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Does enshitification happen because companies are publicly-traded? (beehaw.org)

submitted 4 months ago by [email protected] to c/[email protected]

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Isn't that a prerequisite for enshitification? Publicly-traded companies are required (by law, I think) to maximize profits for their shareholders, even if that means utterly ruining their original product (Reddit, Boeing, etc.), yes? What do you think?

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[–] [email protected] 28 points 4 months ago (2 children)

It's not really direct cause and effect, but yeah. The incentives for a publicly-traded company make enshitification far more appealing then it would be for most other organizations.

[–] [email protected] 17 points 4 months ago (1 children)

Oh, also, it's a common misconception that publicly-traded companies are required to maximize profits. They can have whatever goals their shareholders want. It's just that the way modern publicly-traded companies work, most of their shareholders are people quickly buying and trading shares based on who they think will earn them the most money this month, so that sort of inevitably becomes the goal of any publicly-traded company.

[–] [email protected] 12 points 4 months ago

Also the reason they focus entirely on unrealistic quarterly measures and don't value long term stability.

[–] [email protected] 15 points 4 months ago* (last edited 4 months ago) (1 children)

I've worked for a couple startups and you're absolutely right. If you make a profit you pay taxes on that money, so startups like to spend most of the money they bring in. They also want to show revenue growth, since that's what investors like to see. You grow revenue by getting more paying customers. And you do that by doing what your customers want.

When you go public, your goal is to increase shareholder value. So you do this by reducing costs and finding ways to wring customers out of revenue. You find ways to nickle and dime customers out of revenue so much you develop an entire branch of law devoted to you suing your customers

[–] [email protected] 1 points 4 months ago

I knew that link was going to be something related to Oracle, and I was not wrong. xD