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- [00:01]
A
What's up everybody? My name is Demetri Kofinas and you're listening to Hidden Forces, a podcast that inspires investors, entrepreneurs and everyday citizens to challenge consensus narratives and learn how to think critically about the systems of power shaping our world. My guest on this episode of Hidden Forces is Tim Wu. Tim is a professor of law, Science and Technology at Columbia Law School. He's the author of several influential books on the history and intersection of technology and power, and works in the White House as Special Assistant to the President for Technology and Competition Policy. He joins me today to put all of that experience to work in an incredibly important and timely conversation about his latest book, the Age of Extraction, which explores how the rise of platform power has become the defining economic event of our time, why it's responsible for much of the current dysfunction, from politics and media to housing and healthcare, and what we can do to take back control of the Internet and create an economy that works for everybody, not just those at the very top. He and I spend the first hour of this conversation discussing how platform power has become the central form of economic control in our era, why the Internet went from being a freewheeling and optimistic ecosystem of entrepreneurship and creativity to one whose business models of extraction dominate it today, and how platforms have been weaponized against their users in order to capture and extract economic value rather than created. The second hour is devoted to a discussion about the plethora of readily available solutions to our current predicament like antitrust enforcement, line of business restrictions, utility rules and caps, mandated transparency of the platform's objective functions, and the need for alternative business models that don't treat human users like industrial farm animals to be milked and sheared until every exploitable moment of their attention and has been harvested and exhausted. We discuss why the failure of democracy to address obvious economic problems makes the appeal of authoritarianism more attractive, examine the breakdown of healthcare delivery services resulting from platform extraction, and consider whether a publicly funded alternative to large social media platforms like Meta and X could serve the function of a digital public square by improving our public discourse rather than corrupting it. If you want access to all of this conversation, go to HiddenForces IO, subscribe and join our premium feed, which you can listen to on your mobile device using your favorite podcast app, just like you're listening to this episode right now. If you want to join in on the conversation, become a member of the Hidden Forces Genius community, which includes Q and A calls with guests, discounted access to third party research and analysis, and in person events like our intimate Dinners and weekend retreats. You can also do that on our subscribe. And if you still have questions, feel free to send an email to infoiddenforcesio and I, or someone from our team will get right back to you. And with that, please enjoy this incredibly important and timely conversation with my guest, Tim Wu. Tim Wu, welcome to Hidden Forces.
- [03:25]
B
Great to be here.
- [03:26]
A
Finally, Tim, I had to stalk you and hound you down for a decade. We met 10 years ago almost. I remember I came up to you. I just started my podcast. Actually, it was about nine years ago. It was 2017, and I had already read the Master Switch and I don't think the Attention Merchants had come out yet. I think they came out a year later. I remember coming up to you and this was still at a time where podcasts weren't really necessarily a serious medium. I mean, there were serious people doing podcasts, but really hit or miss. So who is this guy showing up at this conference and he's saying, will you come on my podcast? And I had so many conversations like that and you kind of looked at me a bit askance. And I remember pressing the issue and then realizing that that was going to be a failing strategy because then that was a signal that I was desperate. So finally, after 10 years of establishing myself, I'm able to get you on the show. And it's well worth it because you're out with a new book. The book is titled the Age of Extraction. And it feels like this is kind of, in some sense, it almost feels like a merger of the Master Switch and the Attention Merchants. Where does this book fit in in terms of the canon of stuff you've published in the past?
- [04:32]
B
Yes, I appreciate that you've read the other books and have that perspective. I thought of it as the third in the trilogy. I have wandered through those books to try to chronicle the main moving pieces in the information industries over the last 150 years. Now that's a pretty big mission. And obviously it's not like a comprehensive history of every company over the last 150 years, but the big moving picture. I thought the piece that was missing from Attention Merchants and from Master Switch was this puzzle of platform power and the ascendance of the platforms and how that came to be and where it goes from here. So that's this. It's kind of a part three.
- [05:17]
A
So I just noticed this morning because I actually, even though I have the physical books, oftentimes those are from my records and I read the PDFs because it's easier to highlight and stuff like that. I see that Karen Howe reviewed your book. She'd also been on the podcast, and I was going to observe that, in fact, this feels like a book that falls in the category of a Karen Howe, of a Shoshana Zuboff, where it's, yes, technology features in the book, but it's not really a book about technology. Do you feel like that's a fair description of the construct in which the book falls?
