You paid for it, but you don’t own it: How big tech is creating a new digital feudalism

The move by Ubisoft prompted debates across forums and tech columns, with many asking if it was legal or even ethical in the first place. For many, this was a reminder of how present-day digital economies function.

Interestingly, this wasn’t the first time something like this happened. In 2023, Sony kicked the hornet’s nest after it nearly removed purchased Discovery content from its users’ libraries. However, backlash caused Sony to reverse course.

This problem is not just restricted to Ubisoft or Sony. It is to be noted that Amazon reserves the right to remove movies, shows, e-books, or any other digital purchases from an account. Similarly, Apple, too, can revoke access to iTunes media, and Steam can do the same with games. Most of these platforms work under a licensing model, meaning users ‘pay for access’ and not ownership.

However, this is something most consumers delude themselves with. This illusion of owning digital goods is so widespread that in September 2024, California state pushed for more transparency through legislation requiring platforms to disclose that such purchases are licensed and revocable.

While physical goods follow a ‘first-sale doctrine’ allowing buyers to resell, digital goods, on the contrary, are constrained by terms of service. In all of these, what we are missing is the slow yet steady step towards techno-feudalism, a world where corporations act as digital landlords, renting things that users once believed they owned.

What is technofeudalism?

Economist and former Minister of Finance of Greece, Yanis Varoufakis, in his book Technofeudallism: What Killed Capitalism, argues that the world is not moving into a new phase of capitalism but rather regressing into a digital form of feudalism. This is what he calls ‘technofeudalism’, a system that is propelled by the humongous power of tech platforms and algorithms, which also happen to dominate the global markets, labour, and even the private lives of people.

Much of this, according to Varoufakis, reminds you of the power of mediaeval lords over the peasantry. At the core of this ideology is the argument that Big Tech firms, like Amazon, Google, Facebook, and Apple, have moved beyond being mere market participants. Instead, they now act as owners of the digital spaces where most economic activities occur.

According to the author, these companies do not simply compete in markets; in essence, they are the markets that are dictating terms for both consumers and producers. The author likens this to monopolistic dominance, which is breaking the foundational structures of capitalism, such as competition, private property rights, and open access.

When you think of it, in traditional capitalism, ownership and control were distributed among entrepreneurs, shareholders, and business owners. On the contrary, technofeudalism, in a way, centralises economic power among a handful of digital platform owners. According to Varoufakis, these ‘digital lords’ use their platforms to control user behaviour, data flows, and even labour.

He asserts that something as ostensibly neutral as algorithms is used to monitor, predict, and even manipulate human behaviour. And this is not just for convenience or efficiency, but to draw maximum value and consolidate platform dominance. The author also critiques surveillance and how tech tycoons are now accumulating wealth through platform ownership and not through traditional capital investment and risk-taking.

As a resistance against technofeudalism, the author calls for political, regulatory, and grassroots responses, which also include antitrust action, data privacy laws, support for cooperatives and advocacy of decentralised digital models.

Physical vs digital ownership

To put it into perspective, when you buy a DVD of your favourite movie, you own that copy. You can watch it, lend it, sell it, or even break it. On the other hand, if you buy an eBook on Amazon, you are just granted access to read it under certain conditions. This may also prevent you from sharing it with a friend.

It is worth noting that Amazon once offered a feature that allowed users to lend certain Kindle eBooks to others for approximately two weeks. However, in August 2022, the e-commerce giant largely discontinued this feature, much like it did in 2020 when it brought the curtains down on the Kindle Lending Library, a feature launched in 2011 that allowed Prime users to browse a selection of e-books and borrow one a month for free. There was no announcement regarding the change in 2022, with many reports claiming that Amazon’s customer service representatives were even unaware of the discontinuation.

Essentially, this absence of transferability impeaches the principles of the first sale doctrine, a legal standard that accords one the right to resell or gift physical items. Over time, courts have ruled that this principle does not apply to digital purchases, virtually trapping content in proprietary ecosystems. However, there were some attempts to counter this. In 2009, a Massachusetts-based company, ReDigi Inc., sought to create a marketplace for the resale of pre-owned digital goods, such as music, eBooks, games, apps, and software.

The platform allowed users to stream, store, buy and sell legally acquired digital media. However, in the few years of its existence, ReDigi faced significant legal challenges, eventually leading to its shutdown. This, in a way, solidified the notion that digital ownership is largely a myth.

Subscriptions: Rent, renew, repeat

Digital ownership has branched out into subscription models that essentially want consumers to rent, renew, and repeat their engagement. Today, there is a growing dominance of subscription models, which once began as a way to support journalists and indie creators. It is being increasingly applied to products that were once bought outright, ranging from creative software to car features.

For example, in May 2013, Adobe discontinued its perpetual licensing model with the launch of Creative Suite 6 (CS6). This marked the software giant’s transition to subscription-based Creative Cloud, requiring users to pay ongoing fees for access to Adobe’s suite of applications. As of June 1, Creative Cloud All Apps is priced at an annual prepaid cost of $659. Cancelling the subscription may likely result in loss of access to the suite and related files.However, there are companies that still follow the one-time purchase model. Apple, for instance, offers its Pro Apps Bundle for Education, consisting of apps such as Final Cut Pro, Logic Pro, Motion, Compressor and MainStage, at $200. Companies like Blackmagic Design continue to offer one-time purchases of DaVenci Resolve Studio with free updates. Subscription models are not restricted to software; they have entered other domains such as printers and cars.

Companies like HP and Brother now offer monthly plans that can deactivate cartridges if the user cancels. Similarly, automaker BMW in 2022 announced a subscription model charging $18 per month for heated seats despite existing hardware in certain markets, which was later discontinued owing to backlash. On the other hand, Mercedes-Benz offers an Acceleration Increase subscription for its EQ series electric vehicles.

Reportedly at $1,200, this service unlocks enhanced performance and improved acceleration, all of which the vehicle is already capable of. These practices sparked debates about consumer rights and the ethics of charging extra for accessing existing hardware capabilities.

What does digital ownership mean?

Digital access comes with convenience; however, there are strings in the form of logins and subscriptions. Sometimes, even the right to share content is often paywalled, prompting one to opt for higher-tier payment plans. In case any of the platforms shut down, in all likelihood, one’s purchases will vanish into thin air. By contrast, physical books and cards retain value and can be used for a lifetime. With the increasing proliferation of subscription models and vague ownership of digital goods, we seem to be staring at a system that minimises consumer rights and maximises recurring revenue for big players. The outcome is a loss of permanence, as a user cannot hand over their digital library to their children. They cannot resell or gift it, let alone guarantee future access to it. This essentially makes ownership provisional.

Is there something you can do about it? Perhaps buying physical media like books, DVDs, vinyl records, and even boxed software. These continue to offer ownership. They may not be convenient, but they are yours to keep. Look for DRM (Digital Rights Management) free content. DRM is a type of software used by companies to control how users access their digital content, such as movies, eBooks, music, and games. Most importantly, educate others. This is important, as many still believe that a digital purchase means ownership.

The move towards technofeudalism is not inevitable. From what is happening around the world, it is more like a policy choice, a business strategy, and a cultural shift. Now more than ever, there is a need to support open platforms and seek consumer rights.