy like an add-on, or a plugin, or a maintenance or a part from someone else, you aren’t allowed to sue them.” Like the IPR that you have to sign when you go to the W3C, where you say “If you have a patent that overlaps with a standard you’re making, you’re not allowed to use that patent against people [unintelligible 01:03:54.09] the standard”, we could just say “If you want to do business with the public, you can’t constrain the public’s ability to maintain and extend the functionality of the product you sold them.” And this isn’t even a new idea. So Abraham Lincoln only bought interoperable rifles and tooling and ammo from armors that would agree to use standard sizes… Because it’s embarrassing to be the commander in chief of the Union army during a civil war and to show up at Gettysburg and say “Sorry, boys, war’s canceled. The sole supplier for the bullets isn’t opening this week. They had a big booze-up and they’re all too hungover to make bullets. Go home, I’ll call you when they’re ready.” So this is just good administration. And yeah, companies are gonna go “Well, how dare you constrain our ability to exercise our rights?” And the correct public response is “Oh, you don’t have to. You just can’t sell to us if you’re going to. Because yeah, your shareholders’ priorities are important to you, but the public’s priorities are important to us. And if you’re too emotionally fragile to be a supplier to the US government, find a line of work that’s like more suited to your delicate sensibilities.”
Some of this seems not necessarily anti-capitalistic, but I’m curious of your thoughts on capitalism. Because it’s like a chess move to acquire – to think down the line far enough to be powerful enough in business, and successful enough to create value, to create revenue, to have surplus, to acquire, or even have the debt to income ratio to be able to do different things like that. So if you acquired somebody in the line, and you said “Well, as part of an acquisition strategy, I’m going to acquire XY and Z, that competes with me here, so that I strangle a portion of the free market.” That’s a move. That’s a capitalistic move. And I can see the antitrust, and the sort of – but isn’t that just like the way business kind of works, in a way? Doesn’t that hold back the ability to have a free market and hold back the ability for a capitalistic natured world to thrive and operate? I’m just kind of curious what you think about how that plays out there.
Yeah, sure. I guess it depends on what you mean by the free market. So the term free market really dates back to Adam Smith. And Smith did not mean a market free from regulation, he meant a market free from something that economists call rents. And this is a complex and subtle, but really important idea. And really to kind of get your head around what the relationship rents have to capitalism, you have to read, or it benefits you to read an essay that praises capitalism to the skies, and especially as dynamism and imagination, and its ability to grow and find new value. And that essay is Chapter One of the Communist Manifesto, which is Marx and Engels just going like “Holy shit, capitalism is amazing.” So it’s quite remarkable how many people who get their underwear in a twist about kids on college campuses reading Communist Manifesto, which is also the book from which we get the word capitalism. Capitalists didn’t come up with word capitalism, communists did… They get really freaked out about it, because Marx and Engels are really excited about what capitalism can do. They just want to change the – they want to see if they can preserve that dynamism.
So Smith, when he’s writing about free markets, he is contrasting two different economic systems, one of which is colloquially called feudalism… More properly – historians always write to me when I say this, so I’m going to say this now; properly, it’s not feudalism, it’s manorialism. Manorialism is like feudalism, except if it’s a feudal system, the king can order you to raise an army. So manorialists didn’t have to raise an army. If you had like a land on which the peasants sewed barley, you didn’t have to have a standing army ready to go at the king’s command. That’s manorialism.
[01:09:46.04] So under manorialism, which everybody calls feudalism except for a few weirdos who sent me email, the major source of income was not profit, but rent. So the rent was a sum that was due every single quarter, irrespective of the performance of the asset that was rented from you. So think about like if you own a building with a coffee shop in it, the rent is the same, whether the coffee shop does well or poorly; you are owed that rent. And that rent is distinct from profit in lots of different ways. One of the important ones is that it’s not subjected to competition. So if the peasants on the next plot of land over - and I should say here that entrepreneurialism and feudalism peasants were bound to the land. You weren’t allowed to leave the land you were born on; you had to work it and pay rent to the lord until you died, and then your kids had to do that, and their kids had to do it. So you’re a captive tenant. When we say tenant farming, that’s what we mean; tenant farming.
So these rents were not subject to competition. If the tenant farmers on the next lord’s plot did better, you didn’t do worse. Your peasants didn’t go out of business. If they did better, I guess you could hike the rent, but you didn’t have to. And you didn’t own the means of production. The landlord doesn’t own the espresso machine in the coffee shop, and the landlord who owns the land doesn’t own the grain threshing apparatus. They just own the land. They own an asset that other people work with their capital. And in this case, the capital would be an espresso machine, or a scythe, right?
