Enshittification: the moral rot that threatens capitalism

“Enshittification” is a term coined by author Cory Doctorow. It describes the moment a company stops trying to win customers with value and starts attempting to trap them to extract money.

It is a specific, predatory trend where companies deliberately make their products worse to meet the demand for short-term profit. The apps we once loved become increasingly frustrating to use. The services we've relied on for years are suddenly cluttered with advertisements, hidden fees and unnecessary upgrades that don't actually improve anything.

Not only is this bad for the people using these services, but in the long run, it is catastrophic for investors. This trend of corporate decay threatens the very moral legitimacy of capitalism itself. To protect the free market, we must tackle the root problem head-on.

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To see this, we must look at a source of wisdom from outside the free market. Most capitalists tend to switch off the moment a trade-union leader starts talking about corporate greed. When the National Union of Rail, Maritime and Transport Workers (RMT) launches an attack on parasitic middlemen, it is easy to dismiss this as class-war rhetoric. But in the case of the RMT's crusade against Trainline, the union is right.

Current RMT boss Eddie Dempsey and his predecessor Mick Lynch argue that Trainline has inserted itself as an unavoidable digital toll booth. It charges booking fees to customers and takes commissions from train operators such as Avanti, often 5% per booking, while adding almost zero tangible value to the journey. What was once a simple transaction has become a tool for extracting rent. The service has become a digital tax while senior executives collect multi-million-pound pay packets. This is an example of a dominant company resting on its laurels because it has achieved a monopoly. It doesn't have to innovate; it just has to exist and extract.

Enshittification turns moats into cages

Doctorow says that “enshittification” follows a specific, three-stage life cycle of corporate decay. In the first stage, the platform is good to its users, often subsidising services to lock them in. Once the users are captured and the competition is dead, the platform shifts to being good to its business customers, such as advertisers, at the expense of those original users. In the final, terminal stage, the business becomes hostile to everyone, squeezing users and partners alike to maximise returns. It is the business equivalent of a strip-miner: once the ore that's easy to reach is gone, it starts tearing up the foundation of the mountain just to find a few more ounces of profit.

In the book The Myth of Capitalism, Jonathan Tepper explains that this is the death of high-functioning competition. When companies abandon efficiency and stop offering the best service, the rot sets in. They replace competition with so-called “moats” that are really just cages, designed to trap customers rather than win them. In the process, the free market stops working as it should. It is easy to see why company directors would do this. In the short term, extraction boosts margins and placates the quarterly demand for growth. But for the long-term investor, this behaviour should ring alarm bells. When a business shifts from being customer-obsessed to becoming extraction-obsessed, it is usually because it has run out of ideas. It is no longer growing the pie; it is eating it.

The extraction phase of a company often looks like a success story as the company becomes more profitable long before it looks like a disaster in the real world. For a short-term trader, this is the sweet spot: margins are expanding and the monetisation strategy is working. But a long-term investor must distinguish between a company that is creating new value and one that is exploiting brand equity.

The playbook for “enshittification” was refined by private equity firms. The strategy is to find a brand with decades of accumulated trust and milk it until the brand is a hollowed-out shell. For 50 years, Dr. Martens was owned by the Griggs family in Northamptonshire. It was a business that championed British manufacturing and made high-quality boots. In 2013, the family sold the business to the private equity firm Permira for about £300 million. Permira's strategy was textbook extraction: it moved production to cheaper locations in Southeast Asia, diversified the brand into flimsy products such as cheap T-shirts to promote the brand and hiked prices. By the time it brought the company back to the stock market in 2021, the valuation had ballooned to £3.7 billion.

On paper, Permira generated a massive return. In reality, the brand had been strip-mined. Today, the consequences are undeniable. Long-term fans complain of the declining quality of the leather and soles that split within months, yet the retail price has outpaced inflation. By harvesting the goodwill built over half a century, the private equity owners extracted billions, but left a hollowed-out legacy. They didn't grow the business; they simply extracted the value of the reputation built by the Griggs family and sold the remains to the public.

For digital platforms, the squeeze occurs when a service becomes so dominant that it acts as a conduit between a business and its customers. Auto Trader and Rightmove are among the UK's premier digital platforms. In their early days, they were revolutionary tools that helped dealers and agents reach a wider audience for a modest fee. However, as they achieved near-total market saturation, the value-creation phase ended and the extraction phase began.

