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this post was submitted on 02 Jul 2023
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Technology
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Yep. Web/tech companies generally had an easier time than most dealing with the pandemic, and capitalism, in all its reactionary, short-sighted wisdom, smelled profit and massively over-invested, so companies grew faster than they knew how to handle.
Cut to ~6 months ago and most of them had nothing to show for all of that money (Reddit being a great example - in the time between their massive expansion and now, they only thing they actually added were wildly unpopular NFT avatars). But capitalism demands that profits increase at an increasing rate, so they have to squeeze money from somewhere, which is how we got the massive tech layoffs at the start of the year.
Now they need to find even more ways to increase profits, but many of them are at the point where finding ways to monetize is actually really difficult, so they're tying to squeeze money out of everything they can find - Reddit's API changes, Twitter trying to push people towards blue with arbitrary limits, wholesale shuttering of things like Gfycat. Now obviously that's going to cause a bunch of problems with user trust and retention but who cares about that? That's a tomorrow problem, and we need profit now!
Capitalism working as intended.
Great analysis. I'd add that, as that famous article states, platforms are in a unique position for enshittification as they stand to bleed value from both users and advertisers/creators. Whereas a traditional business like a hardware store needs to keep a certain level of customer satisfaction (low as it is) and cannot pretend to survive by selling nonfunctional hardware.
The great irony of Web 2.0 is the pandemic forcing massive shifts to work from home, coupled with the Republicans taping down the button on the Federal Reserve money printer, meaning Silicon Valley tech companies have never had it easier, since the world ran on their digital infrastructure for like....2 solid years, and then after bills came due they realized they'd overinvested in both physical property and personnel (things that Silicon Valley companies had famously tried to either disrupt or make obsolete since at least the 70s), so they've tried to kill work from home as a way of instituting "quiet layoffs" and leverage their tangible assets as collateral like a broke dad who owes back child support trying to pawn his baseball card collection. Fucking California Ideology. Couldn't happen to a nicer group of assholes.
It is not only the pandemic. Even before, during the last decade or so, they got the VC investments. Now with rising interest rates and the shift to AI capital is drying up for the web2.0 bubble.
Yeah, painting this as a downstream effect of the pandemic is just wrong. This has been coming for a long time and would have happened no matter what caused interest rates to rise.