I’m writing this out of frustration with the current state of the service industry, and with the unfortunate prediction that things are going to get worse before they are going to get better. I also read Monopolized by David Dayen which leaves an unfortunate aftertaste in your mouth, even after what is supposed to be a rallying call of a last chapter.

In my complaint today, I’m talking about classic rent seeking. This is the type that’s always shown up when honest people are trying to make a living, because honest people pay fees willingly.

I’m talking about platforms like HomeStars, Yelp, Angie’s List, Handy, Homeflock, Flamp, the list goes on. Google and Facebook act in similar ways, but their extraction is to a further degree, as they sell ad space for you to purchase (and potentially off of the traffic they generate from the ads).

Same Pitch, Different Platform

The pitch is always the same, that it’s for the customer’s benefit, but the company profits are the end to its means. The whole goal is to have their platform be the intermediary, because they don’t perform any of the services.

Each of these platforms works by cultivating itself as a place for clients to submit proposals of the work that they want to get done. The proposal then gets tendered to several vendors (depending on who has paid most recently) and the client can select between a few choices.

Any provider who has worked with one of these intermediaries knows their whole focus is to get you to spend more time on their platform, and to use your credibility to increase their credibility.

It means that service providers need to be ready to respond quickly in-platform so that a “slow response time” isn’t posted to their account (unremovable, even as a paying member) which will drive down their ratings.

These platforms also have direct control over the amount of proposals an account can see, or the location they are seeing them from. None of this is to better the consumer, it is to extract as much money as possible from the service provider.

Draining Your Resources

An extreme example of this can be seen with their website plug-ins. They want you to feature HomeStars as a component of your website, with links to them that increase their back-end PageRank and SEO. You might say, but HomeStars puts a link to my website on their page too, doesn’t that help me in the same way? And that’s a pretty honest and fair assumption, which is why HomeStars doesn’t do it. Here’s what Neil Patel (a world-class SEO expert) has to say about why a website would use a “nofollow” link for vendors on their website:

“Why would a website use nofollow links? Because linking to low-quality or low domain authority websites can hurt the link-hosting website’s rankings. So websites will often use these links to avoid destroying their own rankings with a low-quality external link.”

So websites like HomeStars don’t want to risk their reputation by potentially linking to your poorly optimized website, but they’ll absorb all the value they can from you. These platforms rely on the assets of the companies that use their platforms at every point of their business model – parasitic through and through.

It’s just like how Google and Facebook both fight to have web-crawling pixels/lines of code so that they can take as much information. The more crawlers you add to your site, the slower it functions, but the faster it can be indexed, and the more valuable data is captured.

Google Monopoly

Google also works to extract rents from service providers, and recently it is expanding the depth of its reach in this area significantly.

You could already pay to be at the top of the results, or the top of the reviews, or the first results on a “maps” search. Google had already started playing with submitting quotes directly through search, but it recently added messenger on Mobile (a bit over a year now) and Desktop (added within a year) so that people don’t have to leave their search results page to ask their questions directly to the company.

Google is closing the loop on direct communication with clients and service providers, which is one of the only ways that you can further entrench yourself after you already control a majority of internet searches.

Closing Thoughts

The model is the same with all of these rent-seekers, dominate as the intermediary by any means necessary. For Google and Facebook, this means coming pre-installed on devices and being unable to delete them, a standard practice in the mobile phone industry now.

For others like HomeStars, it means betting that they can optimize their online presence better than the local competition and holding customers over the heads of those businesses behind a paywall.

These practices are terrible. There is no benefit but to the intermediary.

As the late David Graeber would say, these are Bullshit Jobs.

And the legal landscape of Washington seems to be changing its tone towards these tech monopolies, which is a good thing for Canada too (and the world, ultimately). I hope we see antitrust and break-ups in the near future, but I’m cautiously optimistic.