The capitalists hate the feudalists, because the capitalists want to turn the serfs off the land. This is a process called proletarianization. So they wanted to deprive them of the guaranteed income, but also liberate them from the forced labor, and say “Off you go. Figure out a way to make a living.” They want to rent that land and use it to grow sheep, which will be inputs to an industrial process, the textile mills. This is the Industrial Revolution. And then the fact that these workers have nowhere to go means that they’ll come and work in the factories, and spin the sheep’s wool into textiles. So that’s the process.
Now, the more the rent is on the land where the factory is, or the land where the sheep is grown, the more peasants are bound to the land and required to pay rent, the less money the capitalists get, and the less dynamic the system is. Feudalism is static. The way that you grow your share of the income as a feudalist is you invade another country; that’s why feudalists had to have a standing army. You don’t get it by being a better lord than your neighbor. The requirement for being a lord is emerging from a very lucky orifice. It’s not like being good at business.
And so capitalists, they are really subject to competition, because the thing that creates this dynamism that Marx and Engels are geeking out about is that capitalists are fighting with each other to find ways to increase productivity, to generate more dollars per hour, per worker. And the capitalist that do best put the other capitalists out of business, and absorb their market share. And so there’s this constant churn, where capitalists, they can’t sleep. This is Elon Musk’s hardcore work environment. You’re sleeping on your desk, because if you miss 15 minutes in your commute the next day, that’s 15 minutes that your competitor who sleeps under their desk is going to use to steal a march on you and put you out of business. So capitalists are always competing.
Now, John Steinbeck supposedly once said “Socialism never took hold in America, because workers see themselves as temporarily embarrassed millionaires.” And no one can show where Steinbeck allegedly said that, so he probably didn’t… But also it’s probably not true. There’s certainly like a pretty good labor history in America, which is also enjoying something of a renaissance right now. A lot of people who don’t think of themselves as temporarily embarrassed millionaires. But it’s totally 100% true that American capitalists see themselves as temporarily embarrassed feudal lords. That the goal of successful capitalist firm is to cease being capitalist, and become a rentier; someone who collects rent. To own AWS, not to use AWS. To own Amazon, not to be a seller on Amazon. To provide the Uber app, not to drive an Uber. These are rent extraction systems. 30 cents on every dollar for every app, it’s because I own the app marketplace. I don’t care, I don’t have to. I’m the phone company. You have to pay me rent.
[01:14:26.01] And so we have lived through this period of about 40 years, in which rents rather than capital, rather than profit, have been ascendant. And the difference between a feudal and a capitalist society is not whether there’s only rents or only profits. There were profits under feudalism, and there’s rents under capitalism, obviously; there’s landlords. The thing is what happens when rents and profits come into conflict. If your productive company gets hauled into a patent court in the East District of Texas by some patent troll, who’s pulled the wool over the USPTO’s eyes by saying “I have a system and a method for doing stuff with computers”, and then they sued you for $300 million, and you have to give them $300 million - that is the triumph of rent over profit. They make nothing but lawsuits, you make things that generate the $300 million that you give them for the lawsuit.
And so when rents are ascendant over profits, as they have been in a steady trajectory for 40 years, we tend to forget that rents aren’t profits. And of course, all the rentier companies are also profit-making. Google makes phones, Apple makes phones, Amazon does a whole bunch of stuff that is stuff; they make movies, they make whatever, right? They have stuff, they have coders, they make things. But the majority of their income comes from rent. Amazon Prime is actually free for Amazon to operate, because the 51 cents they take out of every dollar for every dollar made on the platform by third-party sellers pays for 100% of Amazon’s own shipping. So all the shippers that have to use Amazon, because they’re the only – you know, if you don’t sell on Amazon, you might as well not exist… All those shippers have fully-subsidized Amazon’s own use of its logistics system. Amazon uses that for free, and also competes directly with those companies, which is nice work if you can get it, right?
