Dispelling the idea of Digital Feudalism
When technology starts building castles not bridges, the moat isn’t around the product — it’s around us.
• 5 minute read | Part 1 of 2 articles
Can we resist normalising the term “moat”?
Overall, global search interest in the term "moat" within a business and technology context has increased by at least 150% to 200% compared to five years ago. In this piece I cross-examine use of the term and its bearing on our ability to choose. Then in part two, I reflect on the unspoken realities of the agentic era. The contradiction it presents to the concept of moats.
The term went viral in May 2023, after an internal Google memo from a AI researcher was leaked to the public with the heading: “We Have No Moat, And Neither Does OpenAI.”
Since then the term moat has become a linguistic device that normalises the fortification of technologies — as if feudalism were a natural progression for competition and enclosure a marker of quality. It reflects a collective mindset that prizes defence over openness, turning innovation into territory rather than shared progress. The consequences of this thinking deserve pause and reflection before they harden into the architecture of our digital world.
Back to basics: what was Feudalism?
Feudalism lasted for almost 600 years, running from roughly 9th–15th century Europe. It was not a romantic age of castles and chivalry. It was a decentralised control system where power was distributed among local lords. That decentralisation existed within a rigidly centralised hierarchy - you can see it visualised here↗. The monarch remained the apex of authority, legitimising all subordinate power through:
Land ownership (fiefs)
Hierarchical loyalty
Restricted mobility
Protection in exchange for dependence
It emerged from the collapse of centralised empires — the late Roman world of extreme wealth concentration and brittle institutions — and eventually gave way to the early modern period: cities, markets, labour mobility, and the rise of the nation-state. Feudalism was not a stable equilibrium. It was a transitional system born of institutional failure.
Which brings us to today.
Fortifications project power from a place of vulnerability.
Economists and technologists — most famously Yanis Varoufakis — argue that the digital economy increasingly resembles a feudal order more than a capitalist one.
Optically speaking, the parallels are uncomfortable:
Platform Lords: Tech giants own the digital infrastructure. They are not just in the market; they are the market.
Digital Serfs: Users produce the raw material (data) that platforms monetise. We pay for the privilege — our hardware, our bandwidth, our time.
Rentier Dynamics: Instead of competing, platforms extract rent: ad fees, commissions, access charges.
Digital Manorialism: Leaving a platform is technically possible but socially costly. Opting out is a form of self-exile.
It’s a useful metaphor — not perfect, but directionally correct. It becomes more portent when you look at how modern systems behave.
Where “Moats” meet systemic fragility
Our upcoming white paper on the State of Global CX reveals a pattern across industries: modern systems reward companies even when they neglect their customers.
Not because leaders are malicious, but because the system’s incentives drift toward:
Enclosure (lock-in beats quality)
Extraction (rent beats service)
Automation without accountability (efficiency beats empathy)
Opaque decision-making (models beat humans)
User resignation (people stop complaining because they expect nothing)
This is the real danger of “moat thinking.” It accelerates the shift from competitive markets to fortified fiefdoms. A moat is not a strategy for value creation. It is a strategy for value capture. And when everyone builds moats, the system stops rewarding those who build bridges.
What Yanis and his ilk tend to miss is the citizen’s role and responsibility in the process, what they should be saying — “Is that what you want? Because that’s a consequence and what’s going to happen if you choose it” - the incentive system is an unintended consequence of peoples’ decisions, which can then be compounded by powerful organisations.
Technopanic, AI and the new Enclosure movement
The current AI moment has intensified the feudal instinct.
Companies rush to fortify IP.
Models are walled off behind proprietary APIs.
Data becomes a weapon rather than a commons.
“Dominance” becomes the goal rather than contribution.
Every firm wants a castle; every founder wants a moat.
This is not innovation. It is preemptive enclosure — a fear-driven attempt to secure territory before anyone else can.
This is the crucial part: We are not digital serfs, not yet. The functions we enjoy online are by and large not needed for us to survive nor to live comfortably.
We still have agency — If we choose to use it
Feudalism was not inevitable. It emerged because people lacked alternatives and institutions failed. Digital feudalism is not inevitable either. We can choose:
Interoperability over enclosure
Open standards over proprietary lock-in
User agency over behavioural extraction
Transparent systems over opaque algorithms
Competition on quality over competition on captivity.
At the individual level, agency shows up in the choices people make: supporting tools that respect autonomy, selecting platforms that don’t treat users as a crop to be harvested, valuing portability, openness, and reversibility, refusing to celebrate “moats” as accomplishments, and rewarding companies that compete on merit rather than fortification.
The internet was not built to be a castle economy. It was built as a network — a commons — a place where value flows, not a place where value is hoarded.
The Choice Ahead
The metaphor of digital feudalism is powerful because it warns us what happens when systems drift toward enclosure, extraction, and resignation.
But unlike medieval serfs, we are not bound to the manor. We can walk away. We can build alternatives. We can demand systems that treat us as participants, not tenants.