Why all of a sudden tech companies are not being favorable to their users?
YouTube disallowing adblockers, Reddit charging for API usage, Twitter blocking non-registered users. These events happen almost at the same time. Is this one of the effects of the tech bubble burst?
I think it's a consequence of higher interest rates drying up VC money, meaning that tech companies now have to actually be profitable, rather than just grow.
If the plan was grow now, profit later, then later has come
Venture capital has shifted very quickly from companies HOSTING content to companies SCRAPING content (LLM’s). This means renting compute is now very expensive and moving into the hands of ‘AI’ companies. It’s like trying to fly a plane while monkeys are tearing the wings of.
I'd say because it's in the air. Obviously companies watch each other. Like the layoffs in January. The initial wave was the companies that needed to do it and had been planning it for awhile. Then when there was blood in the water everyone was doing it because then they aren't big mean company, they are just another company doing layoffs right now. Lost in the crowd. It's already come out some companies did it purely because big companies like Twitter and Google did it.
But we are seeing a big increase in anti-consumer moves because there seems to be no backlash. Like there's the vocal minority, but it seems by and large a huge amount of the customers for these tech companies are unwilling to move away.
Every time Twitter does something some move off Twitter, and they get such growth! But then eventually stuff like Mastadon's activity has a noticeable decline over time and Twitter carries on. Some people go back, some quit Twitter entirely. But these are fractions of a percentage probably. They still have the biggest celebrities and a crap ton of users.
Netflix just cracked down on password sharing, in a move that people were calling foolish. The outcry was everywhere and anytime Netflix was mentioned was 20 comments saying they cancelled that day. But subscriptions are up, Netflix won.
YouTube has been pushing more and more ads on users, there isn't as big as a direct backlash. Like there was more outcry on removing the dislike button. Which...no one cares now lol. But YouTube pushing's more ads, and they don't seem to be loosing money for it. I'm sure they are trying to find the 'breaking point' for customers. But either people really are willing to put up with 2 30second unskippable ads every 5 minutes or premuim subscriptions are skyrocketing as they ruin the free experience.
WB killed a ton of shows outright, basically burned a bunch of media and shuttered a ton of HBO Max's staff. People upset... Twitter all a buzz. Now it's back to HBO is the best streaming service (Which it is lol)
Like it just keeps going. I think it's just a combination of companies making terrible blunders steal the spotlight from each other and society as a whole has a 3 day memory. The Reddit protests are already cold news because Twitter just DDOS'd itself. People who saw all this with Reddit and call it disgusting moves by the company and the unspoken bond is broken, always end their diatribe with something like "Well I'll just use old.Reddit with an ad blocker" like they are winning when they still provide Reddit with their usage.
People like us who walk away and move to spots like this are the minority of a minority. It's up in the air how many will stay and how many will slowly forget their outrage at Reddit and go back.
Honestly they do it so consistently that i’m starting to wonder if they have a choice.
A common way to do things for tech startups is that they get venture capital funds, use them to run the business at a loss hoping to acquire market dominance, and then use market dominance to turn a profit. I think a lot of tech startups that we know are currently in phase 2, meaning they’ve thrown money out the window for years and are now trying to recoup their investments.
Also, Reddit wants to go public and Twitter already is. This is relevant because investors are animals, all they see is short-term profit, and they use their voting power to make the company behave that way.
There’s a common thread between both my theories: it’s shareholder capitalism. I say this as a lifelong shareholder myself, shareholders ruin everything.
Most of the aspects have already been covered but I would want to add one:
This was always the plan, it just wasn't as highly prioritised as growth.
I work as a developer at a big tech company. We (the company) had our roadmap and it was mostly about getting more users. The more users you have the day the economy turns - the better off you are (... If you manage to turn an profit).
So when the economy went to shit and we (and other tech companies) no longer can loan money for free to cover our running expenses - the priorities shift. Working towards attracting more users is only going to increase your costs at the point and you don't want to run out of money. So all roadmaps changed and cost saving efforts became the highest prio all of the sudden.
That graph shows the Federal Funds Effective Rate. Until recently, VCs could borrow money while effectively paying zero interest. That meant their investments weren't under any pressure to become profitable any time soon. Now, borrowing is expensive. VCs don't want to loan any more money, and want their investments to pay off. Reddit and other pre-IPO companies are scrambling to become profitable.