And so if you want to live in a capitalist society, one in which innovation and excellence and productivity gains are the biggest predictor of your success, rather than the orifice lottery, rather than just like claiming the land before anyone else gets to, rather than being the first person to build the cloud that then everyone gets locked into by their tooling, and their other switching costs, and then you capture the regulators so that making interoperable tooling is impossible… If you want to be Unity, where you just rely on the fact that reverse-engineering Unity and making a runtime that would allow people to recompile their games to run without your engine is a crime, and so you can now start extracting rent from people who make games with your engine, you can just like do Darth Vader NBA shit, where it’s like “Yeah, I’m altering the deal. Pray I don’t alter it further”, then that’s feudalism. If you want to live in a capitalist system, where Unity doesn’t get to swoop in and like bankrupt you overnight, because they decided that you owe them rent on a thing you already bought and thought you owned, then you have to eliminate rents.
You mentioned Amazon… Was Jeff Bezos born from a lucky orifice to just –
Yeah, yeah. He started with $400,000 and an MBA from his family. But he also just got lucky, right?
I don’t know about that. Can you really say that though? He just got lucky?
[01:17:46.03] Oh, yeah. Well, he got lucky in the sense that – so for example, he floated a bond like a month before the dotcom crash. And if it had taken him three weeks longer to float that bond, he would have gone under in the dotcom crash. All the businesses that didn’t float bonds just before the dotcom crash went bust.
I suppose you can call that luck, yeah. I mean, that part is probably a lucky draw…
But it’s not timing in the sense that he was like “My spidey sense is tingling.” Right? It’s just timing in the sense that he did it as quickly as he could, and he got lucky.
Aren’t we all kind of in that same situation? I mean, I was driving yesterday, and I almost got hit, right?
Yeah, 100%. Which is a great argument for mobility and competition, rather than saying “Oh, that guy, he got lucky because he was genetically predestined to rule.”
This is the divine right of kings, right? So look, either Jeff Bezos – well, let’s have a couple of different counterfactuals.
I used that as an example because you were talking about Prime, and subsidization, and the 51%… That’s why I was bringing that up. And the reason why I posed the capitalistic question was mainly because they are just so profitable now, and so capable now, and so powerful now… But it began somewhere. And along the way, there was strategy, and acquisition, and conquering and whatnot…
Well, and cheating…
I’m sure, yes.
Cheating, labor market cheating, attracting subsidies on false pretenses, sucking up billions in subsidies and false pretenses, violating all kinds of laws in every way… Using subcontractor gambits to avoid having to pay for like maiming and killing your workforce… Yeah, Amazon did a bunch of historically contingent things to get to where they were. But – so let’s look at a couple of different possibilities. So one is Jeff Bezos got lucky… Or the way Jeff Bezos got lucky is he was born with a genetic mutation that made him Jeff Bezos, that made him the guy who was going to do this. So that’s one.
Another one is Jeff Bezos got lucky because he was born into a world with a Jeff Bezos-shaped hole in it, and he filled it. And without Jeff Bezos, there would have been another guy just behind him who would have done it.
A third one is that Jeff Bezos is descended from a line of would-be kings, and he drew the sword from the stone. And Jeff Bezos’ son, and his son and his son confound a dynasty, that from now on rule over us with the divine right of kings.
So we’ve had all those different theories of history in the past. And the question is, which one do you think is like more plausible? I think that Jeff Bezos is good at some things, I also think that he got really lucky… Because there are lots of people who are good at the same things as him. I think that if there hadn’t been Jeff Bezos, there would have been someone else who would have filled much of that niche. When you look at what it is he did, the tactics aren’t all that different from other people who did similar things, but he prevailed, often by things that amount to coin tosses… And what I reject is the idea that he’s King Arthur. And yet, the dynasties, the kind of wealth that Jeff Bezos has established are self-perpetuating. In the absence of some competitive force that allows for new market entrants, in the absence of like periodically burning down some of the forest to open up some space in the canopy, so that new shoots can develop, he lasts forever. And his children and his children’s children govern forever. You get this dynastic wealth. And not only do I think that’s not true that he is King Arthur, and not only do I think that even if he’s good at his job, I don’t want his kids, and his kids’ kids running the business, I also think that when you have a society built on those lines, it becomes extremely unstable. Because the legitimacy of a society, the reason we buy into its institutions, and its norms, and we accept its rules, is because we think it’s fair. And unless you’re prepared to accept that you are a peasant whose destiny was to be bound to the land, which - the peasants didn’t; they had uprisings. Unless you think that that is your destiny, then living in a world in which that is all that you can hope for, is a world in which you will cheat any chance that you get, in which the system will fall apart. And so either we have a fair system, or we have no system. I don’t think we have an intermediate system; or the intermediate system that we get is an authoritarian system that is intrinsically brittle, and that collapses in the most awful way imaginable.
