Nithin Kamath Criticizes Platform ‘Enshittification’ and Rising Ad Costs

In a recent LinkedIn post, Nithin Kamath, CEO of Zerodha, discusses the increasingly aggressive advertising strategies on major online platforms and their impact on businesses, particularly smaller ones.

Kamath highlights a common, yet frustrating, experience for his own company: the necessity to bid on their own brand name to appear in search results. He writes:

“The only way for us to show up first is to bid on our own brand keyword. So we’d essentially be paying to be visible when a customer is actively looking for us by name, and if we don’t, competitors will happily take that spot.”

The ‘Enshittification’ of Platforms

Kamath argues that this practice is a symptom of a broader trend he terms ‘enshittification,’ a concept suggesting that platforms, over time, extract maximum value from users and advertisers until they are no longer viable. According to Kamath, this process is evident in how platforms are prioritizing ads over organic results.

He points out the absurdity of the situation:

“The sheer irony of having to pay to show up when someone is already searching for you by name never stops being absurd.”

As Nithin Kamath notes, this strategy benefits the platforms themselves, particularly app stores, which collect ad revenue on top of existing commissions. This increased marketing spend, he suggests, is ultimately passed on to consumers through higher prices.

Disintermediation vs. Gatekeeping

Kamath contrasts the popular business concept of disintermediation with the reality of modern platforms acting as powerful gatekeepers. He explains:

“We live in a world where everybody keeps talking about disintermediation, but these platforms are some of the most powerful and profitable gatekeepers in history. They sit in the middle and monetise both sides.”

In Nithin Kamath’s view, this gatekeeping role allows platforms to control visibility and monetize interactions, often at the expense of businesses trying to reach their customers directly.

The Impact on Businesses

The increasing prevalence of ads, especially above and below organic search results, makes it difficult for brands that do not pay for advertising to maintain visibility. Kamath emphasizes the disproportionate impact on smaller businesses and startups.

“For smaller businesses and startups it can be devastating. They just can’t afford to keep up,” Kamath writes, highlighting the challenge of competing in an ad-driven ecosystem. This situation, he argues, forces brands to allocate significant marketing budgets simply to remain visible to customers who are already looking for them.

Ultimately, Nithin Kamath’s post serves as a critique of the current digital advertising landscape, urging a re-evaluation of how platforms operate and the true cost of visibility in an increasingly monetized online world.