Technofeudalism: the hidden risks of as-a-service models

We've all heard the term “service” at a technology conference, but what does it really mean in the context of today's digital economy? Let’s cut through the jargon and dive into the details of as-a-service models.

Basically, an as-a-service model is a way for companies to leverage third-party services on a subscription basis , rather than investing in their own infrastructure or software. It's like renting a tuxedo for a wedding (the service) instead of purchasing it outright (the traditional ownership model). You get all the benefits without commitment or long-term maintenance.

As-a-service models do what they say: they provide products as a service, most of them with a pay-as-you-go model that allows you to have a great deal of control over your budget. For the most part, these services are amazing for both startups and large companies.

In addition to infrastructure, you also get other advantages such as worldwide connectivity and integrated systems. AWS and Azure are great examples of complete solutions to meet business needs, from storage to artificial intelligence and everything in between. It's very comfortable, but it also means you're strongly encouraged to put all your eggs in one basket. And that brings its own set of problems.

For example, consider cloud storage services. They offer us large amounts of storage space without the need to maintain physical servers. However, we are effectively handing over control of our data — perhaps our most valuable asset — to third parties. What happens if they raise prices? Or worse yet, what if they suffer a security breach?

In this article, we will delve into these concerns and explore how we can navigate this brave new world without losing our digital sovereignty.

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The emergence of technofeudalism

As we move into the digital age, a new socioeconomic system is taking shape – one that bears an uncanny resemblance to the feudal systems of yore. This phenomenon was called “technofeudalism” by New York Magazine . In this system, we are similar to medieval serfs, while technology companies play the role of feudal lords.

Now, before you dismiss us as Luddites with a talent for dramatic metaphors, let's delve into the technical details. In a traditional feudal system, serfs worked on land belonging to their lords in exchange for protection and a share of the produce. We are renting our own little digital plot of land to build our products, and in return we pay for the protection and benefits offered.

But there is another aspect of feudalism that crept into this model. Although serfs used the same currency as the rest of society for the most part, some lords, especially in remote areas, distributed scrips or tokens instead of coins. These tokens would be used to purchase food and services from the local economy, maintaining a metaphorical moat around the fiefdom.

As these tokens were not recognized as official currencies, it was very difficult for serfs to exchange them for real coins, and even if they were able to exchange them, the new owner would have to spend them on the lord's land. In other words, it was a closed ecosystem .

Just as these gentlemen created a tightly controlled and interconnected market, technology companies are also building interconnected ecosystems that work very well together, but at the same time make it difficult to leave once you become a customer.

Once we invest heavily in a service provider, we limit our freedom and ability to change or adapt. What happens if they decide to change the terms of service? Or what if we see a price increase? Technofeudalism highlights how as-a-service models can lead us down a path where we hand over more control than intended. If you want to know more about the concept of technofeudalism, watch this video, where economist Yanis Varoufakis explains his thinking in detail.

How as-a-service models put you at risk

As-a-service models generally operate under a pay-as-you-go structure. This means we only pay for what we use – seems fair, right? Well, not exactly. Let's look at this more closely through an example.

Imagine you are using a cloud storage service (a classic SaaS model). You start with a basic plan, but soon need more space as your digital assets grow. This way, you upgrade to a higher level – more cost for more space. But here's where it gets tricky: the service provider has full control over every aspect of the pricing schemes.

Some services may structure their tiers in such a way that you may end up stuck between a tier that is too restrictive for you and another that, while accommodating, is too expensive because it offers more functionality than you actually need.

Most services offer huge discounts when choosing their custom solutions. For example, AWS favors DynamoDB over other database solutions. It doesn't matter how good the service is; you might end up choosing a subpar option just because the price difference is significant enough.

Walking away from a partner in this context is extremely difficult. You can't just copy and paste your microservices architecture and take your money elsewhere. And to be fair, unless you're another tech giant, there's very little you can do in terms of legal action if these providers decide to change their terms of service.

