Addicted America: Why Facebook, Apple and Amazon thrive

America is addicted. We see this everyday as 100s of Americans die from drug overdoses. The opioid crisis is a national emergency yet the government’s response is insubstantial in comparison to the problem with their most substantial act to declare and reaffirming the national emergency. Critics would suggest it was a media strategy to manage appearances rather than an attempt to change the reality of the crisis.

Americans are addicted to opioids because it provides welcome relief from the chronic pain, both physical and spiritual, that they experience. Life in America has become harder and harder but not simply materially. Many Americans live a life of comparative luxury with a prosperity that is often the envy of the world. Yet, American life is harder because the gap between rich and poor, haves and have nots has widened both in a relative and absolute sense. What is different is that social media magnifies the gap to make it visible and ever present.

The opioid crisis could be treated; but it will take more than Trump’s media strategy to deal with it. Claims of a national emergency and wanting to execute drug dealers sound good and get the Twitter trends that Trump craves, but it does not change anything. For Trump this does not matter since to appear to have acted so he can claim success for his response and blame any failure on those who oppose his preferred option. Unless he plans to start killing pharmaceutical executives and physicians, executing drug dealers will not have an appreciable effect on addiction rates or overdose rates. However, none of that is important so long as he can gain headlines and *appear* to be doing something *tough* and *unpopular* with those his base dislike.

Trump’s concern with appearances brings us to Facebook, Apple, and Amazon. These companies are part of the FANG group of stocks (Facebook, Apple, Amazon, Netflix, Google) that makes up almost 10% of S&P500[1] and therefor a sizable part of the US economy. Trump has famously become “obsessed” with Amazon because its founder and CEO is a critic.[2] He is a critic with a difference since he wields great economic power and owns a major newspaper, the Washington Post. Trump makes public statements about Amazon’s tax advantages and the way they use the US postal service and these have an impact on Amazon’s share price. However, they have no content since there is little that Trump can do about Amazon’s dominance. Even though he wants the appearance that he is doing something and cares for the small retailers, perhaps to tap into the economic populism that Bernie Sanders champions, he has done nothing of substance nor can he do something of substance. Why? America is addicted to these companies.

Amazon

Americans pay for Prime membership so they can get their purchases faster. They already arrive within a few days, but now the average consumer *pays* for the privilege to get them faster. One would imagine that the average person lives with a “just in time” logistical existence so that as soon as their cereal runs low they can replenish it immediately.[3] Except people don’t need to live this way, instead they have been conditioned to live this way by Amazon as if their lives were less worthwhile or enjoyable before Amazon Prime made it easier. What Amazon understands about consumer psychology is that the consumer is addicted to the immediate gratification or satisfaction of their purchase and that is reinforced by quick delivery after the purchase.

Amazon reinforces the customer’s satisfaction by subtle or not so subtle prompts that encourage further purchases. They have tapped into the social satisfaction loop with the following prompts.

  • Others have bought the following items.
  • Only one remains in stock.
  • The price of the product you looked at has dropped or risen.
  • If you order more you can get free delivery or faster delivery.

In time, Amazon will link these prompts to celebrity endorsements so that the consumer can satisfy their status anxiety by buying what their preferred celebrity has just purchased or looked at. If shopping is a drug, consumers have their supplier and they know where they can get their fix.

The Facebook

The Facebook succeeds by its ability to exploit its users. In return, it “connects” its users and creates a “community” that further enhances the Facebook’s ability to exploit them. The more connected the users, the more they believe that their life is enhanced with greater convenience. For most people, once connected, they have no alternative to the Facebook since it becomes their main or exclusive platform. In time, the user becomes dependent on it both for their news and their “connection”. Although, the Facebook has an age limit of 13 it is also keen to take a share of the education market.[4]

What the users do not know and the Facebook does not mention is that social media is designed to be addictive.[5] Moreover, if you leave the Facebook, you leave your “community” and that would mean that the average person will have the dreaded social isolation that they all platforms implicitly warn against through push notifications. Want your next fix, just wait you will have another notification to prompt you to “connect” by telling you who has just updated their profile and who has posted a new link. All of this is sold as a greater convenience and if you do leave the Facebook, you will suffer withdrawal symptoms.[6]

Apple

They have customers addicted to their products and with Apple vertical and horizontal integration within the Apple ecosystem. Your music is on Apple Music which you manage through iTunes. Your iPhone is Apple, you need AirPods, you need an Apple Watch.

Most importantly, and this is how Jobs outdid Coke and Pepsi at selling sugar water because despite their success as status symbols they had an insurmountable barrier. They could not sell the next generation of Coke or Pepsi. Apple, through the iPhone and the iPad can renew *the* status symbol with each generation. You must have the next upgrade because your current iPhone which was much better than the last one needs to be upgraded. If only Coke, Pepsi, or Tobacco had that process. Moreover, Apple just doesn’t sell you an iPhone, you must buy the accessories as you can’t buy one from another supplier.[7] Not only that, if you have your iPhone repaired by anyone else, Apple can stop your phone from working with the next software update. In turn, that requires you to send your phone to them to be repaired.

