TMW #181 | The era of digital redemption
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The era of digital redemption
What happens after transformation?
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Did you know that the Marvel cinematic universe is now in its fourth phase?
If you were a raging comic book nerd, you would already know. The Marvel franchise and its superheroes have dominated the box office over the years with the now-dozens of films capturing various stories that all converge into one big narrative arc.
It turns out that this is a great way to think about the web. All of the news we cover on TMW – the acquisitions, lawsuits, new innovations, and industry shifts – all seem like random noise until you put them into context.
The way we think about this at TMW is by breaking down the internet economy into three eras: Emergence, Disruption, and Transformation.
The age of Emergence represents the freeform canvas for creativity of the early web from 1990 to 2007. This era gave us Amazon, AOL, eBay, Myspace, and millions of websites that have since died or flourished as the web grew. There was a lot more creativity when only 20% of the population was surfing the web.
Once businesses started to seize opportunity, then came the era of Disruption; a tipping point in which new business models started to supplant the existing order. Think Uber (taxis), Airbnb (hotels), Netflix (home movie rental), Spotify (music distribution).
Characterized by the rapid growth of new ideas that disrupted their legacy counterparts from 2007 to 2015, this was a time of free-flowing venture capital and a healthy appetite for risk. I peg the beginning of this era with the arrival of the original iPhone on June 29, 2007, which made the supplanting of so many legacy industries possible.
But what about those legacy companies that were left behind by the digital disrupters? They transformed. In response to the disruption brought on to the industry by new companies only made possible with the smartphone and an internet connection, the Transformation era has seen established companies pour billions upon billions of dollars into digitization programs.
From building their own apps, staffing digital departments, and experimenting with new business models – and yes, to buying new digital technologies like CDPs, personalization platforms, and marketing automation. Think Walmart’s transformation into a technology company that sells apps on the Salesforce App Exchange, Disney’s successful entrance into streaming, Starbucks’ industry-leading loyalty program, or how the New York Times once said in 2017 that “no other newsroom in the world has more journalists who can code.”
So as you can see, we’ve seen a tremendous amount of change. But in the midst of this, there has been a great darkness emerging from the web: The monopolies that have grown off the back of these three eras of the internet economy. And sure enough, we’re now starting to see consumers reject the status quo, governments sue and regulate, and new theories and ideas come to the fore for which direction the web should go in.
In short: There’s a palpable sense that we’re not satisfied with how things ended up on the information superhighway. And this brings us to what I’m calling the era of Redemption.
It’s a word that most people working in Martech might take for cashing in on a coupon. But in the traditional sense, the concept of redemption means to secure the release or recovery of persons or things via the payment of a price.
Redemption on the web means paying a price to secure the future of the web from the clutches of the monopolies.
For us to enter into this era, we must pay the price. What is that price? Let’s find out.
Too big to lose
The biggest companies in the world just so happens to be the biggest companies on the web. The combined market capitalization of the top 6 web-focused companies is $15 trillion, which equates to about 33% of the market capitalization of every company in the S&P 500.
The value of the web is in its infinite scale. But it’s also its terror. The web allows companies to take a foothold in the flow of information, commerce, connections, and facilitates the bulk of our web-based experiences today.
In 2021, when Sandvine analyzed global website traffic, they found that 57% of all traffic was attributable to a handful of these giant companies. But wait, it gets worse! Maria Farrell and Robin Berjon do a masterful job of giving us the broad brushstrokes of the monopolistic control these large companies enjoy over the web.
“They’ve concentrated into a series of near-planetary duopolies. For example, as of April 2024, Google and Apple’s internet browsers have captured almost 85% of the world market share, Microsoft and Apple’s two desktop operating systems over 80%. Google runs 84% of global search and Microsoft 3%. Slightly more than half of all phones come from Apple and Samsung, while over 99% of mobile operating systems run on Google or Apple software. Two cloud computing providers, Amazon Web Services and Microsoft’s Azure make up over 50% of the global market. Apple and Google’s email clients manage nearly 90% of global email. Google and Cloudflare serve around 50% of global domain name system requests.”
This has created a problem on the internet whereby every other company is partially or fully reliant on a small handful of giant companies. And it’s leading to all kinds of issues.
The weight of monopolies
Things are starting to break under the weight of a handful of very large, and systemically important companies on the web. There is now a significant number of lawsuits against Big Tech covering everything from antitrust, data privacy violations, market manipulation, abuse of children… and that’s just the beginning.
One of the main challenges to the monopolistic practices of Big Tech is the ongoing Department of Justice case that alleges that Google has built an anticompetitive advertising and search monopoly. It’s an antitrust suit that cites several violations, mostly centered around an allegation of Google creating and maintaining an illegal monopoly over advertising.