This situation illustrates how as-a-service models can create a risky environment. We become captive customers, locked into services due to high switching costs or lack of alternatives.

We are not saying that service providers are bad or that they do it because they want to exploit their customers. They are like everyone else, people who are building solutions and trying to keep bringing as many customers into their ecosystem as possible.

The hidden risks of as-a-service models

Now, we don't intend to rain on the parade as a service, but it's important to understand that these models have their pitfalls. While they can be cost-effective and convenient, they also come with some hidden risks that can turn your digital dream into a nightmare.

Firstly, there is the issue of data security. In an as-a-service model, your data is stored on the service provider's servers . This means you rely heavily on their security measures to keep your precious information safe from cyber threats. Then there is the risk of service interruption . If the supplier experiences downtime or technical issues, its business operations may be affected.

Finally, there is the aforementioned risk of supplier dependency. Switching providers can be expensive and time-consuming due to high migration costs and possible compatibility issues with other systems.

So while as-a-service models offer some significant benefits, it's essential to approach them with eyes wide open, fully aware of these potential risks lurking in the shadows.

Consumer privacy concerns

In as-a-service models, we are dealing with a whole new level of potential privacy pitfalls. When we entrust our data to third-party providers, we are not just handing over files and folders; we are essentially giving them access to our digital identities .

Now, service providers can inadvertently become conduits for privacy violations. When your data is on someone else's servers, it is exposed to a greater risk of unauthorized access or misuse. Consider this scenario: You use a SaaS application for CRM. It stores confidential information about your customers. If a security breach occurs at your service provider, all of your sensitive customer data could fall into the wrong hands.

These service providers have some of the best cybersecurity teams on the planet, but the fact that your data is in the cloud is a risk in itself. If it is connected to the Internet, there is a way to access it. For example, the last known AWS data breach was in 2022 and was, unfortunately, an inside job.

The role of regulation and government policies

When it comes to the digital economy, regulation is often seen as a pesky mosquito buzzing in the ears of innovation. But let's reframe that image for a moment. Instead, consider regulation as a game of chess where each move determines the balance between technological progress and social well-being.

First, we must recognize that government policies can act as catalysts for equal access to as-a-service models. Implementing laws that encourage competition and prevent monopolies ensure that no one entity holds the reins of our digital destiny.

Furthermore, governments can also promote digital literacy through educational initiatives. Think about it: what's the point of access to technology if you don't have the skills to use it?

This is where things get technical. Consider GDPR – Europe’s General Data Protection Regulation. This legislation established global standards for privacy and data protection. It empowers users by giving them control over their personal data while holding companies accountable for any misuse.

Regulation is not intended to stifle innovation or play Big Brother. It’s about establishing a fair playing field where technology serves us all equitably and ethically. In this high-stakes chess game, strategic moves toward sensible regulation might just checkmate technofeudalism.

Conclusion: Addressing Technofeudalism in Models as a Service.

We walked through the landscape of as-a-service models, from their promise of efficiency to their potential pitfalls. We highlight concerns about data privacy and security and the risks of putting all your eggs in one basket.

In this conclusion, we want to address a concept that has been lurking in the shadows throughout our discussion: technofeudalism. This term refers to a potential digital future where a few tech giants control vast amounts of data and resources, leaving the rest of us as mere digital servants renting a corner of their digital land. It's a scary prospect, but one that needs to be addressed if we are to ensure fair models as a service.

To meet this threat head-on, we need robust regulatory frameworks that balance innovation with ethical considerations. But laws alone will not solve this. We also need a cultural change towards transparency and accountability within technology companies themselves. Only then can we avoid becoming pawns in a game controlled by digital overlords.

So here's our final thought: Let's not adopt new technologies just because they're shiny and efficient. Let's examine them, understand their implications, and shape them so that they serve us all equally well. After all, technology should be our tool, not our ruler.