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THE GENERAL THEORY OF ENSHITTIFICATION  
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Paul Krugman
July 24, 2025
Paul Krugman Substack
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_ Once almost everyone was using the internet, it became possible for
businesses in a variety of areas to build up customer bases sustained
by strong network effects. And one after another, these businesses
have gone through the enshittification cycle. _

Cory Doctorow, the prolific author, activist and journalist, proposed
the idea of the "enshittification" of social networks over time,
screen grab

 

Everyone loves enshittification. Not the thing itself, of course. But
Cory Doctorow’s neologism was an instant hit, neatly encapsulating
the public’s growing disappointment, sometimes bordering on rage,
with what was happening to internet platforms. His pithy summary of
the process
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brilliant:

Here is how platforms die: first, they are good to their users; then
they abuse their users to make things better for their business
customers; finally, they abuse those business customers to claw back
all the value for themselves. Then, they die.

I argued earlier this week
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enshittification has a lot to do with the way the tech industry has
fallen out of public favor:

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Source: Gallup

And the increasingly anti-democratic rage of tech bros is, I’d
argue, in part driven by their awareness that people don’t love and
admire them the way they used to, and their belief that
they _should_ still be the culture heroes they once were.

But without detracting from the brilliance of Doctorow’s discussion,
I’ve become convinced that his analysis is too narrow, focusing only
on certain kinds of social platforms. In fact, the basic logic of
enshittification — in which businesses start out being very good to
their customers, then switch to ruthless exploitation — applies to
any business characterized by network effects. It may go under
different names like “penetration pricing,” but the logic is the
same.

Doctorow’s final stage — “Then, they die” — may also be
wishful thinking.

So let me talk a bit about the economics of enshittification, as I see
it, then follow up by talking about how enshittification can mess with
our heads in several ways. The title of this post is, of course,
facetious. I don’t have a general theory to offer, just some
hopefully clarifying ideas.

Suppose you run a business whose product, whatever it may be, is
subject to network effects: the more people using it, the more
attractive it is to other current or potential users. Social media
platforms like Facebook or TikTok are the currently obvious examples,
but the logic works for services like Uber or physical goods like
electric vehicles too.

What’s the profit-maximizing strategy for your business? The answer
seems obvious: offer really good value to your customers at first, to
build up the size of your network, then enshittify — soak the
customer base you’ve built. The enshittification could take the form
of charging higher prices, but it could also involve reducing quality,
forcing people to watch ads, etc. Or it could involve all of the
above.

As I said, this business strategy seems obvious, but I thought it
would be a good idea to clarify my thinking by returning to my
professional roots and writing down a little mathematical model. If
you’re a normal human being I wouldn’t recommend reading this, but
if you’re a masochist here it is:

A SIMPLE MODEL OF ENSHITTIFICATION DOWNLOAD
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In my little model I don’t leave any room for degrading quality;
enshittification takes place solely through higher prices. The model
predicts the following paths for the price, P, and the customer base,
B:

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In this simplified, stylized model enshittification happens all at
once, with a sudden jump in prices. It’s not hard to think of
real-world reasons the process might be more gradual and stealthy —
the ruthlessness might sneak up on customers rather than being
revealed all at once. On the other hand, I was struck by
Tuesday’s discussion of Uber
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Bloomberg’s Odd Lots, and Uber’s move into profitability has been
quite sudden:

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Gotta say, “earnings inflection strategy” as a term for squeezing
your customers — basically, enshittification — is a euphemism to
be savored.

One last point: In my little model, the story doesn’t end with the
firm dying. It ends, instead, with stagnation — the monopolist
increases prices and/or reduces quality enough that his base stops
growing, but not enough to drive it away. For what it’s worth, that
appears to be the story so far for Facebook, whose user base has
plateaued but not crashed. Twitter is a somewhat different story, but
this post is about enshittification, not Nazification.

Side note: I don’t post on Facebook. I think I may have tried once
many years ago, but if you see accounts claiming to be me, they’re
impostors.

Anyway, to summarize: a history in which firms start out offering
great stuff at low prices but eventually offer worse stuff at high
prices is the natural life cycle for any industry with strong network
effects. It’s the story of Facebook and Amazon. It’s also, I’m
pretty sure, the story of the rise and fall of Peak TV
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Why do such stories seem more widespread than in the past? Well, the
internet isn’t the only source of network effects, but it does make
them more likely. And the internet only really became pervasive during
the 2000s:

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Once almost everyone was using the internet, it became possible for
businesses in a variety of areas to build up customer bases sustained
by strong network effects. And one after another, these businesses
have gone through the enshittification cycle.

That’s bad. Like everyone, I miss good service, good prices, and
quality entertainment. But a further problem with enshittification is,
as I said, that it messes with people’s heads.

For users, it’s all too natural to see the degradation of their
experience as a morality play. Once upon a time, the fantasy goes,
there were nice guys who ran their businesses in the public interest.
Then, however, they became corrupt, or were forced to behave badly by
venture capital, or something.

But they were never nice guys. Doctorow is good on this
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Now, the guy who ran Facebook when it was a great way to form
communities and make friends and find old friends is the same guy who
has turned Facebook into a hellscape. There’s very good reason to
believe that Mark Zuckerberg was always a creep, and he took
investment capital _very_ early on, long before he started fucking
up the service. So what gives? Did Zuck get a brain parasite that
turned him evil? Did his investors get more demanding in their clamor
for dividends?

As Tessio says in The Godfather, it was always “only business.”

The thing is, the enshittification cycle also messes with the heads of
the people running these companies. They were loved when the public
imagined, falsely, that they were the good guys. Now they aren’t.
And it drives them crazy.

OK, I should talk about policy responses to enshittification. But this
post is already too long, so I’ll come back to that another day.

_I [Paul Krugman) am an economist by training, and still a college
professor; my major appointments, with some interim breaks, were at
MIT from 1980 to 2000, Princeton from 2000 to 2015, and since 2015 at
the City University of New York’s Graduate Center. I won 3rd prize
in the local Optimist’s club oratorical contest when in high school;
also a Nobel Prize in 2008 for my research on international trade and
economic geography._

_However, most people probably know me for my side gig as a New York
Times opinion writer from 2000 to 2024. I left the Times in December
2024, and have mostly been writing here since._

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* Cory Doctorow
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* enshittification
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* Social Networking
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