- [05:46]
B
Yes, in a sense, I feel that's like all my books. And I guess I say that partially based on my time in Silicon Valley, where I felt that there was always this internal narrative of Silicon Valley, that nothing we do is like anything else that has ever happened in the universe, and we are not subject to the rules of gravity, like the rules that have shaped companies and fortunes. And so I think that's right. I have always felt. I mean, Master Switch is sort of about how the Internet revolution is not entirely different than the radio revolution and other film and the telephone like previous big revolutions. And I think, similarly, the platform power, in my view, is the most important form of economic power in our times, but also not something entirely new.
- [06:47]
A
Yeah, I'd actually put Tim O'Reilly in that category also, who has also been on this podcast. Aren't you the guy speaking of Tim O'Reilly? Because Tim O'Reilly came up with Web 2.0 as a catchphrase. Weren't you the guy that came up with net neutrality? Wasn't that your term?
- [07:00]
B
That was my term, yeah. That was my term. Almost by accident as a young person just publishing the right paper at the right time. I mean, all that stuff is like.
- [07:11]
A
Does it make you feel old?
- [07:13]
B
I think my daughters do more to make me feel old, but I guess so. I mean, it was back in Colorado at the conference where I first did the paper, and I was like, well, that's 20 years ago. I'm kind of like one of these aging bands that's still playing their hit song or something like that. Except for, frankly, I did move on at some point about 15 years ago.
- [07:31]
A
Yeah. Because I had a conversation with Douglas Rushkoff also recently, and I feel like all of you guys, and Karen, too, because I feel some sympathy with this. We have a sense of what the Internet was, and in the blink of an eye, what we remember the Internet as, this kind of freewheeling, creative, open, permissive, experimental medium has become to feel not just stale, but I was actually reflecting recently that just Twitter specifically feels like a prison yard that we all keep going Back to over and over again because we can't seem to overcome the switching costs to move to a beautiful public park or a beautiful Italian piazza.
- [08:17]
B
I mean, it's totally like, you ever see that movie the Peach, where it's like some paradise that a bunch of people discover and things go off. I mean, part of this book, and this is another reflection on how it relates to the other books, was an effort to write about my own kind of optimism and frankly, Kool Aid drinking in the 90s and early thousands. I mean, I was totally into this stuff. I mean, frankly, from the 80s on, just to date myself. I ran a bulletin board system in the 80s and logging in to other bulletin boards, getting on the Internet. I got the Internet in the late 80s. It was blowing my mind. And if you found younger me and woke me up and said, what's going to save humanity? I would have been obviously the Internet, because it's going to do everything for everyone. So, yeah, the big question in my book, in a sense, it's like, what happened to the dream of the 90s and the idea everything was going to become great?
- [09:20]
A
Well, it seems to me. So maybe you should also tell our listeners what net neutrality was in principle at that time and distinguish between what it is in spirit. Because I feel like one of the key realizations that people seem to have missed about net neutrality is that the concept should have extended to the platform. The concept of the idea of net neutrality should not simply have been about the bits and the physical traffic across the network. And what has seemed to have occurred in the course of the last several decades and since you came up with that term, is that the concern of centralization at the point of the infrastructure and the actual traffic, Internet traffic became choked at the level of software with the platforms.
- [10:01]
B
Yes, I think that's exactly right. And an astute observation. So let me say. So net neutrality was the principle, frankly, that really began in the 70s that suggested that the Internet infrastructure is essential infrastructure and it needs to treat all the traffic equally and not discriminate based on the type of application or the identity of the sender. What that meant in practice was very important for innovation and basically the initial freedom of the web. It meant that even though your stuff was going over the cable company's wires or their coax cable, you could still run video and not have the cable company be like, nope, I'm sorry, video is ours. Or even more, at the very beginning, it was all about the bell monopoly and AT&T and people starting businesses that ran over their wires and preventing AT&T from saying, wait, you can't do that, that doesn't fit our business model or we don't agree with it, or that's stuff that people won't like. So it was an essential guarantee of freedom. To take your point about the platforms. The infrastructure was kind of obvious that they should pass stuff over their wires. The platforms have become essential. And that's kind of the point of the book. I think we all rely on them and the idea they have just no rules whatsoever, how they treat stuff is my mind a little crazy.