I assume the big companies like YouTube / Google going against people blocking ads are just taking advantage of the chaos.
Ads pay basically nothing now and VC funding has dried up. Most of these tech companies operated at a loss and are now being pressured into becoming profitable since investors don’t want to throw money at them anymore.
Data privacy laws have also gotten better, cutting off another revenue stream that was typically used.
Tech companies were only favorable to their users during the corporate Web 2.0 genesis when these companies had to lure educated users in with extremely convenient free services, but they always did and continue to do so under terms of service that are intentionally made as hard to read walls of legalese bullshit, so they always click accept and hand them power by moving there.
These companies usually are either publicly traded or aspire to be publicly traded, and are backed by venture capital loaned to them by banks and investors.
Then during the late 2000s and early 2010s these corporations gobbled up web traffic by having all the valuable information and communities behind their walls. This drove their operating costs up a lot but it was no problem, since the zero interest rate policy was in effect so these now-megacorps had basically interest-free loans to get infinite money to finance the platform. However they realized around the mid 2010s that they controlled the vast majority of the web so they realized they could be as greedy as they wanted since no one is going to ever step up to them (YouTube is a shining example of this) and ever since the mid-late 2010s they started nerfing and crippling the user experience in order to please their investors and ad networks. This process was extremely slow initially to minimize the backlash. They applied the boiling frog strategy and it worked.
By the early 2020s this was in full effect: websites do not respect your privacy and try to shove trackers and ads whenever and wherever they legally can, search engines are manipulated to put sponsored and SEO spam links first rather than useful answers, sites are implementing login walls to make sure the valuable content they hold hostage can only be accessed once they have the data of users, discourse is being controlled and micromanaged by corporations with automated censorship, mystery echo chamber algorithms, shadowbans and wordlists, news sites have article limits and paywalls now. It got so bad that it's already harming society as a whole because it's causing polarization and these platforms now have enough power to theoretically manipulate elections in some really bad cases.
This is a process known as enshittification: start great then become shit and die. Now that the zero interest rate policy is over, and interest rates started climbing up it means silicon valley free money is over so they can no longer afford to be boiling frogs, they are turning up the heat to 11 and just roasting the frog alive. In other words, the enshittification cycle is becoming exponentially faster and it's only going to get worse for the corporate web and its users. The only solution is returning to decentralized technologies like Web 1.0 used to be, but it's extremely hard since free as in you pay with your data services are addictive like crack cocaine.
Part of it is the standard crisis of capitalism, the profit you get from doing the same thing always declines, so over time you have to push up revenue (increasing prices, forcing people to pay, showing more ads, gathering more data, etc) & push down costs (fire engineers, run on less hardware, etc)
Part of it is capitalisms natural tendency to create monopolies, and the lack of competition in a given field causing the company to then lose sight of what it's good at to compete in a bigger field.
Part is that interest rates mean loans are no longer cheap, so taking on debt to get customer, to at some point down the line make money, is a less viable plan. Twitter is a special case where the bad loans are because that was the original deal not interested rate related, and Musk is trying to pull all of the enshitification levers at the same time.
Part is that CEOs generally don't have a fucking clue about their products or what they are doing (it's a circuit job about who you know/blow, not what you know), so once one CEO starts firing/enshitifying, the rest just copy them so as to not be left out.
It's so common there's even a term for it now, "enshittification"
To quote the article that describes it:
"Here is how platforms die: First, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die."
It's simple, despite what big tech companies are telling themselves, current algorithm for personalized online ads doesn't actually work, because you can't force people to be interested something just by shoving media in front of them.
Instead of realizing that people want genuine human engagement to tell them HOW your product can help solve their problems, we are at the phase where tech companies double down on their incorrect assumption and thinks to make people want things, they just need to shove more things people don't want to see in front of them.
i hope that the internet becomes sort of how it used to be, made by the people for the people and ran by the people instead of made by a few huge corporations that sell our data and constantly try and squeeze profit out of their platforms. i love the sense of community in decentralised social media and there seems to be next to no arguments most places. im really enjoying everything so far after joining
Others have basically captured it, but my read is a massive change in the overall risk profile held by venture capital firms. The time of reckoning has come, and it’s time for everyone’s (or at least VCs’) favourite three letters: ARR (Annual Recurring Revenue).
