Isn’t that a prerequisite for enshitification? Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders, even if that means utterly ruining their original product (Reddit, Boeing, etc.), yes? What do you think?
Some false premises in this thread — corporations are not required to maximize profits. Even if maximizing profit was mandatory, this is a pretty subjective topic — is short term profit while pissing off your customers “maximizing profit,” or is sacrificing short term gains for long term customer loyalty “maximizing profit”? It’s not a rhetorical question, and I think you can find examples of both.
Corporations are also not all pursuing endless growth; in addition to “growth stocks” there are “dividend stocks.” Some companies aren’t aggressively pursuing growth, but are making profit, and the stock reflects this. It feels almost antiquated in the “to the moon” era, but these companies do exist.
This is like the “there are some responsible assault rifle owners” argument. Although corporations are not required by law to maximize investor returns, CEO “compensation” is often tied to “performance” so the incentives of those with the most decision power make it de facto required to maximize returns to investors. That’s why Musk needed to convince his board of directors (who are there to represent the best interests of the share holders) to approve some ridiculous pay package. His “performance” in their eyes is proportional to share holder profits so if they’re happy, he gets his absurd pay package, which is why his incentive is to maximize profits for shareholders by any means necessary.
Corporations are inherently the vehicle of non-mutually-beneficial capitalist profit-seeking. They cannot really be anything else. That’s what differentiates them from e.g. a profitable ‘mom-and-pop’ grocer.
The purpose of incorporating as a business is to limit liability by separating the assets and incomes from the owners and investors, in order to allow profits to be gained without actually engaging in a good-faith exchange with prospective business partners/customers (since corporate bankruptcy limits their ability to recoup losses from the individuals running the business).
Weapons are a means to do harm, but they are not something that the mere ownership of implies a threat from; most people do not being their guns everywhere. If they do bring it somewhere, that indicates an adversarial stance towards the place or persons who they’re meeting. Put another way, “gun ownership” is very different than “having a gun present at all times with which you could threaten someone”.
Corporations, on the other hand, are at all times and in all business dealings leveling that threat of one-sided liability/risk, because it is intrinsic to them as corporations. You can own a gun without threatening to shoot anyone with it. You can’t operate a corporation without threatening to evade rightful liability.
So it’s possible to be a “responsible assault rifle owner”, but it’s not possible to be a non-exploitative corporation.
Interesting little article
In other words, it is activist hedge funds and modern executive compensation practices — not corporate law — that drive so many of today’s public companies to myopically focus on short-term earnings; cut back on investment and innovation; mistreat their employees, customers and communities; and indulge in reckless, irresponsible and environmentally destructive behaviors.
So I guess the publicly-owned model allows the bad shit to happen when the majority of shareholders are get-rich-quick hedge fund types then?
One of the worst companies in recent years has been Purdue Pharma, which worked with the also shitty McKinsey to get as many Americans addicted to opioids as possible, and make billions on the epidemic.
Both Purdue and McKinsey were privately held.
Koch industries is also a terrible privately held corporation.
Being public versus private doesn’t make a difference, in my opinion.
I don’t think that it’s a prerequisite but it’s definitely a catalyst.
Another catalyst is one company buying another. I cannot think of one example where the acquired company’s product/services got better after a M&A.
Another catalyst is one company buying another. I cannot think of one example where the acquired company’s product/services got better after a M and A.
I feel like there have been some positive outcomes of mergers and acquisitions but I am having trouble thinking of them. What comes to my mind is Meta acquiring Oculus, Activision merging with Blizzard, and Mojang acquiring Minecraft. All of those have led to a shitty Russian nesting doll of launchers and DRM.
The positives might be harder to note though. There must have been a couple times where some kind of acquisition has brought a series into the mainstream.
I know a lot of people prefer the classic Fallout games but I do wonder how people would be aware of the series if it weren’t for Bethesda buying the right to Fallout for example.
After being acquired by Google, YouTube got better for years (before getting worse again). Android really improved for a decade or so after getting acquired by Google.
The Next/Apple merger made the merged company way better. Apple probably wouldn’t have survived much longer without Next.
I’d argue the Pixar acquisition was still good for a few decades after, and probably made Disney better.
A good merger tends to be forgotten, where the two different parts work together seamlessly to the point that people forget they used to be separately run.
That’s true, and also why I added that last part about it being confirmation bias on my part. Definitely not saying there aren’t good examples, but like you said, I’m also having a hard time coming up with any.
Has Valve ever bought any other company? lol They’re one of the few I could see actually making the child company better xD
I’m not sure. Portal and Team Fortress both have really interesting back stories that I think have a bit to do with Valve acquisitions
Interesting. I’ve never played TF but Portal is one of my all-time favorites (I’m not much of a gamer lol). Will try to look into that when I have time because it’s definitely interesting if true (and can be my token good example lol).