[01:22:22.20] I don’t know all of Jeff’s history and childhood… I remember one video where he was on the internet saying – he was interviewed saying “I was looking at the growth of the internet, I basically saw that it was growing at such a multiple, and I thought to myself…” And I’m paraphrasing, probably terribly… “I want to capture what that growth is.” And then he began with the bookstore. And I’m not sure of all the exact history, but I did read “Working Backwards”, mostly; I’ve kind of jumped back and forth from chapter to chapter. And there’s a certain respect you have to have for the way they’ve strategized the market. And I guess what I’m pushing back on is, I see somebody who saw an opportunity, and saw the opportunity to find the money, find the investors, push profits down the line so far, and the tenacity and willingness to capture the market. And now they’ve captured the market. And sure, they’ve done some things along the way, which I don’t fully know about, nor do I agree with if they’re super-negative… There’s also lots of misinformation out there; I’m not saying that’s not true or not. What I’m speaking to really is the capital market, where - isn’t that the dream that we can all be? Not that I would want to be, but the possibility of being a Jeff Bezos. That somehow I can see an opportunity in the world, and put my work out there so hard, whether it’s luck, or good timing, or however, you want to shake it out, that that’s a possibility.
Well, I mean, I would say that the people who work so hard in his packing facility that they can’t even go to the toilet, and just wear diapers and shit themselves are pretty –
But they’re hardcore. No, no, I’m not saying that’s terrible. Let’s stipulate; it’s terrible.
They’re hardcore. They’re putting in the hours that Jeff Bezos is putting in. So if the argument is “Work really hard, care about your job, give it your all, and sacrifice”, then I think we have to acknowledge that the existence of Jeff Bezos means that for everyone else who’s working just as hard, if not harder, there is no chance of being Jeff Bezos. That Jeff Bezos’ success is antithetical to it.
There’s an amazing book I want to recommend to you. It’s public domain, you can get the audiobook for free on Librivox, and it’s a book that was written by the first woman in America to get a science degree. Her name was Ida Tarbell, and her father was a Pennsylvania oil man who was ruined by John D. Rockefeller. And in her 20s she became a self-taught investigative journalist, and she began to write an investigative history of John D. Rockefeller. It was serialized in one of the best-selling magazines of the day, a magazine called Colliers, and eventually collected in two volumes - the History of the Standard Oil Company volumes one and two. It formed the basis of Congress’s investigation into the Rockefeller empire, and led to the breakup of Standard Oil. She was an amazing person.
And in the last chapter of volume two of the history of Standard Oil she introduces this concept she calls “illegitimate greatness.” And she says “John D. Rockefeller and the oil trust have done amazing things.” He pioneered metrics, and cross-enterprise knowledge sharing. So he would measure the performance of every oil refinery in his network, and the ones that performed best would become the sites of tours for the managers of the underperforming ones, so that they would learn the techniques that the best-performing refineries were using, so that the whole empire increased. And she said “That is legitimate greatness, and we should celebrate John D. Rockefeller for it.” But when a Rockefeller competitor tried to run a competing oil pipeline, that would have allowed the Pennsylvania oil men to get their oil to market without having to go through Rockefellers refinery, he sent goons with railway ties to beat their brains in. And that is a form of illegitimate greatness. He was really good at it, but it is a form of illegitimate greatness.
[01:26:13.11] And when a senator from Ohio proposed a bill that would have constrained the action of the Standard Oil Company, that senator got a job working for a Standard Oil subsidiary in San Francisco, that paid 20 times his senatorial standard, and had no duties. And he moved to California. And that is a form of illegitimate greatness too. And we started off talking about how the pitch that tech people want to make to you is that their offerings are indivisible. That if you want Uber, you have to take the annoying notifications. But tech is decomposable. No one came down off a mount with two stone tablets and said “Jeff, run your warehouse in a way that causes your workers to shit themselves.” Call me a crazy dreamer, but I can imagine a warehouse where people pack boxes and don’t have to shit themselves.
I can imagine that, too. I’m with you.
I mean, I know. Let’s dream here.
I don’t know what gets that to happen, though. What in the world happens inside of an organization that says “We should optimize to this degree to essentially enable that kind of system.” I don’t get that. That doesn’t make any sense.