The last twenty years, we’ve seen this sort of spray-and-pray model, where 99 bad investments could be offset by 1 “unicorn”. The risk appetite seems to have shifted largely because 1.) there’s a higher volume of early stage concepts (so there’s more bad ideas), and 2.) there’s either fewer unicorns, or the unicorns that mature are ultimately less valuable.
Crunchbase put out a good analysis of the current trend of global venture dollar flow:
You can read news from various outlets - some say it’s a post-pandemic correction. Some say it’s because labour is too expensive. But the bottom line is that VCs aren’t willing to spend money on “users-in-lieu-of-revenue” like they once were, and I honestly don’t blame them. There were a lot of really, egregiously stupid ideas coming out of SV, and their wax wings melted. sad_trombone.mp4
Adam Kotsko summed this entire phenomena up nicely:
Here is how platforms die: first, they are good to their users; then they abuse their users to make things better for their business customers; finally, they abuse those business customers to claw back all the value for themselves. Then, they die.
Not really "all of a sudden", this has been a long process. The often repeated enshittification thing is fully valid. The short version is:
start out
grow and expand as much as possible
bring in advertisers
make everyone depend on your service
abuse your powers, since everyone "needs" your service
Google, Amazon, Facebook, Twitter are the more obvious culprits, but every big tech company does something similar, one way or another, even hardware companies like Intel or Nvidia
A lot of the 2010's tech was fueled by venture capitalists looking for the next big thing. They saw things that were extremely popular, like Facebook, Reddit, YouTube, etc, and figured "well we've got a ton of users, surely we can find a way to make money off of this."
Some investors are starting to realize they aren't actually making much money or costs are blowing up without revenue following. People are starting to back out of this bubble without clear goals towards profitability.
That doesn't fix YouTube's core issues with the ads that they run, impacting every free user without an ad blocker: 1) Not 100% safe 2) Unscrupulous advertisers, sometimes running scam ads 3) Poor user experience re: ads (far too many in general, and multiple mid-roll ads per video make for a horrendous time).
I'm not going to reward them for these misbehaviors toward their user base by buying their "Premium" service. Same for any other site that does this and offers a "Premium service" to fix the problem that they, themselves, created. There are ways to have safe ads, and fair user experience even with them in play.
Because they don't have too be. Most people are so dependent on social media that they'll keep using a service even though they hate it. Like a drug addict who keeps using even though it's killing them.
They've reached such an economic power that now they just want to be as profitable as possible, crushing any kind of competition of popular pro-user participation while profiting over our data and content
WE, the users, made them able to do so, giving them economic and sometime even geopolitical power.
But WE still determine whether they can exist or not man, we still have the power to bring them down. It's time to take back what's ours!
Because investors are tired of the model where they dump a shit load of cash into something that has no good path for monetization. So they’re forcing them all to make money which hurts users.
I find it the ad bubble is bursting so companies are increasing costs for api access and divert people into using their own apps (so they can't block ads and such)
The 'trust thermocline' occurs when an organization repeatedly takes their customers for granted, and they reach a critical point of 'no trust return' and just leave. Essentially, if you gradually provide less quality while charging more money, you erode trust- and if you lose trust, you don't actually ever get it back. See: Twitter. And possibly now Reddit. Great term, I love it even, but I hate that the lesson these people are learning isn't 'hey maybe we should stop pissing people off without good reason' and is instead is "this is acceptable risk and we should continue playing chicken with dissatisfied users to make our shareholders happy."
You are the product and right now the product is falling in value. I have known a few people who raise exotic animals and they treated them as nicely as a parent treats their own child. Now compare this to people who raise chickens.
The easy money is drying up. Hence you, the product, are worth less money. I personally don't really care all that much. The market was due for a correction well over a decade ago. The average person is worth about a dollar to Alphabet and when you think about how much you are getting the numbers never made sense. This dead weight mismatch has been skewing our entire economy. Engineers and project managers that would have gone into tangible items and paid for services instead were recruited to keep you on social media all day.
There are only a finite amount of techies and no one is going to care if slack integrated with Google maps if we are drowning in human sewage.
Enshitifacation. Twitter onlyy turned a profit once, YouTube is about 20% of global bandwidth and has turned a profit. companies don't just want money they want the amount of money to always increase. So they turn to ever more exploitation to try to get it.
Interest rates went from almost zero to real rates. If you're sitting on a pile of money you can invest it in internet companies with crazy valuations and no profit or near zero-risk Treasury Bills and interest-bearing certificates.
