The horror of the internet has three causes

1. As understood even 20 years ago, tech firms need to obtain network- (and/or IP-based) monopolies in order to earn returns that would justify the financial investment.

2. To obtain these monopolies, firms offered their products and services for free (Google, Facebook), or below cost (Amazon, Uber). While the companies did not so intend, their strategy had the short-time side-effect of generating enormous goodwill among consumers. (Remember this? “Amazon, as best I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers.”)

3. Once they obtained their monopolies, the tech firms rationally engaged in what economists call “rent-extraction”—raising prices or reducing costs by degrading service, which often took the form of violating promises to protect data privacy, bombarding users with ads, failing to maintain earlier quality standards, or all three. Consumers felt betrayed.

4. Meanwhile, the tech firms took advantage of consumers’ unfamiliarity with the new commercialized internet. People didn’t (and mostly still don’t) understand that:

a. When they reveal data about themselves in piecemeal, seemingly harmless ways, they enable tech firms to aggregate the data in ways that may compromise their privacy, autonomy, and even safety.

b. When they use convenient services on the internet, they are often being subtly manipulated in ways that make it difficult for them to stop using those services, even when those services are no longer convenient.

c. When they express their opinions on the internet where normal social cues and expectations are obscured, they often do so in ways that deeply offend, even enrage, people that they don’t want to offend or enrage, and would never try to do so in other settings.

People have been socialized in how to use the telephone, how to write letters, and how to talk to people in professional and social settings. They (still) haven’t been socialized in how to use the internet, especially social media. That will take years.


It’s the combination of monopoly power, technological manipulation of boundedly rational consumers, and consumers’ unfamiliarity with a new technology that makes the internet the hell that it is today. While most people will eventually figure it out, and both social and commercial institutions will socialize us and help protect us from manipulation, only government regulation can counter market power.