TECHNOFEUDALISM: THE RISE OF PLATFORM POWER

THE NEW LORDS

In the 21st century, a new economic system has emerged that's very different from traditional capitalism. This system, called "platform capitalism," is dominated by digital platforms - companies that don't just sell products or services, but control the basic infrastructure of how we interact and do business online. Think of companies like Amazon, Uber, and Meta (formerly Facebook). They're not just regular corporations. Instead, they've become the essential building blocks through which modern life operates. 

The Architecture of Digital Feudalism 

Imagine living in a world where control isn’t about owning land, as in feudalism in the Middle Ages, where lords owned all the land and peasants had to work for them, but about owning digital spaces and the data generated within them. This is the essence of "digital feudalism." 

Let’s break it down: 

Platform Lords and Digital Serfs

In medieval times, lords controlled land, and peasants had to work for them in exchange for protection and a place to live. Today, the "lords" are tech companies like Amazon, Google, and Facebook, and the "serfs" are us - the users who rely on these platforms for nearly everything. 

Think about it: 

● Buying and selling: Small businesses depend on platforms like Amazon or Etsy to reach customers.

 ● Social connections: Platforms like Facebook, Instagram, or TikTok have become the main way we interact with friends and family. 

● Information access: Google dominates how we find and consume information. 

● Jobs: Gig workers rely on apps like Uber, DoorDash, or Fiverr to make a living. 

The biggest difference from traditional employment is that these platforms set the rules and can change them anytime, leaving users powerless to negotiate. A small tweak in an algorithm can ruin a business or make a service disappear overnight. It’s a system where power flows one way - toward the "lords." (1)

Data: The New Gold

Instead of land, the currency of this new feudalism is data. Here's how it works: 

1. We create data: Every click, like, purchase, or trip we take online generates information about us. 

2. Platforms collect it: Companies track and store this data - our preferences, habits, locations, and even our conversations. 

3. They turn it into power: Platforms use this data to create more personalized services, attracting more users and collecting even more data. 

Unlike physical resources, data is infinite - you can copy and share it endlessly. But here’s the catch: companies don’t let us access or control our own data. They hoard it, using it to stay ahead in the digital economy. 

Capitalism killed Capitalism

How Platform Capitalism Works in Practice 

In today’s world, tech platforms don’t just connect people, they control how modern economies and workplaces function. Let’s look at two examples to understand how this system works: the gig economy and digital marketplaces. 

The Gig Economy: A New Way of Working 

Companies like Uber, DoorDash, and TaskRabbit have created jobs where people can work as “independent contractors.” But while these jobs offer flexibility, the system is designed in a way that gives most of the power to the platform. Here’s how: 

● Automatic management: Algorithms decide which worker gets a task, where they go, and how much they earn. This system replaces human bosses with software. 

● Dynamic pricing: The cost of services changes depending on demand. For example, during a storm, Uber prices go up because more people need rides. While this benefits the company, workers don’t always see much of the extra money.  

● Ratings control behavior: Customers rate workers after each job, and these ratings are crucial. A low score can mean fewer opportunities or even being removed from the platform entirely. 

● Lack of freedom: Even though these workers are labeled "independent," they have little control over their work. They must follow the platform’s rules, which can change without notice.

Many gig workers face challenges like unpredictable income, no health benefits, and no job security. It’s a system that prioritizes profit for the platform over stability for the workers.

Digital Marketplaces: The New Town Squares 

Platforms like Amazon, Google, and Apple have become the digital equivalents of old town squares, where people come to buy, sell, and interact. But unlike traditional marketplaces, these platforms control the rules and often benefit unfairly. 

● Amazon’s dual role: Amazon acts as both a marketplace and a competitor. Small businesses sell their products on Amazon, but they have to compete with Amazon’s own brands, which often get better visibility and pricing advantages. 

● App store control: Apple and Google run the app stores, deciding what apps are allowed. They also take a percentage of every sale, making it hard for small developers to compete or earn fair profits. 

● Payment restrictions: Platforms like PayPal or Stripe decide who can use their services. If they cut someone off, that person or business can lose access to their money. 

● Cloud computing dominance: Many businesses rely on cloud services (like Amazon Web Services or Microsoft Azure) to run their websites and apps. These companies can raise prices or deny service, leaving businesses with few alternatives.

Why This Matters These systems create a form of economic dependency. Whether you’re a gig worker or a small business owner, platforms control how you earn, interact, and operate. They set the rules in ways that maximize their profits while leaving users and workers with fewer choices and less security. 

Understanding how platform capitalism works is essential to recognizing the power dynamics shaping our digital lives. If these systems continue unchecked, they will deepen inequality and limit opportunities for the average person. 

How Platforms Maintain Control 

Modern platforms have become experts at maintaining their dominance. They achieve this through two key mechanisms: algorithmic management and user lock-in, which ensure users and workers are dependent on their services.

Algorithmic Management 

At the heart of every major platform is a powerful system of algorithms that shape nearly every aspect of how platforms operate. Here’s how they maintain control:

● Deciding what you see: Platforms like Google and social media companies use algorithms to determine what appears in your search results or on your feed. These decisions aren’t random. They’re designed to keep you engaged for as long as possible, often by showing content that aligns with your interests (or triggers strong emotional reactions). 

● Setting prices and wages: In gig economy platforms like Uber or DoorDash, algorithms decide how much a ride or delivery costs and how much the worker gets paid. Workers have no say in these calculations and often find it hard to predict their earnings. 

● Monitoring performance: Platforms track how well workers are doing. For example, delivery times, customer ratings, and response times are all monitored. If performance dips below a certain level, workers risk being penalized or removed from the platform entirely. 