- [11:28]
A
So we'll have a chance to talk about AT&T and the Bell system a bit later perhaps, as well as possibly IBM and how that is an example of the waxing and the waning of platform power. But I actually want to take a quote from your book that I really liked as a jumping off point for my next question. You write quote, the transformation of the economy to one in which platform power has become central in tech and other industries show signs of being the signal economic event of the last half century. That seems like a pretty important observation. What do you mean by that?
- [12:00]
B
So I think that power is a defining feature of human existence and our relationships with others. I think we're more familiar with political power expressed through government actions, but that economic power over the last 150 years has become equally important. And the reason I said that the rise of platform power may be the most important development over the last 50 years is I think the source of economic power has changed. If we go back, let's say 200 years ago, it was very clear to people like Adam Smith and everyone writing in the era that land and agriculture was economic power. It was very clear what you can produce with land is economic power and it's expressed in gold, but it comes from land. Over the 20th century, things changed late 19th, early 20th century. And industrial power controls the means of production. Karl Marx's stuff, the stuff he was obsessed with, became obviously the dominant form of power. And if you think about mid century United States producing battleships and becoming the superpower, just as an example, that productive power clearly ruled the roost I think the last 50 years or so. And I got to give Bill Gates some credit, I guess, for pioneering this. The tech firms in particular figured out that you could control, even manufacturing, almost everything by being the platform and controlling what happens in the essential bottlenecks of the infrastructural state. And so that is why I describe the sort of self awareness of the importance of platform power as the Most important development of the last 50 years.
- [13:48]
A
So for people that are interested in learning a bit more about your example of Bill Gates, I encourage them to go listen to an episode I did with Brian McCullough years ago on the history of the Internet. And we actually spent quite a bit of time discussing Bill Gates and the Windows operating system and that moment in the mid-90s where they had a chance to basically run away with the entire ecosystem, and then the Internet and Netscape and the browser got in the middle of it. So what are the economics exactly, of platform power? How is it that platforms have become so powerful in the modern era? And what is the source of their leverage?
- [14:25]
B
Yeah, so a platform. Your listeners probably roughly know what a platform. But I think maybe it's useful to define what a platform business is. It's a business that matches parties for transactional purposes. Any business that is in the business of putting buyers and sellers together, listeners and speakers, they are the essence, the ultimate intermediary, I guess you'd put it, for any economic transactions. Historically, most platforms were neutral and in some ways couldn't help being so. I mean, if you think of, I don't know, like Main street as a platform, I mean, it does bring buyers and sellers together. Stores, they're not really able to cultivate or control what happens. It's a street. It's a dumb pipe, let's put it that way. The economic power that has arisen over the last 40 years or so, 30 years or so, comes out of the ability to control what is catalyzed on the platform and to take money from both parties and other valuable assets in the process of doing so. That is the basic business model of almost every one of the world's most wealthy companies at this point, at some level or another, being the middleman to all the transactions.
- [15:53]
A
Let's dig into those a bit more. You actually identify four specific challenges in the book platforms address. One of them is matching, which I think people can pretty much understand. Another one is the asymmetries of information and trust that they solve for. Another one is distributing economies of scale across a broad range of economic entities and agents, which you were kind of hinting at with respect to, like, Main Street. I mean, like, I'm just thinking of a good example. You're downtown right now, even though you teach at Columbia. 8th Street. I used to go to NYU. 8th street used to be a street where you would just go, and all you would find is, like, shoe stores. Because it was just natural that shoe stores would conglomerate around other shoe stores, and then the customers would just go to that area and they would shop around and they would find what they want. And then the other one is flexible infrastructure that can consistently facilitate disruptive innovations. So basically, like, public infrastructure is a good example, like highway systems and things like this. Can you walk me through how each of these fit together in this concept of the platform in more detail?