Apple like other companies and industries relies on planned obsolescence,[8] but they presented it as a feature not a bug.[9] After the issue surfaced, they fixed it.[10] However, based on brand loyalty and the addicted docility, it is unlikely to have an impact.[11] At the same time, they offer a good product that does something more because it provides a status symbol which for a status conscious population, constantly checking their social media feedback loop, this is an important comparative advantage?

Children

What is noticeable about each of these companies is their focus on younger consumers. In their own way, each tap into the market for younger consumers. Apple is trying to catch up with Microsoft in the education market. Google and Amazon have voice assistants that can cater to the children’s market in several ways. Facebook focuses on children as well with 13 being that entry age. Perhaps this is to be expected as the desire for future consumers as revenue streams is important to their success. Even if they avoid breaking any laws, they seek to prepare the ground for younger consumers to become adult consumers. They prepare the soil so they can harvest the seeds they plant by their marketing and educational outreach programmes.

What we find, though, is that these companies and their products do not enhance the common good. They enhance private goods, especially those of their shareholders and the executives, but it is not the common good that benefits. From an economic perspective one might argue that they provide jobs and taxes to Americans so they are important to the common good. To be sure, they do provide jobs and taxes. Yet, the common good is more than jobs and taxes. Each of these services take people way from the physical public domain where their communities exist and the common good manifests. As an Amazon customer you never need to go to a shop or to the mall and see other people or interact with them. You can do all your shopping through Amazon without leaving your home. With Facebook you can “connect” to anyone in the world and never leave your home. All of this is at the expense of meeting people in person and enjoying the serendipity of the public domain. No matter your connectivity through Facebook, you are not physically present. To be sure each company will claim that they make life more “convenient” so that the consumer citizen can enjoy other parts of their lives. Is it their fault if the consumer does not prioritize the public domain?

History has shown that it takes two generations for a Republic to be corrupted. Any change can be resisted if it is identified and remedial action is taken. If it is not taken in the first generation, it is harder for the next generation to resist or even remember what life was like before the change. After two generations, the change is irreversible.

We have one generation to change. The question is whether we can pull ourselves away from our digital opioids and recover our virtue. Perhaps it is too late as citizens we surrender ourselves to the corporate harvesters that exploit us for profit in return for convenience as a better life. As these ills are self-inflicted, we have a chance, but it means a different way of life. Are you ready to make the change?

[1] Apple, Amazon and Alphabet make up 10% of the S&P 500 with a combined market capitalization market cap of $2.3tn. Add Microsoft and Facebook, with a combined market value of $1.1tn, and the big five make up 15% of the index.

 

Overall, technology makes up 25% of the S&P. If tech pops, the thinking goes, so pops the market. https://www.theguardian.com/technology/2018/apr/01/big-tech-touble-amazon-facebook

[2] http://www.news.com.au/finance/work/leaders/why-trump-is-attacking-amazon/news-story/f3a32ee5d0e34c3488cffe3febabfc9a

[3] https://www.economist.com/node/13976392

[4] https://www.cnbc.com/2017/03/28/microsoft-google-and-facebook-see-billions-in-future-of-education.html

[5] See for example Sean Parker’s statement. http://adage.com/article/digital/sean-parker-worries-facebook-rotting-children-s-brains/311238/ Facebook shares this trait with all other successful social media companies. They want their users to be addicted to their services. https://www.vice.com/en_uk/article/vv5jkb/the-secret-ways-social-media-is-built-for-addiction

See also http://www.foxnews.com/tech/2017/12/29/facebook-cocaine-opioids-how-addictive-is-social-network.html Further reinforced in the design: http://www.tristanharris.com/essays/ That is people have designed their systems to exploit their fellow man. They design systems that will exploit their vulnerabilities not to help them but for profit.

[6] https://www.telegraph.co.uk/technology/social-media/9986950/Twitter-and-Facebook-addicts-suffer-withdrawal-symptoms.html

[7] https://www.forbes.com/sites/gordonkelly/2018/03/06/apple-iphone-x-price-cost-upgrade-iphone-x-plus-new-iphone/#4d695b6b6f66

[8] Apple is not the only one. https://www.forbes.com/sites/adamsarhan/2017/12/22/planned-obsolescence-apple-is-not-the-only-culprit/2/#cc6e91440d1f

[9] https://www.forbes.com/sites/gordonkelly/2017/12/21/apple-iphone-battery-life-slow-iphone-performance-ios11-battery/#1e7cbfbb674b

[10] https://www.forbes.com/sites/gordonkelly/2018/01/18/apple-ios-11-3-release-upgrade-iphone-shutdown-iphone-battery-problem/#5f4ca2c84423

[11]““The reputation damage from secretly slowing down old iPhones, regardless of the reason, will likely linger for a decade,” argues popular podcaster Marco Arment in a tweet. He’s right and it should.”  https://www.forbes.com/sites/gordonkelly/2017/12/21/apple-iphone-battery-life-slow-iphone-performance-ios11-battery/#1e7cbfbb674b

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About lawrence serewicz

An American living and working in the UK trying to understand the American idea and explain it to others. The views in this blog are my own for better or worse.
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