The best part about looking at the corporation as a technology or medium is that, in the process, we remind ourselves that it didn’t just emerge as a natural phenomenon. It’s not as if businesses were getting so big that they evolved a corporate structure in order to keep growing properly. Quite the contrary: the corporation was invented by monarchs to stem the tide of a burgeoning middle class and its thriving new marketplace and usurp the growth they were enjoying. The fact that corporations were invented should alone empower us to _re_invent them to our liking.

So, then, what were corporations invented to amplify? The power of shareholders and the primacy of their capital. Feudal lords, who had lived off the labor of peasants for centuries, were getting poorer as the people began to make and trade goods with one another. The aristocracy needed a way to preserve their wealth and position in an increasingly free market. So they invented the chartered monopoly—a piece of paper with a list of rules—through which a king could grant exclusive dominion over an industry to his favorite merchant. In return, the king and other aristocrats got the right to invest in the enterprise. This way, they could use their wealth alone to make more money. Did the merchant need investors? For the most part, no. But he made this concession in order to get the king’s charter and protection. The investors were like shareholders, and the merchant was like the CEO. Except these shareholders were also the ones writing the laws of the land.

[...] Even digital companies that have grown too wealthy and unwieldy, such as Facebook and Google, now innovate through acquisition of startups—for which they pay a king’s ransom. Google has turned itself into a holding company, Alphabet, as if to better reflect its new role as the purchaser of other firms’ ideas. Standard accounting practice encourages it, because acquisitions are treated as capital expenditures, while real R & D counts as an expense against earnings. Once the new acquisition is absorbed, however, it is subjected to the same sorts of cost cutting that befell the parent. The expected “synergies” never quite pan out, which is why 80 percent of mergers and acquisitions end up reducing profit on both sides of the deal.

No question, digital technology has created tremendous new avenues for growth. Apple, Google, Facebook, Amazon, Microsoft, and many other corporations have created new opportunities and new millionaires. But as a result of their extractive, monopolistic practices, the landscape is left with less total activity and potential for growth. The pie is smaller, or at best staying the same, but these digital businesses have managed to get bigger pieces of it—making it harder for every other corporation around, including themselves in the long term.

In large part, this is because they’re still operating as if they were twentieth-century industrial corporations—only the original corporate code is now being executed by entirely more powerful and rapidly acting digital business plans. What algorithms do to the trading floor, digital business does to the economy. In the purely rational light of the computer program, a digital corporation is optimized to convert cash into share price—money and value into pure capital. Most of the people enabling this have no reason to believe it is harmful to the business landscape, much less to human beings

This rationale has been enough to keep most thoughtful Silicon Valley entrepreneurs from worrying too hard about the repercussions of their actions. After all, digital corporations will necessarily carry out corporate code better than their predecessors. They apply the engineer’s logic to every situation or choice and always optimize for the best and most defensible outcomes. For example, last century’s retailers mailed out catalogues and then used sales feedback to adjust the offerings for the next quarter. A digital company will A/B test its Web page, display ad, or online catalogue in real time. Every interaction is a test of a bigger/smaller font, a higher/lower price, friendly/formal language, and so on. The thousandth time a page is rendered, it has evolved into a much better selling mechanism. Digital is better.

Amazon amplifies the power of central authorities. It first appeared that it would empower the independent publisher by giving everyone a place on its infinite shelf space. But it eventually grew into the center of the publishing universe. Everyone is the same size—tiny—compared to the platform on which they sell and interact. Amazon sets the prices, the terms, the technologies, the copy protection, the privacy of readers . . . everything.

Amazon retrieves the spirit of empire by colonizing not just verticals within its own category but horizontals in everyone else’s. It first established a platform monopoly in books by selling books at a loss, in the manner of Walmart using its ample war chest of capital to undercut local stores. A simple loyalty perk like free shipping was eventually revealed to be the ever-expanding, increasingly sticky Amazon Prime. Amazon then leveraged its monopoly in books and free shipping to develop monopolies in other verticals, beginning with home electronics (bankrupting Circuit City and Best Buy), and then every other link in the physical and virtual fulfillment chain, from shoes and food to music and videos.

[...]

Amazon isn’t really a new sort of company so much as a very old sort of company. It is leveraging digital platforms the way colonial powers once leveraged their exclusive shipping routes to the New World. (Both even have pirates to watch out for!) That’s why none of this is ever about bringing more value to people or—heaven forbid—helping people create and exchange value on their own. Digitizing the corporation simply affords it ever more efficient and compelling ways to extract what remaining value people and places have to offer.

As corporate law is currently structured, CEOs and their boards of directors can be held liable if they fail to do everything in their power to maximize quarterly returns for public shareholders. CEOs are not merely incentivized to pursue the short-term bottom line; they are legally obligated. Rather than liberating the corporation from such ultimately counterproductive rules, the digital age has put them on automatic, exacerbating their impact and making them appear more permanently embedded than ever. The more promising potential of the digital environment would be to revise the corporation itself to our liking. That’s the invitation here—not to digitize the corporation with technology but to approach the corporation itself from a digital perspective of redesign. The corporation’s charter can be recoded.

[...] Mozilla is actually made up of two different entities: the Mozilla Foundation, a nonprofit, and the Mozilla Corporation, which the foundation oversees. The subsidiary corporation is responsible for much of Mozilla software’s development, marketing, and distribution. It collects the massive revenue generated by Firefox, but it has no publicly traded stock, no dividends, and no shareholders [...]