Chapter 1: What is the main topic discussed in this episode?
The New York Times app has all this stuff that you may not have seen. The way the tabs are at the top with all of the different sections.
I can immediately navigate to something that matches what I'm feeling.
I go to games always.
Doing the mini, doing the wordle.
I loved how much content it exposed me to. Things that I never would have thought to turn to a news app for.
This app is essential.
The New York Times app. All of the times, all in one place. Download it now at nytimes.com slash app.
When was the last year that the internet felt good to you? I think everybody has different answers to this. Mine, I think, go fairly far back, maybe to the heyday of blogging, at least before the moment when Twitter and Facebook went algorithmic.
But whatever your answer to it is, I have not found many people who think, 2026, right now, this internet, with all of its anger and its outrage and its AI slop, this is what we were promised. This is living at the technological peak.
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Chapter 2: What went wrong with the internet since its early days?
You know, I feel like the tools I like in my life, like a hammer, you know, I swing it, it does something predictable. The internet seems like it's serving two masters. You know, I search for something, I get a bunch of stuff I don't really want, and I don't really know what I'm getting. I want to write like one email or check one thing, I end up in some strange rabbit hole
And like three hours go by and I don't know what happened. So I feel like I'm constantly at risk of being manipulated or taken from. And I don't trust the tools to do what they say they're going to do. And I feel that makes using it kind of like living in a funhouse.
So I want to make sure I give voice to somebody who is not in the show at the moment, because this is going to have the flavor of three middle-aged guys who think the internet went wrong somewhere along the way. When I was working on this episode with my producer, one of the interesting tensions beyond the scenes was she doesn't think the internet is bad.
She thinks TikTok is, as she said, a perfect platform. She's young kids and feels Amazon is a godsend for a young parent. Obviously, there are many people like this who are using these platforms freely of their own volition, happily. So what do you say to somebody who says, what are you fucking all talking about? Yeah, I mean, I guess I'll start. I think that...
The middle-aged thing used to be better, which is I don't want to fall into that sort of situation. I just think the deal is not what it could be. And I think that maybe as a consumer who sort of lightly uses this, the internet is still useful. But if people, I mean, I have children too. And I think it's hard to deny that social media is,
has been tough on kids and has had all kinds of negative effects on that. And that really started accelerating over the last 15 years or so. I think we have a highly polarized political structure, which is made worse by social media.
I think we have a problem with inequality, which has gotten worse and worse and is accentuated by the fact that the margins are just so thin for independent business. And I also think this vision
that it would be this equalizer, leveler, this technology that made a lot of people rich, not just a few people rich, that it was more or less reasonable and a lucrative thing to do to start your own business, that it would sort of change some of the challenges of inequality and class structure in the United States. Now, maybe those were very high hopes, But this is the key concept in my book.
And I think key to understanding the economics of our time is the importance of platforms, which are any space or any institution that brings together buyers or sellers, speakers or listeners. Every civilization has had platforms. I was in Rome a few weeks ago, and you go to the Roman Forum, and there it is, it's all together.
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Chapter 3: How do Cory Doctorow and Tim Wu explain internet 'enshittification'?
They pin those kind of diseases down. That's the definition. I think the idea of it comes from a sense, something I get from teaching a business school sometime, is that American business has, in my view, moved increasingly to focus its efforts on trying to find points of extraction as a business model. as opposed to, say, improving the product or lowering the price.
You know, try to find the pain points where your customers really have no choice and then take as much you can, kind of like in a poker game when you go all in because you got the good hand. Now, there's always been a little bit of that in business or maybe a lot, like in the Gilded Age. But the question is, what is the ratio and how much of business is providing good services for good prices?
You know, making a profit, that's fine. And how much is just that different thing of extraction? So Tim, I want to, before I move on to Corey, zoom in on something you said there, because a lot of that definition seemed to turn on how you define value. And I mean, a lot of economists would say price is a method of discovering value.
If you have a pharmaceutical, people are willing to pay $70,000 for it. That means they value it at $70,000, even if you think that is extractive. So how do you know when a price, when a profit is, is actually extractive versus when we're just seeing that people value that product very highly and bully on the producer for creating something people value so highly. Yeah.
So if someone, for example, has no choice, but they are desperate, let's say, for water, and someone is able to sell them a bottle of water because they're dying for $100,000 or something like that, yes, that person does value it at that level. But we would like to have an economy, and every economist would agree with this, is that an economy full of nothing but
maximize monopoly prices where people are in a position to extract, is inefficient for two reasons. One is too much money gets spent on that water versus other things like maybe pursuing an education. And second, that the entity that holds that much power actually has an impulse to reduce supply, reduce output. and therefore produce less of the stuff so that they can extract the higher price.
I mean, this is just classic monopoly economics, I guess I'm getting into. Everyone inside themselves has something they are willing to pay. But that doesn't mean it's a good society when you're constantly paying the maximum you are willing to pay in every situation. For many of these platforms, for a Facebook, for a TikTok, we're not paying for them.
So when you say they are extractive, what are they extracting and from whom? So when you use Facebook, you are constantly being mined for your time, attention, and data in a way that is extraordinarily valuable and that, you know, yielded something like $67 billion in profit last year. You know, things that feel free isn't free.
when you suddenly spend hours wandering around random things you didn't intend to? Is it free when you end up buying stuff you didn't really want and wonder why you get it later? Is it free when you feel that you've had your vulnerabilities exploited? I would say none of that's free.
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Chapter 4: What are the effects of algorithmic pricing and surveillance on users?
So I am really not here to defend Facebook as an actor. But one of the crazy things amidst all of this, a thing you really focused on there was moving from showing us what we had asked to see to showing us what I would say Facebook wants us to see. There was just the FTC versus Meta case. Tim was, of course, involved in that.