The goal is to break up the various companies that make up a sprawling advertising network, including the Google Ad Manager suite, Google’s publisher ad server, DoubleClick for Publishers, and Google’s ad exchange, AdX.
But it doesn’t end with Google. Apple has been served by the DOJ for – you guessed it – violating antitrust law. The DOJ is accusing the company of illegally using its power over iOS app distribution to prevent competitors from using hardware and software features on its devices, making it harder for consumers to move to competing smartphones.
In one corner, Google and Apple face a breakup of its platforms to increase competition in the marketplace. In another, once-major players in the advertising economy have closed up shop. Oracle has recently announced that it will shut down its dwindling advertising business, citing "growing pressure on the surveillance advertising model." As recently as 2022, the company made $2B in revenue from Oracle Advertising, but this figure has declined to just $300M in FY24. Oracle was the company that suffered some of the largest data privacy breaches on record for its DMP BlueKai.
The era of Redemption started with Cambridge Analytica, where the media turned against tech and society started to become more skeptical of the business models that are collecting people’s data at an unprecedented scale. And it’s only just heating up. Fines against massive technology companies continue to grow, with exhibit A being the scale of GDPR fines against technology companies that seem to follow a similar growth curve you’d only find in Silicon Valley.
And while data privacy and antitrust seem to loom large on the scene of Big Tech regulation, the issues go deeper. Top of the pile is that social media is now inextricably linked to teenage mental health issues. And while the evidence is still hotly contested, legal action is already ramping up.
Case in point is 33 states in the US coming together to sue Meta, with the allegation that the company makes products that addict and harm children. These states claim that Meta has known about the adverse effects its products have on kids for quite some time, but has done nothing about it.
But we can’t lay the blame at the feat of social media firms. There’s broader evidence that it’s not just social media, but 24/7 access to smartphones that is impacting the mental health of kids.
And it’s not only children experiencing the dark side of online manipulation through design. Last year, Amazon was sued by the FCC, who stated that Amazon’s Prime subscription flow is intentionally designed to not only trick users into signing up for Prime, but also make it hard to cancel. Add to this the FTC’s recently-filed complaint alleging that Adobe knowingly deceived customers by hiding early termination fees with its “annual plan paid monthly” scheme, along with introducing several undue cancellation hurdles.
These large platforms are now paying a price for their market command through regulation, lawsuits, and government intervention. The lesson here is that if you enjoy market power, try not to be overly extractive. Commenting on the FTC case against Adobe, Ben Thompson from Stratechery explains:
“I would, generally speaking, prefer less government regulation rather than more, and I think I speak for a lot of people in tech in that regard. Those people in tech, though, need to appreciate the extent to which choices like this one made by Adobe invite exactly that. No, I don’t think this so-called “dark pattern” is that dark, if you take just a second or two to look at the plans on offer; yes, there seems to me to be far more egregious cases that break the law in question much more flagrantly (like publications that make you call to cancel).
However, at the end of the day, Adobe wasn’t satisfied with harvesting the natural gains from their dominant market position: they had to make money off of people screwing up too, and it’s hard to feel bad for them facing regulatory action for not doing right by potential customers. […] Indeed, that is the challenge with the long-run: it’s hard to measure, and thus easily forgotten in metrics-driven decisions; all the more reason to have a bias towards doing the right thing, the value of which is eternal.”
His point is that Adobe (and many other platforms) have overstepped their market dominance by also having to trick users, invade our privacy, and addict our kids to devices. It appears that making decisions about your products and services has become far less values- and vision-driven, and substantially more metrics-driven. Essentially, as long as the line goes up, you get to keep your job for another day.
Entropy is real in all systems. It’s the natural state of every complex thing to decay and degrade over time. Big Tech is no different here. Disruption is just not something we talk about anymore, and most companies are past the wave of transformation. Every company is an internet company now, and what comes next is decay.
The platforms that we personally allowed to loom large over the web are getting riskier to use. So how do we reverse this?
Rewilding the web
One popular theory is this idea of “rewilding the web”, which refers to a movement that wants to bring the internet back to its more open, decentralized roots. In their now famous essay, We Need To Rewild The Internet, Maria Farrell and Robin Berjon make a compelling case for returning to the roots of the early web:
“A rewilded internet will have many more service choices. Some services like search and social media will be broken up, as AT&T eventually was. Instead of tech firms extracting and selling people’s personal data, different payment models will fund the infrastructure we need. Right now, there is little explicit provision for public goods like internet protocols and browsers, essential to making the internet work. The biggest tech firms subsidize and profoundly influence them.