Now we’re back to the forces that constrain firms. This is why Adam Smith said “A free market is not one that’s free of regulation, it’s one that’s free of rents.” Because when a company doesn’t have to worry about competitors, when it doesn’t have to worry about regulators, and when it doesn’t have to worry about its suppliers and customers helping themselves, then the worst people in the company win every critical argument. When you’re sitting around a table and you’re like “I built this Uber app. I missed my kid’s birthday party for it. I worked through that kidney stone for it. And I care about this app. It’s good.” And the person sitting next to you says “We’re gonna send notifications about like tacos.” And you say “Fuck no. I didn’t pass a kidney stone so you could send notifications about tacos through my awesome app”, you will lose that argument unless you can also say “And we will lose a shit ton of money if you do it. Because we’ll get fined, because our competitors will move in, or because our users will install a blocker, and that will shut off some other important source of revenue to us.”
So this is not about – I don’t actually think Jeff Bezos is worse than many other people. I think that he’s a normal – like, this is actually my… I think that if you and I have a disagreement on Jeff Bezos, it’s I think that he’s fundamentally a normal person. Both normal in terms of his evilness, and normal in terms of his capacities; that he just got really lucky. But the difference between he and others is not that he has less of a moral center, it’s that his moral center wasn’t disciplined in moments where it was easy to talk himself into doing things that some part of him thought was wrong.
In the same way that if you’ve got a startup, and you’ve convinced 100 of your friends to quit their jobs, and put their kids’ college funds on the line to come work for you. And your investor comes to you and says “I know we said we were on board with this open source shit, but fuck it. It’s going proprietary.” It’s really easy to talk yourself into saying “I’m not going to turn these 150 people out on the street. Google just laid off 12,000 people. I can’t do that.”
[01:29:30.23] And to talk yourself into thinking that the right thing to do in that moment is close your source. But here’s the thing. If you’ve GPL-ed your code, that is an irrevocable license. So when your investor comes to you and says “It’s time to close your source”, you can say “Bob, you’re right. You’re 100% right, but here’s the thing - we can’t. We just can’t. It’s irrevocably licensed under GPL 3, and there’s nothing we can do to take that back.” And there’s a name for that in economics. It’s called the Ulysses Pact, and it’s named after one of the most important hackers in history, Ulysses. And Ulysses was gonna go sailing through the sea of the sirens, or the mermaids, and there was a standard protocol for surviving a mermaid encounter, which was to fill your ears with wax, because when you heard the song of the mermaids, you would jump into the sea and they would drown you. But being a hacker, Ulysses wanted to hear the mermaids. And so he said to his sailors, “Tie me to the mast, but leave my ears unplugged, and no matter how much I beg, do not let me go. Do not untie me from the mast.”
And so Ulysses heard the mermaids. Not because he was stronger than the call of the mermaids, but because in the moment before he became weak, he used his strength to bind himself against an anticipatable moment of weakness. When you go on a diet, you throw away your Oreos, right? That is a Ulysses pact. When you irrevocably license your code, when you organize as a public benefit company, when you do any number of things that constrain your future actions so that when you’re tempted, you can’t yield to temptation, you prevent yourself from doing things that you’ll be ashamed of on your deathbed. And without that, you and me and everyone we know are handily capable of reasoning ourselves into doing the worst things we can imagine, and convincing ourselves that we’re only doing the right thing.
The Internet Con, on sale now! [laughter] I feel like we should just end right there. Like, why would you even add anything at the end of that? That was a mic drop. Let’s send out the links. We’v got the Internet Con on sale now, we have Lost Cause on sale probably now, depending on when you’re listening… This one will be out before it’s out, but if you’re listening within – what, November 14 is the day? Is that what you said?
Yeah, November 14th. And I don’t know when you’re – will this be out by this weekend?
Oh, next week.
We’re gonna have some early copies for it to – I’m keynoting the Hackaday conference in Pasadena this weekend, and I’ll have some early copies there.
Gotcha, gotcha. There you go. Well, check the show notes for details to that. Pluralistic.net, craphound.com… Anything else? Is that place? Those are the places.
Those are the places, yeah. Pluralistic is like this multi-platform publishing venture I have. So everything that I publish on Pluralistic is simultaneously published to [unintelligible 01:32:17.27] with no telemetry, no ads and no HTML. It’s just text files. It’s also full-text RSS, and it’s a Medium feed, a Mastodon feed, a Twitter feed, and it’s also available through Discourse. So you can get that wherever you – wherever you like to get your media, you can get it.
Very cool. Thank you, Cory.
Alright, I’ll talk to you guys later.
Our transcripts are open source on GitHub. Improvements are welcome. 💚