- [16:50]
B
Yeah, thanks for that summary. Let me, I guess, preface this by saying, even though maybe I've spoken about it in alarming terms, platforms are extraordinarily important for economic growth and innovation and so forth. So to add a little more to what you said, the fundamental function of a platform is matching. So that is bringing together transactional parties. And that's true of any platform in history. If you go back to ancient Greek agora or something, the marketplaces in ancient Greece or in Rome city squares, they play a function of being a place where people come together. The difference today is that the matchmaking capacities are much more sophisticated. You have search engines, you have algorithmic and artificial intelligence matching. You have a lot more information, which is the second thing. Any kind of economic transaction relies on adequate information, among other things. You want to know that the product you're buying is of reasonable quality. You don't want to feel you're getting fooled. If you really don't trust a market, people don't buy. One of the major things platforms do is provide all the kinds of information you need to actually buy things. In this case, probably the most successful example are the stock markets, which give people enough comfort that they're willing to buy. Which basically a piece of paper that supposedly says you own part of a company. There's a lot of steps that happen in that before people are willing to buy. And the fact that companies are forced to cough up so much information has played a huge role in those transactions. But it's true for almost everything. I mean, think about your own buying. Have you ever not bought something because you're not sure about what's going on with it? And then read a whole bunch of reviews or testimonials or whatever, online or in a marketplace and felt like, maybe I can go with this. I think that's a very important function. The third function that I discuss in the book, and I got to say there's more than way of cutting this. But the third function is a little more subtle, but I think really important, which is the idea that a platform makes it possible for a much broader number of entities. And I mean, here, big, small, whatever, to be in the market if you go back to ancient times, one of the things about a platform is it allowed small farmers who had agricultural surplus to bring them to market and sell. In our time, what it allows is for companies that are not entirely integrated to sell and without buying their own distribution channel. It's kind of a leveler. That is one of, I think the original reasons that everyone was so excited about the Internet was the idea that you didn't have to have a huge setup in your own distribution company and a record label to get your songs to people. For musicians, for example, small sellers could sell on ebay or Amazon. So that's the idea that enables the small to be effective and I think a really important one. The last and final point about platforms, particularly well designed neutral platforms, is that they can be future proof, is that they can survive changes and in fact facilitate changes in technology. And this is a subtle point, but in the book I discuss an example of a failure to be future proof as a platform. And that's the French example of the Minitel. I don't know if everyone realizes this, but not unlike in the Monty Python movie, the French got there first and had a kind of a predecessor of the Internet way before anyone else did. But the problem is they made it specific to the technologies of the 90s and it never evolved. The best platforms evolve as the technology on top of them evolves. We mentioned Main street as a kind of platform. The stores on Main Street, 100 years ago, maybe we're selling buggy wicks and maybe typewriters or whatever. Today the stores are selling things like cell phone repair. And around us there's a lot of cannabis stores opening up. Whatever it is, things change and the platform can adapt. And I think that's a very facilitative function. So you put these all together and you just have a giant pile of economic efficiencies, benefits that make platforms the central of any economy and indeed the center of our economy. The question is, what happens with that power?
- [21:30]
A
When I asked you earlier about the 90s or I reflected on it in my conversations with people like Rushkoff and O'Reilly and others, the subtext was, of course, what went wrong? When I reflect on that question, I oftentimes fall back on. The date that sticks out in my mind is 2014. And I usually tell a story that combines ubiquitous connectivity through mobile and social media. You come down close to those dates somewhere between 2012 and 2013. You actually give a specific date of June 11, 2013, as the symbolic day when everything went wrong. Tell me Your story, what happened on June 11 and how does that symbolic event speak to the sources of the problem and how we got here in your view?