Many investors know they are betting on the greater fool instead of any real value in these internet companies. There are now fewer greater fools.
If your business model was to give out free stuff paid for by piles of investor money, you suddenly had to find cash to keep the lights on.
Elon has to pay $1B in interest every year for Twitter. That's still a lot of money.
Elon being a cartoon villian gave other people cover to do the same. You're less likely to be singled out by the media.Your taking candy from a baby is just part of the trend or the run of bad luck falling on those poor billionaires.
I've worked in the tech sector for a LONG time and have met and worked with some of the most shockingly brilliant and insightful people in my life….and many that are far less so.
As with any population.
Bad decisions, lack of strategy or plain old monetization motivated by greed or a desire to cash out before the cash runs out are sadly commonplace. The method taken says everything about the quality (or lack thereof) of leadership.
Because the days of just shoveling money into various silicon valley projects in the hope that maybe they'll turn a profit eventually is over. Big investment firms now want an actual return from their investment, and because of that, tech companies are desperately trying whatever they can to turn a profit from these massive services that are also very expensive to run. That usually comes in the form of changes that makes things harder for the users, but is significantly more profitable for the companies that run them.
They were like this before also, but you're right: now they're much more overt and like they're pushed or hurried by something... And that something is the prospect of recession. They're not publicly announcing it, but their liquid assets are running low and they hit the ceiling for growth. YouTube is trying to maximize their exposure and revenue for ads by cracking down on adblockers; Twitter and Musk doing the dumbest decision just for money, the last one for the rate limitation being connected with not paying the bills to Google Cloud; Reddit introducing 3rd party API usage fees for, maybe, the same reason... They ran out of "smart" and covert solutions to milk their product, partners and clients of money and they would rather go down in greed. And they won't even be directly responsible due to those golden parachutes
It's more like you now notice this because it have visible effects, but it's been going on for years. Restricting content, abusive rules and stupid changes have been the norm, all toward a centrally controlled experience geared toward generating internal profits on the back of users and content creators.
It's also why some prominent content creator started their own platforms, too.
It's just that now it reaches "intolerable" level for most end-users.
Combination of VC money drying up and fear of LLM sucking up their future revenue streams. I think the former is the the logical driver and the latter is the secret fear.
While these changes will eventually happen, as all of these companies are meant to make a profit from the start. The reason they're all happening now is because of the coming recession, or at least the believe that it will come.
There are a lot of reasons for this general trend, but let me add my two cents to make a case for the sudden influx of user-opposed changes:
I don't have a source for this, but I remember that Linus spoke about this on the LTT WAN-Show. Basically, abunch of big silicon valley investors are pulling out of all of the big platforms, therefore leaving them with a huge hole in their profitability. This means, that right now a lot of them are scrambling to scrape together more money over time, so all of those platforms are sustainable.
Obviously this has to observed in conjunction with all of those are trends that are already mentioned by other comments, but this gives more basis as to why now, and why to this extent.
If someone else knows what I'm talking about please add quotes and sources because I don't like the good old 'dude trust me' guarantee one bit.
YouTube can try lol. But they've never cared about users. They're just all at about the same point where they have to stop pretending in order to feed that capitalism machine (or try to at least). It looks like hostility, but it's just them finally being honest.
Money is tighter since the inflation affects VC and stupid money flowing in. Stock prices are not going up, people have no money to play with (see the death of NFTs at the same time, the definition of a stupid investment).
They forget the users are their base, not their employees, or are bought by idiot billionaires who think they can turn the platform I to another money printer (or tax write-off)
Spez in particular saw Twitter and thought that would be a great idea.
I don't think he understands he's about to be CEO of Tumblr 2.0
Because users are not the customer but the product for others. And with network effects meaning there's less competition (ie no place to go to), then they no longer have to attempt to appease the product and can focus on appeasing customers.
The answer is AI. Amongst other things. Reddit is about to go public and wants everyone on their main app for advertising and tracking. Twitter is dealing with hosting issues with Google.
Plus AI companies are extracting content from Twitter and Reddit to train their AI models like chatGPT which is a huge money maker, and these platforms aren't getting any money from it so they're trying to make it more difficult to get access to it. They want companies like OpenAI and Stability and Microsoft and Google to pay large sums of money for access to their content to train AI on.