Auto Trader now charges UK dealers an average of nearly £3,000 per month just to be on the platform; a cost that has consistently risen faster than inflation. Its 2024 rollout of Deal Builder sparked a full-scale revolt among dealers. This feature forced dealers into a system that allowed customers to reserve stock for a £99 fee. For the dealer, this meant the inventory was effectively frozen for up to a week for a customer who might never show up, while Auto Trader collected the data and the fee. The platform felt safe making the dealer's life harder because it knew the dealer has nowhere else to go.

Rightmove is following a similar path and currently faces a £1 billion legal claim for allegedly abusing its dominant position to impose excessive and unfair subscription fees. When a platform's profit margins reach 70%, as Rightmove's have, it is no longer a partner to the industry; it is a parasite. The company has stopped innovating to make it easier to buy a house; it is simply exploiting its position to raise the price.

Another form of “enshittification” is the degradation of the search function. Twenty years ago, Amazon's value proposition was simple: the company would help you find the best product at the best price. Today, Amazon has pivoted to becoming an advertising company that happens to ship boxes. If you search for a specific product today, the first several products are no longer the best results; they are sponsored placements. Amazon has introduced a pay-to-play model where the merchant that pays the highest gets the top spot, regardless of product quality or price.

This is deliberate, as the customer then has to work harder and scroll longer to find the product they want. Amazon wins because it collects the fee; the merchant pays up to buy visibility; the customer loses because their time and trust are being harvested. This is the extraction economy: making the product just annoying enough that the seller has to pay to be seen, and the buyer has to pay in time and frustration to find it. This is the behaviour of a slum-lord who stops fixing the plumbing because they know you can't afford to move.

The subscription squeeze

Finally, we have the subscription squeeze, perfectly illustrated by the streaming giants. In the first phase of “enshittification”, services such as Netflix and Disney+ were good to customers. They offered massive libraries for little cost to kill off the old competition (RIP Blockbuster Video). Once the competition was dead and the user was locked in, the extraction began.

Until 2023, for Disney+ the proposition was £7.99 a month for everything. No advertisements, high-definition films and TV, access to the full library. This was the subsidy phase. Once lock-in was achieved, “enshittification” began. In 2023, it introduced a tiered system. By 2024, if you wanted to keep the advertising-free service you already had, the price jumped 12.5% to £8.99. If you wished to stay at the old price, you had to accept a lower-tier cluttered with advertisements.

By late 2025, the prices hiked again. To avoid commercials now, a UK customer is paying £9.99 per month, nearly 25% more than they were two years ago for the exact same service. This is the extraction economy at its most cynical. The company isn't charging you more because the content is 25% better, but because it knows you've already invested years in its offerings. It's betting that the friction of leaving is higher that of paying more for less. This is the ultimate sign of a business in decay: when the primary driver of revenue growth is no longer attracting new customers with a better product, but squeezing the ones it already has because it knows they are too trapped to leave.

As investors, when we see a company transition from growing the pie to eating the pie, we should recognise that the feast is almost over. It is undeniable that the early stages of “enshittification” can be intoxicating for shareholders. When a firm pivots from serving a customer to mining them, the surge in profitability can drive a share price to record highs. But long-term, investors must distinguish between a windfall and a terminal decline. The most resilient businesses are those that realise customers' trust is a non-renewable resource.

Costco (Nasdaq: COST) has a famously customer-orientated culture. Its $1.50 hot-dog combo has remained unchanged since 1985. When co-founder Jim Sinegal's successor suggested raising the price to protect margins, Sinegal's response was: “If you raise the price of the f**king hot dog, I will kill you. Figure it out”. This wasn't about snacks; it was a radical commitment to a business model that refuses to strip-mine its own fans.

We see this same dedication to the customer today with Wise (LSE: WISE). While legacy banks use foreign exchange to hide extortionate fees, Wise is obsessed with transparency, continually lowering prices and increasing speed to make the service better. I would bet on a company that compounds value for its users over a toll-booth value-extractor any day. Milton Friedman, one of the free market's fiercest defenders, recognised the danger. When a business abuses monopoly power to crush competition, it stops being part of a healthy capitalist system and instead invites the very state intervention that ultimately smothers enterprise.

This brings us back to the RMT. We may dismiss its rhetoric, but its diagnosis is a warning we must heed. “Enshittification” is a threat to the moral legitimacy of capitalism. If we allow this rot to persist by rewarding it with our capital, we are handing the ultimate weapon to those who may wish to dismantle the system entirely. To preserve the freedom to invest, we must demand better. To save capitalism, we must stop funding the extractors and start backing the builders.

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