- [22:13]
B
Yeah, I think it's telling that we all agree that somewhere in the early 2000 and tens something went off the rails. And from my perspective, competition was supposed to be the thing that kept the Internet limber and forced companies to stay good. That however, was the day that Google bought Waze and managed to consummate the merger without any challenge from the antitrust authorities. Now there's this thing called a merger to monopoly, which is supposed to be illegal under the antitrust laws to companies combining to create a monopoly. If you think about Google Maps and Waze, they even back then were basically the only shows in town. I think Apple had some kind of product, but it wasn't highly used. And moving back a little bit, Waze, which originally was called Freemap Israel or something, had this kind of, I don't want to say new age, but very web 2.0 or maybe collective vision of how it was going to do mapping. It was all going to be about user contributions and it's like the people's map and it's kind of like to be technical like Linux to Unix, if that lands at all, it's going to be totally different in how it was run. It looked like it was going to be a real contest between Waze and Maps or maybe Waze would be bought by somebody to anchor some kind of alternative ecosystem. But then one day Google just bought them. There are two things there. Number one, okay, so now we're back to as opposed to competitive ideas of the future and what's going to happen instead. We have old school John Rockefeller techniques. So you just buy your competitors. That's number one. And number two, the fecklessness of government in this area was really extraordinary. As I say in the book, I once found a staffer and asked what happened. This was an antitrust party of all places. And she said the boss had the following theory which was that Google is what you use when you want to figure out where you are and Waze is what you use when you want to figure out where you're going. So they aren't actually competitors. In her view, that kind of intellectual bankruptcy captured the era and to my mind epitomized our failure to hold the companies to account and force them to compete with each other in a serious way.
- [24:46]
A
This reminds me of that era of user generated content. Ugc. Yeah, and it wasn't just in things like Wikipedia or Maps. It was also true in content. When YouTube launched, it launched off the back of user generated content. And for a period of time there were many people, myself included, that thought that the future would be user generated content. But what we found was actually, and this is not a failure of the marketplace, it just reflects consumer choice. It turns out people didn't want user generated content as much as they wanted highly edited, gatekept content. They wanted professionally published services, which I think, not to derail us, but maybe we'll have a chance to discuss this, which I think does speak to. It's like this interesting line that the platforms look to walk, which is that they're increasingly acting as editors, or actually full blown editors. I mean, they completely control, in fact, they make more editorial choices, I would argue, than the New York Times editorial board or any of the journalists at the New York Times. And yet they claim to be independent, objective, just service providers. They're not putting their thumbs on the scale. So actually maybe you can speak to that a little bit, because that seems to be one of the central challenges in thinking through this stuff. The Twitter file is another great example. There was all this outrage about how the government, understandably that the government was involved. But the larger question was never addressed, which is that a handful of private actors are controlling all the distribution of information. And it's not just about suppression or censorship, it's also about amplification. It's about everything. So is there also, do you think, just fundamentally a lack of understanding by the public about just how captured our speech is?
- [26:36]
B
Yes, I think you put your finger on this. Well, so going back to the original vision, in the 90s, the vision was, well, in the 80s it was like the Usenet chat. And then in the 90s it's like the AOL chat room. These are all very dated references. But the basic idea is that the main platforms, I say that because that's when some of the laws were written in this area. The basic idea is you'd have these open and free discussion forums. And that was the idea of what the Internet was. And it was all going to be about people spontaneously talking about what they wanted to talk about and so on and so forth. And at some point, and I agree with you, And I think the 2010s is when it really became most serious. The major tech companies went from being, I guess, neutral platforms and became much more like media companies. But they did it in a different way, which is as opposed to like the New York Times does. The New York Times meets every day. The editors and they decide, okay, what's going to be on the first page and what are we going to run at all. The difference was, and I think you can speak to this too, that well, first of all, it's like they have a million journalists. But second of all, it's like, okay, what are we going to emphasize and de emphasize what is even sticking with this platform model? What are we going to make sure people see? How much is that going to be tied to who they are? There's this way of taking control of what the message and the flavor of the platform is, yet without being like a traditional editor. I think that's what they became. They became the strange hybrid of a platform and a media company. And I agree with you, the takeover of that role really changed this whole idea of user generated content.
- [28:36]
A
And further to the point, I'm reminded again, I'm just going to go with these things that just pop into my mind. I remember an interview, a joint interview that Bill Gates and Steve Jobs gave years ago. I don't remember who was interviewing them, but the conversation converged at some point around taste. And Jobs conceded observation that essentially Bill Gates and Windows just didn't have any taste, Microsoft didn't have any taste. And I feel like that's also true in this case, which is that at the end of the day, these platforms have no taste. They view the platforms and the content that's distributed through that as basically the conduit through which to stuff people with paid advertising and grow their revenues by matching advertisers with people that might potentially buy their crap. And that's basically what the whole thing has become. It just become a way of selling ads and nothing else.