Part of rewilding means taking what’s been pulled into the big tech stack back out of it, and paying for the true costs of connectivity. Some things like basic connectivity we will continue to pay for directly, and others, like browsers, we will support indirectly but transparently, as described below.
The rewilded internet will have an abundance of ways to connect and relate to each other. There won’t be just one or two numbers to call if leaders of a political coup decide to shut the internet down in the middle of the night, as has happened in places like Egypt and Myanmar. No one entity will permanently be on top. A rewilded internet will be a more interesting, usable, stable and enjoyable place to be.”
Another thesis on the same concept is “The Web We Lost“ by Anil Dash, which details a more balanced view that Big Tech should be credited with bringing billions of people online and creating incredible value across the web. But Dash also argues that most people today don’t even know what’s possible with what you can create on the web because of the perception that everything is mediated by a large platform.
Molly White adds to this conversation by arguing that it’s entirely possible to return to an earlier version of the web while retaining the things that make the internet great today. This is, in essence, the concept of digital redemption. White puts it poetically:
“When I envision the web, I picture an infinite expanse of empty space that stretches as far as the eye can see. It's full of fertile soil, but no seeds have taken root. That is, except for about an acre of it.”
A practical exploration of the idea of rewilding is the Disenshittify Project, which attempts to build new apps that solve simple problems without tracking, ads, or the monetization of your data. There’s even a list of apps you can co-create to help make the web more hospitable for regular people bit by bit.
I argue that for us to secure a better future for the web, we should embrace more open protocols like the Fediverse and dozens of successful, decentralized methods to do commerce, social networking, and content creation. From TMW #169 | The Protocol Pivot:
“A pivot to back to protocols could change the incentives of the web, from a zero-sum monopoly factory to one where an entire network gets access to value the more protocols are used. The moderation problem goes away as each user controls more concretely what they want to see, and the privacy issue mostly evaporates when the user can control who and for how long data is shared with a third party or an advertiser.
All the main problems of the web trickle down to an economy of major platforms making unilateral decisions that affect us all without our permission. We can and should change that.”
There are ideas out there from some very smart people who care about the “infinite canvas,” but for us to redeem the web, we also must pay a price.
The price we all must pay
What happened during the past twenty years of the web is the slow, yet inexorable trade consumers made for convenience at the sacrifice of control. Our regulators, economy, and people like you have, by and large, made that trade. And it’s not altogether a bad one!
Knowing that my searches are consistent, the fact Google can guide me in a new city according to my historical preferences, or that I can pull up a great movie on Netflix at any time, are distinct benefits.
The accessibility of the smartphone makes so much possible. Social connections have transformed my career, and I’m sure yours as well. But in all of that, I’ve decided to rely on a handful of concentrated platforms to get access to these products and their associated benefits.
It seems as though this was always inevitable; the incentives and business models of the web favor scale and concentration. Can you even imagine life without Google Search?
The price of redemption is to remove consumers from the convenience of interconnected platforms. And this price will be borne out by marketers and advertisers. If Google gets broken up by the DOJ, it will mean a more fragmented advertising landscape. Less convenience. It may even increase costs as economies of scale are diminished.
The European Digital Market and Services Act is heading exactly in this direction. Meta can’t monetize without explicit user consent in Europe, and because of this, Meta attempted to require users in Europe to pay to use their social platform. Expect more of this when regulators tighten the vice around Big Tech and its many issues:
“Here’s my back-of-the-napkin math of what this does to companies. Harsher conditions and lessening online channel effectiveness will attract fewer marketers. Fewer skilled marketers driving growth and revenue will mean that EU companies will struggle to grow. This equates to a negative cycle of less overall growth for brands, and fewer startups building and growing out of Europe.
Forcing Apple to make another app store (and by doing so, lowering their standards and ease of use), making Meta offer a free version, and ensuring that Google can’t use US data centers for products like Google Analytics, are all huge disincentives for connecting Europe to the global online growth machine.”
This is a cost Europeans are willing to pay to create a more competitive web. And it won’t be the politicians bearing the brunt; it will be marketers in small- and medium-sized companies wanting to reach people with their products at scale and across various markets.
Breaking up monopolies and the issues they are causing on the open web means a more fragmented web, and yes, a less convenient and secure web. But is the cost worth it to redeem the web and build a better future for the next generation of builders, marketers, and entrepreneurs? Europe thinks so.
Redemption is a hopeful word. It means that trust can be restored, forgiveness can be obtained, and a better future is possible. The companies we have entrusted with control over the web continue to do harm. But if redemption will be the defining characteristic of the next decade of the internet economy, are you prepared to pay the price?
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