And one of the statistics that came out during it is that only 7% of time spent on Instagram is spent on things people you follow are showing you. Similarly, on Facebook itself, it's under 20%. I forget the exact number, but it's very low.
They have moved under competition from TikTok specifically, although not only, to these AI-driven algorithmic feeds showing you not what you have asked to see, but what they find will keep you there. And what they are finding is that it will, in fact, keep you there and people are coming back to it and they spend more time on Instagram when you turn the feed into this algorithmic feed.
This is the whole reveal preference thing that you were talking about earlier. My personal experience of Instagram when I go on it now is one reason I try to go on it less is that I can actually feel how much more compelling it is. I like it less, but the feeling of getting pulled into something is much stronger. And so I think if you had Mark Zuckerberg arisen from his Sarcophagus.
I was going to say office because I'm a more polite person here. He would say, we did this under competitive pressure. TikTok was eating our lunch. We stole a bunch of things from TikTok, and now we're doing better. We also stole a bunch of things from Snapchat, and now we're doing better.
Because, in fact, we are under a lot of competition, and we are incredibly good at responding to that competition in ways that our user base responds to. This is not in shitification mode. This is the magic of competition itself. And you know that because actually look at our profit margin and look at how much we've changed.
So let me say that I don't think competition is a good unto itself. And I think it is absolutely possible to compete to become the world's most efficient human rights violator. The reason I like competition is because it makes firms into a rabble instead of a cartel. So in 2022, two teenagers... Reverse-engineered Instagram. And they made an app called OG App.
And the way OG App worked is you gave it your login and password. It pretended to be you and logged into Instagram. It grabbed the session key. It grabbed everything in your Instagram feed. It discarded the ads. It discarded the suggestions. It discarded all of the stuff that wasn't a chronological feed of the people you followed that they posted recently.
Facebook or Meta sent a letter to Apple and Google who obliged them by removing the app because there's honor among thieves.
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Chapter 5: What policies could improve the state of the internet?
I just ordered a blender from Kohl's versus we've moved to extraction and we should see it as a public policy problem. Yeah, I think that's a really great question. It's the kind of question we've faced, I think, repeatedly in history. When you start to have a business model start to settle down, you see less real disruptive competition possible.
And I think at some level, once a market has settled... At some point, you've got to call a limit. And we do that in many other markets. And Amazon is still a great way to find a lot of product. It's the world's largest marketplace. But I would say they're running themselves like an unregulated monopoly.
Both of you spend a lot of time on the number of small acquisitions that these companies make. And maybe many of them get shut down or they acquihire the top people. But there are also things that might have grown into something bigger or else. On the other side, sometimes it really is a case that a big player buying something smaller, they can scale it up into something, you know, new.
Like Google bought, I mean, this was actually a fairly big acquisition, but Waymo. And kind of amazingly, like they seem to have made driverless cars work. And I think access to Google's compute and other things was not insignificant in that. And you can look at other cases where, you know, these companies buying something small, they're able to build it into something new.
That ends up being a great option in Microsoft Office or in Google Docs or whatever it might be. So how do you think about, on the one hand, the ways in which, I mean, I think it's what Google's made, you know, more than a thousand acquisitions over, you know, some number of years. How do you think about the ways in which that harms competition? Yeah.
But also, you know, I've known founders who get acquired and are excited to get acquired because they think it will give them scale and the capacity to compete in a way they wouldn't versus Google just trying to do it itself. I think the antitrust level is one thing, but the sort of anti-competitive versus pro scale level is like a much bigger challenge to the way Silicon Valley now works.
And I'm curious to hear you talk through the pros and the cons of that. Yeah, I think that's a really great question.
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Chapter 6: How does competition impact the quality of online platforms?
You know, Joseph Schumpeter, back in 1911, wrote a book about entrepreneurs, basically. And he said, you know, these very unusual people were willing to go out and start to, you know, take these kind of risks. They have some vision, they do this kind of thing. And he thought they were essential to economic growth, that they were these kind of unusual, almost like superheroes, entrepreneurs.
and would do these things and go out and take these chances. The United States economy in general has thrived because it has a lot of those kind of individuals and they can start things. And I think we've erred too far in having all the brains under one roof. You know, it's starting to remind me of AT&T in the 60s or IBM, where they sort of...
became much more centralized about innovation and big ideas would never be developed. It became kind of group-thinky, I think, when the Justice Department did a deal, sued AT&T, tried to break them up, and they forced AT&T to stay out of computing forever. and also license all of their patents, including the transistor patent.
And all kinds of people started quitting their jobs and saying, I'm going to start a semiconductor firm. And there lies the origins of U.S. semiconductors and also, frankly, U.S. computing without AT&T. So I think we have done much better with divided technological leadership.
I frankly think that, you know, LLMs might never have gotten started without open AI being an alternative force because they're obviously threatening to Google's business model. Although don't, in a way, you have to give Google some credit on LLM specifically.
You were talking about transistors a minute ago, but Google does the fundamental research in transformers and releases it publicly and creates an NGC industry.
But doesn't do anything with it internally until there's a competitor that threatens them.
It's just striking how good of an actor they were for a period on AI specifically, right? Like treating it like they had a Bell Labs industry. I agree with that. It actually is a lot like Bell Labs in the sense that Bell Labs kept inventing stuff. I mean, Bell Labs collected a lot of amazing people and then never let things come to market. The internet being probably the best example of it.
Yeah, I think when you look at these companies and their acquisitions, what you see is that these companies very quickly suffer from what both Brandeis and Tim called the curse of bigness. that they find it very hard to bring an actual product to market that they invent in-house.
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