Comment by kragen

Something like that might plausibly be correct, though you've exaggerated it to a level where it's clearly false.

If we steelman it to its most defensible essence, I think what you're saying is that the cost of the human effort needed to provide these higher uptimes exceeds the consumer benefit (the value of being able to buy a camera on Saturday), say. You could imagine, for example, that each incremental improvement in uptime wins over a proportion of the customer base providing a value that vastly exceeds its cost — but only until your competitors improve their own offering to match, so all the surplus from all this uptime improvement ultimately goes to the consumers, not the producers.

There are two related holes in this idea.

The first is that producing consumer surplus is what the economy is for, in a moral sense. The reason producing goods and services is a good thing to do is so that someone will benefit from using them! So if all the effort that sysadmins make goes into making services better for users, that's a good thing, not a bad thing.

The second is that nothing is stopping a new entrant from offering a new, low-cost service that isn't as reliable. If the cost of providing all that extra reliability (bundled into the incumbents' pricing scheme) is higher than the actual benefit to users, the users will switch to the lower-cost, less-reliable service. This has happened many times, in fact: less-reliable minicomputers stole business from mainframes, less-reliable VoIP stole business from ATM and SONET and SDH, all kinds of less-reliable plastic goods have stolen business from all-metal versions, and now solar panels are stealing business from coal power plants even though solar panel "uptime" is like 30%.

So the particular market dynamics we're talking about actually sensitively optimize the amount of effort given to uptime to the economic optimum. There do exist lots of market failures, but the particular dynamic we're discussing is the opposite extreme from something like a dollar auction.