● Influencing behavior: Platforms use subtle nudges to guide users and workers. For example, they might send reminders to drivers to work during peak hours or highlight certain products to buyers. These strategies ensure that behavior aligns with the platform’s goals, not necessarily the user’s or worker’s best interests. 

Network Effects and User Lock-In

Platforms secure their position and become more powerful through strategies that make it hard for users and workers to leave: 

● Network effects: A platform becomes more valuable as more people join it. For example, a social network is only fun if your friends are on it, and a marketplace like Amazon is better when more sellers and buyers participate. This creates a cycle where success attracts more success, making it difficult for competitors to catch up. 

● High switching costs: Once you’ve invested time, money, or data into a platform, leaving it can feel impossible. For example, moving from an iPhone to another phone might mean losing access to apps or features tied to Apple’s ecosystem. 

● Natural monopolies: Certain platforms dominate their markets because it’s inefficient to have too many competitors. For instance, you don’t want five different apps to book rides in one city. It’s easier if one service covers everything. Unfortunately, this also means that one company can dictate terms. 

● Lack of compatibility: Platforms often make their systems incompatible with others. For example, Apple products work best with other Apple devices, making it harder for users to mix and match services from different providers. 

The Result: Limited Choices 

These strategies combine to give platforms immense power over users and workers. They create an ecosystem where leaving feels nearly impossible, and the rules are always dictated by the platform owners. Understanding these mechanisms is crucial to recognizing why platforms have such a firm grip on the modern digital economy, and why breaking free from their control is so challenging. 

Economic Impact 

The rise of platform capitalism has completely reshaped how the economy works. From the way businesses compete to how wealth is distributed, platforms are changing the rules of the game.

Competition in the Age of Platforms 

In traditional markets, businesses compete by offering better products or services. But in the platform economy, competition looks very different because platform companies have special advantages: 

Full visibility into business activity: Platforms like Amazon and Google can monitor all the businesses operating on their systems. For instance, Amazon knows which products are selling the most and at what price. This gives them a huge edge because they can step in and create their own versions of these products, often at lower prices. 

Control over customer access: Platforms act as gatekeepers. They control who gets to sell or interact with customers. For example, if Google changes its search algorithms, some businesses might disappear from search results, losing a lot of their customers overnight. 

Unfair advantages over competition: In the past, laws were designed to prevent unfair competition. But these laws don’t account for the unique power of platforms. For example, platforms can promote their own products over competitors’ offerings, and traditional regulations don’t stop this.

This new dynamic means that small businesses and even large companies are often at the mercy of platforms. Competing with them directly is nearly impossible because the platforms hold all the cards.(5) 

The Concentration of Wealth 

The platform economy isn’t just changing competition, it’s also concentrating wealth in a way we’ve never seen before.

● Platforms capture most of the value: When businesses operate on platforms, they have to pay fees or give up a share of their revenue. For example, sellers on Amazon lose a percentage of each sale to the platform. Over time, more and more of the money from economic activity goes to the platform owners. 

● Dependence on platforms: Traditional businesses are becoming increasingly reliant on platforms to reach customers. Whether it’s a restaurant using delivery apps or a retail store needing an online presence through Facebook or Google ads, platforms are unavoidable. This dependency means businesses lose some of their independence. 

● Low wages for workers: Platforms use algorithms and gig-based systems to minimize costs. For example, Uber drivers and food delivery workers earn just enough to keep them working, but not enough to thrive. With no benefits or job security, workers often struggle to make ends meet. 

● Unprecedented wealth for owners: The people who own and run platforms are amassing wealth at a scale that’s hard to comprehend. Jeff Bezos, Elon Musk, and Mark Zuckerberg are just a few examples of platform owners whose wealth dwarfs that of entire nations. 

The Bigger Picture

This new economy is creating a divide. We have a small group of platform owners that control immense resources, while workers and traditional businesses find it harder to get ahead. If this trend continues, we could end up in a world where economic power is even more concentrated, making it harder for regular people to grow. 

But we don't have to accept this outcome.

The future doesn’t have to be one where a few big companies control everything we do online. We have the power to imagine and build a digital world that is fairer and more inclusive. But making this happen will require effort from everyone; governments, communities, and individuals.(7) Here are some ways we can create a better digital future:

● Stronger laws to keep platforms in check: Governments need to pass rules that prevent big companies from gaining too much control. These rules can ensure platforms treat users, workers, and smaller businesses fairly. 

● Support for cooperative platforms: We can create platforms owned and run by their users. Imagine a ride-sharing app owned by its drivers or a social network managed by its community. These alternatives would spread power more equally.

● Investment in public digital infrastructure: Governments can build free or low-cost digital tools and spaces for everyone to use, just like they provide public parks or libraries. This would reduce our dependence on big tech companies. 

● Countries working together: The internet connects the whole world, so countries need to cooperate to make sure no single company or nation dominates it. Shared global rules can help keep the digital world open and fair. 

● Education and awareness: The more people understand how platforms work and the risks they pose, the better equipped we are to demand change. Schools, communities, and the media all have a role to play in spreading awareness. 

The big challenge is finding a way to keep the good things that platforms bring - like convenience and innovation - while stopping the problems of concentrated power. 

We all have a role in shaping the digital future. As users, workers, and citizens, our actions matter. By choosing alternatives, supporting fairer systems, and holding platforms accountable, we can help decide whether the internet becomes a tool for empowerment or a system of digital feudalism. 

The future isn’t written yet. Together, we can work toward a digital economy that serves everyone, not just a privileged few. 

Thanks for reading. Abrazos.

Diego Rojas