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Diseconomies of scale in fraud, spam, support, and moderation

danluu.com

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Re: Diseconomies of scale in fraud, spam, support, and moderation

#191

Post by slv77 »

This author is essentially arguing that the security of his garden shed is equivalent to the security of most banks because statistically banks get robbed more often.

Spammers and scammers have a fixed cost to initiate an attack and the potential return on investment is proportional to the user base. A platform below a certain size simply isn’t profitable to attack. It isn’t that small shops are going to be better at mitigating spammers and scammers as the article states, small shops just aren’t being attacked.

If the arguments were true that there are diseconomies of scale there wouldn’t have ever been consolidation in email hosting. Email providers all use the same protocols so the incremental cost of attacking a small provider is zero. A small company hosting their own email will quickly see their customers flee for the big providers as they drown in spam. Scaling spam management was the primary driver that drove consolidation in email providers in the early 2000’s.

This also drove consolidation in areas with similar economics such as e-commerce. The low cost of attacking a new player in the e-commerce space and the cost of scaling risk management drove a lot of the growth of PayPal and spawned the growth and consolidation of outsourced e-commerce fraud risk management.

The economics are going to be true of any n-squared business model where the value is in the size of the network. I go to LinkedIn because it has the lowest scam rates but because most of the people I work with are there.

While a wildly diverse ecosystem would be more resilient against fraud this is the internet, the biggest n-squared system of them all. It’s unlikely that the internet is going to devolve into small, diverse fiefdoms so the problem is here to stay.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#192

Post by pushcx »

jseliger wrote: post #43

Well, I received a keychron keyboard a few days ago. I ordered a used K1 v5 (Keychron does small, infrequent production runs so it was out of stock everywhere). After some examination, I've received a v4. It's the previous gen mechanical switch instead of the current optical switch. Someone apparently peeled off the sticker with the model and serial number and one key stabilizer is broken from wear, which strongly im…

They do have a comparison page, but it's hard to find, incomplete, and leaves out significant information: https://www.keychron.com/blogs/news/difference-among-keychro...

The KeyChron Discord has seen enough questions that it has many bot autoresponders to explain model differences. I thought the experience of selecting among the many very similar, poorly-named models was a frustrating slog, but it seems unlikely to change given that they sell out their production runs.

As long as you happen to quote it, I forgot a key sentence in my story: I placed my order with the official Keychron store and it was fulfilled by Amazon.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#194

Post by samatman »

bsder wrote: post #193

The issue is law. If a "ban" was considered "defamation" and you could take a FAANG to court and be awarded $1 Million in damages, suddenly FAANGs would be superb at avoiding false positive bans.

There's a kernel of a good idea here, but banning someone from a platform isn't defamation by any reasonable interpretation.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#195

Post by godelski »

bongodongobob wrote: post #190
godelski wrote: post #123

Earlier quoted context omitted.

> Going to get the FBI involved for a $20 purchase? Sure, why not? And if you're at the scale is Blizzard I'm sure it's a lot more than $20. We're collecting all kinds of information these days. Surveillance capitalism is a common term for it. Data is gold they say. So why not give that data to people that can use it to stop crime?

Blizzard doesn't get paid for reporting fraud. They lose money. So what's the incentive for them to give a damn? They'll just push it back to the CC companies to deal with, if anything.

> So what's the incentive for them to give a damn?

Do you only do things that you get paid to do?

Re: Diseconomies of scale in fraud, spam, support, and moderation

#196

Post by godelski »

Anotheroneagain wrote: post #170
godelski wrote: post #150

Earlier quoted context omitted.

I find that a strange comparison. Certainly there are bigger fish to fry. In both drugs and credit cards there is a whole ecosystem. Cards probably more straight forward as these are typically being sold on websites and you thus have a clear marketplace. Which I'd differentiate a marketplace from a dealer on a corner. Go after the people who are the generators. That's people making the drugs or people stealing the ca…

I mean it's probably a guy who knows someone who can cook meth, rather than a servant of some kingpin who is running a massive drug conglomerate hiding who knows where.

Okay? But somewhere down the line is the person cooking meth. I'm not sure what you're getting at.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#197

Post by nojvek »

I agree with some parts not all of them.

His point of fraudulent Amazon SD cards makes sense but you could get fraudulent cards in other places too.

Amazon has one of the best return policies and support.

I once bought a portable AC from a small shop and they wouldn’t take it back even though it was quite noisy compared to what they had advertised.

Large platforms e.g Google and Meta pride themselves that they have billions of users with very few engineers.

The problem is Google thinks engineers should be isolated from users and support can be algorithmified. More often than not, it fails.

I am all for smaller companies when it comes for human touch.

However there is a case for economies of scale when a problem is simple and can be captured fully by an algorithm.

E.g YouTube only really works because they have algos to detect what background music is attached to what video. Imagine if humans were doing it? They wouldn’t be consistent.

The truth is that computers are slowly getting better at understanding the real messy world.

And the reverse problem is computers are also getting better are creating human-looking mess in the real world.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#198

Post by HeatrayEnjoyer »

jakewins wrote: post #132
BrenBarn wrote: post #128

I think the post underestimates the scope of these problems. It touches on it briefly, but I've mostly come to believe that it is in general bad for companies to become extremely large. It's not just an issue of content moderation. One reason that the article does touch on is the detachment from support. Large companies no longer need to care about the individual consumer, so they stop doing so. A sort of corollary f…

> In the sense of benefit to the overall economy, to the society in which that economy sits, or to humanity in general, virtually all economies of scale are actually harmful You had me until here. Economies of scale in commodities is the thing that makes it so we don’t have to do sustenance farming and everyone gets to have sewn clothes on :) There’s truth in both sides there - we want nail production to not be done…

Economy of scale also applies to the ability to exploit the common person. From society today we can see that when unilaterally driven entities become too large the economy of scale stops benefiting the regular individual and becomes a weapon against them.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#199

Post by pixl97 »

mschuster91 wrote: post #171
BrenBarn wrote: post #139

Earlier quoted context omitted.

I guess I forgot to repeat the part about "extremely large" there. But I mean like "all economies of scale beyond a certain point". In any case, I'm not sure I agree that economies of scale are the thing keeping food on the table. Like, yes, we want nails to be made in some efficient way, but that's not what I mean by "economies of scale". What I'm talking about is the size of the companies involved. If there are 10…

> If there are 10 factories making nails, I'd rather have them be run by 10 different companies than one. And you might be able to convince me that 9 or 8 or even 5 companies is reasonable, but not one or two. Well, a nail is fungible, as are many other products. So what you'll end up with instead is a bad situation on its own. The 10 nail factories win sales contracts by competing on price (obviously), so there is a…

Um if the government in question is beholden to its people, otherwise it's just a means of enriching oligarchs.

Re: Diseconomies of scale in fraud, spam, support, and moderation

#200

Post by btbuildem »

It's an interesting read; I wonder how much of the failure to support users is a factor of the size of the organization itself, and how much is the scale of the user base. I think the other (ordinal) dimension to consider would be whether the users are also customers, or just part of the product.

For meta, google, twitter et al, it's almost as if the users that fall through the cracks of the system are off-spec product pieces, where it's cheaper to get more instead of fixing existing issues.

What I find fascinating (and this is anecdotal) is that large companies that have few big customers ALSO suck at support, despite having relatively large portion of their headcount assigned to Customer Support. I would tend to agree with the article's author, that as an org grows, it becomes less able to perform its core functions.

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