You might be interested in Portal on the N64 while you’re at it.
I’d check out Narbacular Drop. Pretty sure that’s the game that I’m talking about that became Portal, in a way, later.
There was a good YouTube video about it a while ago but I think it had a clickbait title that makes it hard to find.
They would bring other game developers or mod developers in house.
Wasn’t Turtle Rock (or whomever made L4D) basically acquired?
Meta acquiring Oculus
As someone with industry experience working with VR, I can tell you it’s a mixed bag. I think there’s certainly no way Oculus (and consumer VR in general) takes off the way it did without Facebook’s dollars behind it, and it’s certainly paved the way to the outstanding quality of standalone HMDs that are on offer today. However, it killed the initiative for PCVR hardware with the non-consolation that Meta, Pico, and HTC offer “Link mode” on all their headsets and it’s iffy on good days, which makes B2B PCVR very difficult to facilitate without some serious legwork on lowering latency over the air connections. Would that we could revive the Rift S, that headset was perfect for our needs.
I recently discovered the excellent suite of Affinity Photo, Publisher and Designer. Not open source, but very good and they sell them at a reasonable price with no subscription. Seemed pretty ideal. Then a week or two ago they sent out an email saying they had been bought by Canva. I kind of hate Canva because it functions like one big infuriating ad for their subscription service. They promised Affinity would not change, but I have never known such promises to be kept after an acquisition. It’s pretty disappointing.
I think there can be an intermediary step where things get a little better before they get much worse. I’m thinking of Youtube, which pre acquisiton, iirc, was getting slow and bad. Google infrastructure made it faster, but then, well…
This is really just the first step of enshitification - first they make things good for users, then introduce advertisers, then claw back all the value for themselves.
Or put another way
- "don’t worry you favourite thing will stay the same - we don’t want to mess with a winning formula!
- “these changes will benefit users!”
- “we have to comply with industry standards and best practices. please read our updated terms of service.”
- "in order to compete in a dynamic marketplace, we’re introducing an add supported tier!
- “we’ve made changes to our subscription model!”
- “we’ve made changes to our subscription model and we’re introducing adds on paid tiers! suck it!”
- “sure, you paid for it, but our agreements are expiring and we don’t value you as a human being!”
- “really, where else are you going to go? lololololol”
It’s not really direct cause and effect, but yeah. The incentives for a publicly-traded company make enshitification far more appealing then it would be for most other organizations.
Oh, also, it’s a common misconception that publicly-traded companies are required to maximize profits. They can have whatever goals their shareholders want. It’s just that the way modern publicly-traded companies work, most of their shareholders are people quickly buying and trading shares based on who they think will earn them the most money this month, so that sort of inevitably becomes the goal of any publicly-traded company.
Also the reason they focus entirely on unrealistic quarterly measures and don’t value long term stability.
I’ve worked for a couple startups and you’re absolutely right. If you make a profit you pay taxes on that money, so startups like to spend most of the money they bring in. They also want to show revenue growth, since that’s what investors like to see. You grow revenue by getting more paying customers. And you do that by doing what your customers want.
When you go public, your goal is to increase shareholder value. So you do this by reducing costs and finding ways to wring customers out of revenue. You find ways to nickle and dime customers out of revenue so much you develop an entire branch of law devoted to your lawsuits
it happens because people have a natural urge to think things constantly need improvement.
Private companies also seek to maximize profits…
True but they dont have a knee to their neck from share holders to increase profits year over year.
Private companies still have investors and board members they’re accountable to.
Yes, that is the root of many problems facing the general population. Environmental, monopolistic, and enshitification.
Publicly traded companies are not compelled by law to maximize profits. That’s a long standing myth.
I think the real root cause is governments allowing corporations to grow so large that any competitive effects are removed. In the absense of real regulation there’s no way for competition to occur, allowing corporations to squeeze every dime they can from their customers.
Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders,
The is not true, stop spreading misinformation
They may not have to maximise profits but the shareholders will question every decision that doesn’t maximise profits so the result is the same. That’s why activist investors that push companies to more ethical behaviour are important.
Yeah, but we’ve had countless examples of loss-making tech companies with sky-high valuations. Amazon didn’t make a profit for something like 20 years. Investors of course want returns, but they can differ on the timeframe they’re willing to wait for them.
They may not have to maximise profits but the shareholders will question every decision that doesn’t maximise profits so the result is the same.
If that were true, we wouldn’t see the obscene salaries of C-suite level execs skyrocket… That money cuts into the profits as well, you know?
They are ok squeezing their workers while giving themselves the sweet life on the company’s dime
That’s why activist investors that push companies to more ethical behaviour are important.