- [29:28]
B
Yeah, I mean, I agree with that. I think you go either in two directions. One, you are like the original idea and you truly are just an open Internet. And maybe the closest to that right now is Reddit. I guess among the. I mean, I'm not saying Reddit doesn't sell ads, but it's kind of. I don't know how many subreddits they have, but a lot.
- [29:45]
A
But also selling ads as banner ads or whatever pop ups is totally different than what these platforms are doing.
- [29:52]
B
Yes. And then other than that, if you're going to curate, just in terms of having good taste, if you're going to curate, then maybe you want a fully curated product that at least has some dignity. But we're kind of stuck in the middle pretending to be a platform, but as you said, basically taking people's worst instincts and throwing the back at them and trying to get them honed in on their worst fears. And this is the attention merchants. But basically feeding on the lowest human emotions of all kinds as a business model is not been the greatest thing for either the Internet or our civilization.
- [30:30]
A
I'm sure that there are people out there. I've heard of these people. I actually don't know any of them personally. I think these platforms are great. They like the way they are. Those people might be happy addicts like Kurt Cobain or something just careening towards their demise. But for those of us who feel like things have gotten worse, my question is, does it matter? I mean, does it matter that people's experience and when I say does it matter, I don't mean in a cosmic sense. I mean from a consumer choice point of view, does it matter at the end of the day, will there be consequences first, beginning just at the market level, Is there a tipping point where people just check out and the model no longer works? And then two, is there a point at which the public discontent grows so large that it becomes a whipping boy for politicians and then regulatory changes become inevitable?
- [31:18]
B
I mean, I think it depends if we're talking about social media or platform power more generally. So maybe. And you're talking about social media right now.
- [31:24]
A
You're right, I'm talking about social media and I would throw YouTube in there as well. But platform power extends to things like Amazon and stuff like that. So take that question however you like.
- [31:32]
B
No, I mean I'll talk about social media first. I mean, I think much of the damage has been done with social media and we should have. It is a good example of where we just kind of let everything fly out on a belief which many of us held that if you just sort of let chaos rule something good will. Which I sometimes think is the right answer. But frankly, I mean this is the subject of the attention merchants. A business model, as I said, that feeds on the deepest, darkest emotions that people have, feeds on our worst tendencies, tries to generate addiction, tries to feed. It just is not going to be good for civilization. And in the United States just sticking here. We're so divided. Such terrible people say terrible things about each other. It's just hard to be proud of what we've become. I think the damage is done and I don't think it. Hopefully it doesn't matter where you are politically or ideologically. You can't think this is what you think a good civilization looks like. So I think that damage is already done in terms of if I can turn to platform power, if you will. Let me go there. I think the subtle but then increasingly obvious ways in which platforms dominate the economy and take more and more from every other industry and are copied by industries contributes to a different sort of problem. So it's less about just having a a failed civilization and more about economic inequality, anger about monopolization, a sense of unfairness, economic insecurity, which historically has tended to lead to a lot of instability in extreme versions, leads to revolutions and war. So I think we've marched pretty far down that path. It's not only the tech platforms. I think we have an economy that has centralized wealth in finance and tech particular and made a lot of other people very resentful about that fact. And I think our politics reflects it. And as I say in the book, if you don't manage to start addressing those kind of problems, the result, we've seen it in so many other countries, Russia, Germany. The result is increasingly unstable politics. So that's a little bit going beyond I'm annoyed at Twitter and more into.
- [34:00]
A
Actually, I do want to explore those things because not only do you go in depth with case studies like Amazon in the book, but also stuff like the healthcare system where we've seen a lot of these private equity rollups that have destroyed private practices that we've all experienced. I've written about this recently as well in some newsletters or housing, so we're going to get to that. But let me rage a bit more about social media as a content creator, because this reading your book gave me cause to think about this a bit more deeply and it sort of combines the forces of artificial intelligence into this conversation or merges them. So as a content creator, my time in this business not making money for a long time. I wasn't making any money when I started my first blog in 2006, but this goes back two decades now. Speaking of feeling old, and I remember that when I started the same economics that held for content creation held for the broader software industry. It was the zero marginal cost economy. There was no additional cost to gaining additional readers. The cost was all upfront in writing and publishing the information. And that has essentially been the model. And it's been coupled largely with advertising. On this show I elect to go to a subscriber model, but for the most part it's been advertising. And even with subscription models, the same economics, some of the core economics, certainly on the cost side, hold. I feel increasingly like, because I've been seeing this recently with the adoption of large language models, that there's a tsunami of content heading toward me. And this isn't just true. At first you would expect it to see this on the kind of low level crap content out there. But I even see this with folks who are very smart and are able to reproduce smart content by training LLMs on having their voice so that there's stuff actually now that I might want to read that I don't even have time to read. And so I'm just curious if you've thought about this at all. In other words, this problem of just there's just too much information so that even in theory, if all the information you exposed to was interesting, there would be so much of it that you experience a kind of attention paralysis. And I wonder if you think that there are implications for the business logic of the zero marginal cost economy leading to a kind of breakdown in a sense.