It's not anything new and nothing "all of a sudden", unfortunately. Facebook, Tumbler, Google - all done stuff like that before. Even for Reddit this is not the first protest blackout and not the first time they treat users and mods like garbage.
It simply is now happening to the apps and services you (and I) use daily, so it hits closer home.
All modern stairs are built on the same terrible foundation: Attract users, no matter how much money you lose. Once you feel strong, introduce fees, ads, hike the prices and try to regulate years of financial loss.
Happened like clockwork, and companies going public are a clear sign it's just around the corner. (Kind of like any free mobile app will ask you for a 5 star review, just before introducing monetization schemes)
We're not people to them, just part of a product. Why do anything more than absolutely necessary to keep the money flowing in? Save a fraction of a penny on bandwidth, earn another fraction by selling more complete data and ad views. Multiply that by the number of users and if enough will tolerate it, somebody at the top can buy a shiny new yacht.
The biggest problem is that average people are used to the tech big companies provide, and lazy so that they won't move to overall better alternatives. This means the companies don't care about consequences of their actions, because there is NONE. Looking at it from the company's perspective, why not make more money from people that won't leave the site anyways?
The tech companies tend to follow the leader on unpopular actions. The first-mover bears the brunt of the backlash, allowing the copycats to implement the same policies without the same flak. Witness Twitter introducing fees and then Facebook following suit. Witness Twitter banning third party apps and Reddit... you know the rest.
All VC backed tech companies have been operating on the assumption that they can focus on growth and then make a profit later. That hasn't happened for most of these companies and VCs are starting to demand returns. It was always going to happen, I'm surprised it took this long.
Because you can't have an open api while serving legit user and bot. The bot will eat your future snack of exploiting the data they're amassing.
So you end up having some limitation to block the bots to some extend.
the problem is businesses r built on the concept of infinite growth, profit isn't the thing that determines success, it's the constant increase in profit, now things r quickly hitting the limit and they're desperate to find any way to keep the number going up
I think part of it has been watching Twitter just completely abandon any attempts at treating users and developers well, and seeing that people are still active there. Reddit sees Twitter completely fuck over third party devs, and realizes they can do the same and weather the storm, and have it all work out well enough for them.
When interest rates are low the difference between a dollar now and a dollar later (discount factor) is negligible. In this environment the math favours businesses that can grow revenue really fast.
Now that rates have risen, the discount factor has become more expensive and so firms want their dollars today. A lot of companies need to come up with a path to profitability quickly to shore up their stock prices and have a sustainable business.
Chatgpt is using up all their resources and inflating viewership by logging into these sites millions of times. And ad companies are mad that they can't catch eyeballs anymore so they are pressuring social media giants to search for alternative income
Like several of the other comments that highlight the interest rates, for those of us who saw the late 90's/early 2000's tech bubble burst it's the same thing all over again.
Everyone's rushing to implement/improve AI. AI needs a ton of data, Reddit/Twitter are good available sources. Reddit/Twitter would prefer to sell this data as opposed to having it gathered from under them by bots, for free.
I think that's why Twitter and Reddit are rushing to restrict access (directly or through the API).
Youtube are just aggressively serving you ads, and limiting ways for you to circumvent ads. I think that's just what they do as they have the market sewn up
very good observation! I guess it's to no small part caused by a change in the economic and investment climate, and as a result new measures by man's companies; and they chose the first day of the new business quarter as a start date for many of them.
My guess is their calculations are that they're not necessarily being unfavourable to their more casual users. Which are probably the majority. People who have digested the idea of ads, don't create content and casually scroll around for a laugh or for some biased news and surface level discussions probably don't feel that much has changed.
i saw a comment on hackernews about how chatgpt and LLMs really caused reddit's recent changes and conflicts. and that made sense to a degree. the regular user is perpetually online and i guess big tech is all about grabbing users' limited attention at this point.
Turns out hiring thousands of people and hosting tons of data gets expensive, especially as your customers (advertisers) stop spending as much on your product. After a decade of cheap money being thrown at them by investors to grow grow grow, interest rates has made new debt far more expensive and the need to turn a profit is here. On top of this, their primary source of revenue has shrunk as most companies cut back on their advertising budgets, again because money has gotten tighter now very quickly.
They've got you - you're addicted and/or locked in and the hastle of moving to alternatives is too great. The short answer is : 'They no longer need to be favorable, they have you, your data, and your friends and it's too much effort to go somewhere else'