This is a fairy tale force, like Santa or the boogie man. You’ll never get ethical behavior from profit seeking entities
The ones that are successful at enshitification have captive markets. They’re a monopoly, monopsony, or in another kind of inelastic market. https://pluralistic.net/2024/04/24/naming-names/
Every single comment here is describing symptoms but not the cause.
Enshitification is the evolution to the final form, only possible after the company, thru merger/acquisition or stock manipulation (leveraged buy outs, acquiring controlling stake, shorting a company into insolvency, etc), has achieved a commanding monopoly.
Then it flexes it’s monopoly powers, the buttons fly off its shirt and the monster shows it’s true colors.
We have laws to prevent this. Lina Khan is the first FTC chair to start holding these companies to account. Meta, Google, Apple, Microsoft, Amazon all need to be broken up into a thousand different companies, same as we did with AT&T.
What America truly needs is another Teddy Roosevelt. We need to revive the Progressive party with the Bull Moose as the symbol. Protect the environment, protect the family by protecting the workers, end legal loopholes and trustbust the 1% back down into the 10%.
And if we don’t? The path ahead is obvious, I for one, don’t want to live in Blade Runner, but that’s where we’re going until we stop fucking around and right ship.
I’m really emotionally and mentally exhausted. But what you just wrote makes me think you are my spirit animal. I guess what I’m trying to say is that it’s nice to see that other people are identifying a major issue and care about it.
I’m flattered. Thank you.
I told my wife if we ever decided on kids (which we won’t) I want to name the kid after my hero. She asked “who’s that?”.
“Mega man”
“What if it’s a girl?”
“We can call her Meg”
"Middle name?”
“No middle name. MegaBlake, that’s it.”
I’m wearing a mega man belt she bought me right now actually.🤓
Meta, Google, Apple, Microsoft, Amazon all need to be broken up into a thousand different companies, same as we did with AT&T.
And unlike with AT&T, after divestiture there needs to be an order in place that perpetually prevents the divested companies from ever merging or buying each other up. At this point AT&T has almost completely re-formed from the companies it was broken into, and that should never have been allowed.
And for fucks sake we need to make the fine for white collar crime that extends state lines to necessitate the forfeiture of the entire C-suite’s and board of directors assets, both domestically and internationally, upon threat of seal team 6. Empty their bank accounts and leave them with nothing
Absolutely this. We need to abolish corporate personhood, and hold company leadership directly responsible for the company’s behavior. Since it is the people who are doing these things. The “company” isn’t some autonomous entity that has a will of its own. People drive it, and those people should be held accountable.
Keep corporations as persons - restore public execution. If a man with the mind of a 10 year old can be executed, so can executives.
Enshittification happens due to greed and power; It’s just the process of removing the false mask of mutually-beneficient business.
First you make users think you’re beneficial to them, so they get locked in,
then you make businesses think you are beneficial to them, and get them locked in,
then you give up that facade and admit you don’t care about benefitting anyone but yourself.
Short answer: No
Long answer: Look into the phrase “rot economy.” Basically, enshitification starts MUCH earlier in the process than an IPO or a major buy out. It happens because our financial markets value growth, not financial gain. We always here about how companies only worry about the bottom line, but they don’t, actually. They care about demonstrating growth. How do you make growth happen while not worrying about the bottom line? Easy! Operate at a loss on purpose! That way you can capture more of the market in a fiscal year, and then the next year adjust your prices a little bit and operate at slightly less loss and show investors you’ve grown. Those adjustments? That’s enshitification. It all happens from the very first moment when you decide, “We have to capture the market.” That’s not the IPO. That’s the very founding of a business.
We need to instead value sustainable businesses. Ones that have higher revenues than losses. And you’ll notice something VERY interesting about sustainable businesses: They don’t do MASSIVE 3rd quarter layoffs literally every year. Why? Because they don’t have to show the investors that they’ve made a profit, they just need to show they captured more market and then reduced costs
'Member before publicly traded companies? We had dudes like Rockefeller and Carnegie. Company towns, rats in the sausage, kids getting caught in giant cogs…
No, it’s not because they’re publicly traded. It’s because people like money, and if they have enough they can pay to not look at the side effects of getting it - whether that’s dead kids or just no privacy and bad content.
You dont have those things not happen any more because of the stock market, you dont have to endure those things any more because regulations prevent it.
I can guarantee you 100% that if corporations could use child labor again, or dump rats in a meat grinder and sell it, they would in a heartbeat.
Yep. No disagreement.
OP was asking whether public trading causes shitty business behavior.
Ah fair enough, that makes more sense then.
It wasn’t, although it wasn’t an argument against per se either. Both were/are markets.
What actually needs to happen with internet enshittification is probably some kind of regulation. People just don’t understand the magic boxes well enough to not fall prey. The EU is on it, at least. With Boeing, probably the Enron formula. We’ll see how many accidents it takes to create movement on that, considering it’s a company that makes the big banks look disposable by comparison.