- [36:22]
B
Yes. And by that just let me be sure I understand what you're saying because you're saying the zero marginal cost of content creation, software creation, both of which are information, both of which can be replicated at almost zero cost, right? You're saying that non human actors are better positioned to take advantage of that.
- [36:39]
A
So I'm saying two. Thank you for asking for clarification. I'm saying two things. First of all, I absolutely believe that the non human angle actually aligns really well with your Amazon case study. So let's take that for a second. In the Amazon case study, you explore how independent retailers selling on Amazon Marketplace eventually got squeezed to death on fees. At first they were able to make a viable living, it was a great model. But eventually they either got squeezed to death because the costs kept growing, all these hidden fees, like when you're checking out at a hotel or Amazon launched independent brands, their own brands that competed directly with these and put them out of business. Dude, this is the model for the vast majority of influencers on these central platforms. AI is going to push all these influencers out of business. Why? Again, because most of the content creators, interestingly enough, evolved basically to align their content with the objective function of the platform and they just became basically conduits for ads. And so those people are going to be replaced right away. So I think actually like that is one interesting observation, which is going to be the mass levels of unemployment in the influencer economy, which I'm not pulling out any small violins for those people. But then the other observation I was trying to make, and thank you for asking for clarification, is that I know smart people. A good example is a friend of Mine, who recently started sending me these 20 page papers of his thoughts that were produced by AI, by him having spent all this time training it on the corpus of tweets and other things that he's published. And he was sending these to me and they look very interesting and I wanted to read them. And even if we assumed that they were done perfectly and they were all very interesting, I just didn't have time. I was so overwhelmed by the amount of content. And so what I was basically getting is that up until now, the economics of content creation have really been about how do you just get more stuff out there because the platforms rewarded you. This is certainly the case in podcasting. The fact that we publish once a week is something that's actually a negative for this show because we get down rank on visibility. But at what point, if it becomes so easy to produce content, and even if we could theoretically assume that all that content was great, where does it all kind of break down? Because at the end of the day, individual human beings have to be in a position to absorb it and their minds can only take in so much information. So it seems like there's a breaking point here somehow.
- [38:54]
B
No, I agree. I mean, I think that one of the questions that I think it will animate the next 20 years is, are like, what are the real scarcities in our time? I think economics and all of human behavior is driven by scarcity. And sorry to get really big picture, but if you're talking 200 years ago, people don't have enough food to eat or whatever. And that's like the competition for material resources is kind of the primary one. And human labor and the ability to manufacture things, another giant scarcity. When you innovate around, you invent things, you eliminate other scarcities. It all comes down to time. This is just like physics, it's really hard. The fact is 24 hours is what we got. It doesn't matter who you are, rich or poor, the week, the day does not expand. I guess you can do without some sleep, but there's only so much of that you can do. And so the limiting factor in almost everything with humans as the assuming we are still the economic units we're talking about is time. And in that sense, the quality of the content being produced, if a human has to absorb it or read it, that is becoming everything. Frankly, I think the platforms understood this well 10 years ago and have tried everything they can to capture the last resource, which is time. How much time do you spend on the major platforms versus other entities you can tell where the future lies. Now, to their credit, they're one of the few companies that really managed to grab some time in our era and that shows you where the competition really is.
