This blog is part of my 38 34 before 38 series. I write a blog for every single day for the 38 days leading up to my 38th Birthday.
The internet is supposed to have “infinite” real estate. You can setup a website or app, and start selling your products or services. But how do you get people to come to your site or install your app. How do you create market your self?
Why, through advertising of course! You have ample opportunities through digital marketing platforms! Great choices like Google, and Facebook, and Apple, and Amazon, and…
That’s it. There are smaller players and regional actors, but you have to go through these giants eventually. They control the flow of information, and/or communication, and/or commerce. They own the “land” that you must trade on. The real estate does not seem very infinite now, does it?
Malthusian Shadow
[David Ricardo] was influenced by the Malthusian model but pushed the argument farther. He was above all interested in the following logical paradox. Once both population and output begin to grow steadily, land tends to become increasingly scarce relative to other goods. The law of supply and demand then implies that the price of land will rise continuously, as will the rents paid to landlords. The landlords will therefore claim a growing share of national income, as the share available to the rest of the population decreases, thus upsetting the social equilibrium. For Ricardo, the only logically and politically acceptable answer was to impose a steadily increasing tax on land rents.
— Capital in the 21st century, Thomas Piketty, et al.
David Ricardo was an early economist. He published Principles of Political Economy and Taxation in 1817. He took up after Malthus, in that he believed that resource scarcity as the primary concern for economics. You have to imagine the world during his time. The population was growing at an unprecedented rate, but wealth was not. Society was still stratified, and hierarchical. Pre-industrial times. The only true way to be wealthy was to own land, and that was not possible for most. Even some who can afford to buy it.
Land was not going to grow. So it followed that it would become scarcer as the population grows. So power would amass in the hands of landowners. The world had a danger of transforming into a play ground for rentiers.
Of course, it did not come to pass. Industrialization changed the way wealth and capital were accumulated and valued. Except on is digital commerce.
Cyber Landlords
Big Tech have realized Ricardo’s nightmare. They have cornered the market on the one limited resource left in the hyper-consumer society; attention. They can’t control what your potential customer does, but they control what they see. If you want your offerings in front of a consumer, you need to pay their rent.
Their “organic” algorithms that are supposed to provide users their most relevant information have success as pre-requisite. You need to already have some momentum to succeed. Which means you have to pay them to achieve any form of success.
They have become the rentiers of the web. Need people to install and app? Better pay Apple and Google for app install ads rent. Want people to buy your new innovative widgets? Better pay that Amazon tax. Want people to visit your site? Google and Facebook require their tithes. They would argue that they provide value to consumers by gatekeeping access in such a way. They would be lying.
The experience for consumers across the board has been getting worse(tkaddlink). Google’s results are terrible, Instagram only shows you rage-bait and cringe trash, and Amazon is just AliExpress with premium shipping. These companies know that nobody likes using their products. They don’t care. They don’t have to.
Years of lax anti-trust enforcement has crushed any fear of competition. They are all you have.
Remedies
The EU regulators have started a clamp down. They have forced Apple to adopt industry hardware standards and open up their phones to outside app stores. They keep fining Google. The US government itself has been engaged in their own anti-trust proceedings against Google. Though I don’t know how far they will go in the coming months.
But regulations have a tendency to entrench establish players. Making competition difficult. The rentiers have the advantage. Not unless we find a way to break their monopoly on our attention.