- [40:49]
A
So I love this. What a great transition. These platforms optimize for engagement and also time spent on platform. I don't know if you directly connect this observation in the book, but you do talk about economies of scale tipping into dis. Economies of scale. And that's where monopoly power becomes so important because now there's no more incremental profit to be gained by expanding your product offering or increasing quality. At this point, you're basically using coercion to extract. And again, the name of your book is the Age of Extraction to extract profits from your users and in this case the Internet, who you treat like cattle. And it seems to me that we may be reaching a tipping point where the juice is no longer worth the squeeze. Or rather that the users of these platforms find these experiences so awful that they independently begin to drop off and no longer voluntarily participate in the marketplace because the incentives are so broken. Does that seem like a plausible hypothesis to you?
- [41:52]
B
I mean, it is plausible. If I were betting on AI as the successor to the tech platforms, and I think one of the greatest questions of our time is whether AI fortifies the platform model or challenges and maybe destroys it. If I were betting on on AI, it would be that no one's going to spend time on platforms anymore because of the sheer magnitude of junk there. And what they'll want is an AI to find them the stuff they want on the platform. Now the weird part about that is the platforms rely on, you were saying, on user generated content or people being active on them. And so if that's what AIs are harvesting, somehow the model is going to collapse. In fact, there's literature called model collapse on just this problem. But I think it is a clear and present danger in the book. And as you've described, I see their business model over the last seven years, maybe 10 years as having evolved away from trying to offer anything like a product and more a model not unlike a casino, where the whole idea is just keep people there. You know, time is the most precious resource and you know, the more people are on your platform, you'll get something off them. Whether it's assets, whether it's data, whether it's advertising revenue, whether it's fee revenue. You just want to keep people there and who cares what they're doing.
- [43:29]
A
For.
- [43:29]
B
A long time, like reading other people's ideas or Looking at other people's pictures. I mean, that's been a pretty good model, buying things on a giant marketplace. But I think they think platforms think it's vulnerable. I think the heavy investments in things like sports or movie studios shows that in a sense, it's almost like a casino where they want to have restaurants where people go and hang out for a while, or movie theaters. There's a sense you got to do more to keep people on the platforms. But this is a slightly meandering. But I think that is the game right now, who has the most loyalty of the most people. And that's obviously a number to be significant and is measured in hundreds of millions of people. And that has become the contest for economic supremacy in our time.
- [44:19]
A
Just a quick observation, then I'm going to move us to the second hour. I'm pretty sure you talk about B.F. skinner in the book because so many of these behavioral algorithms treat humans in this basic scheme of stimulus response. There have been subsequent research studies that I've read about, one of which comes to mind where they put electrodes in the mouse's brain and basically whenever it hit a certain switch, it released dopamine. And the things just hit the switch until they die. And it feels like we've set up a model where it's so extractive that it's creating people who are less productive, less able to meaningfully contribute to a human economy. And so it cannibalizes itself. It tips the very resource that it depends on into ecological collapse. And it feels to me like one way or the other, whether it's the business model breaking down or the Internet platform experience itself becoming so unlivable that people voluntarily choose to drop off or reject the program. That's something will have to change. What I'm very interested in speaking with you about in the second hour, Tim, is what comes next, both from a public policy and marketplace innovation standpoint. What can we expect to see in the coming years? What are some of the very simple but powerful innovations that could fundamentally disrupt and improve this broken system? And how can some of these changes apply not just to the technological platforms that we spent quite a bit of time talking about so far today, but also the platform model in general in places like, for example, healthcare and housing, which you also explore in the book. For anyone new to the program, Hidden Forces is listener supportive. We don't accept advertisers or commercial sponsors. The entire show is funded from top to bottom by listeners like you. If you want access to the second hour of today's conversation with Tim Wu, head over to HiddenForces IO subscribe and sign up to one of our three content tiers. All subscribers gain access to our Premium Feed, which you can use to listen to the rest of today's conversation on your mobile device using your favorite podcast app, just like you're listening to this episode right now. Tim, stick around. We're gonna move the rest of our conversation onto the Premium Feed. If you wanna listen in on the rest of today's conversation, head over to HiddenForces IO subscribe and join our Premium feed. If you want to join in on the conversation and become a member of the Hidden Forces Genius community, you can also do that through our subscriber page. Today's episode was produced by me and edited by Stylianos Nicolaou. For more episodes you can check out our website at hiddenforces IO, you can follow me on Twitter cofinas and you can email me at infoiddenforces. As always, thanks for listening. We'll see you next time.