When the AI bubble bursts, what will Australia do with the tools it built? One man thinks he has the answer
Science fiction author and journalist Cory Doctorow, who coined the term "enshittification", is bringing a warning to Australia ahead of a visit to promote his new book: when the AI bubble bursts, businesses that sacked staff in favour of AI tools will struggle to rebuild the human skills and knowledge they discarded. He argues the AI industry is being propped up by huge investment from Gulf sovereign wealth funds and billionaires into datacentres, and that this circular investment between chipmakers, AI firms and tech companies is fragile and could collapse if key deals fail or IPOs from firms such as Anthropic and OpenAI keep stalling.
Doctorow says detailed institutional knowledge held by workers who are fired, retired or retrained cannot easily be recovered once "scattered to the four winds", comparing the aftermath to a post-apocalyptic scramble to relearn lost skills. He also cautions creative industries against relying solely on copyright to protect their work from AI companies, a point made days after Australian prime minister Anthony Albanese pledged tougher copyright laws to make AI firms pay for using music, books and news content, arguing copyright reform alone "won't solve anyone's problems".
In short
- Cory Doctorow warns AI bubble will burst, leaving lost skills hard to rebuild
- He blames fragile, circular investment from Gulf funds and tech firms
- Doctorow says copyright fixes alone won't protect creative workers from AI
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Doctorow raises legitimate concerns about unsustainable economics driving AI investment. The circular capital flows between venture funds, chipmakers and AI companies create dependency rather than genuine value; if this system breaks—through failed megadeals or delayed IPOs—the sector could contract sharply. The permanent loss of institutional knowledge when experienced workers are dismissed cannot be undone; tacit expertise in systems, client relationships and domain-specific problem-solving cannot be easily reconstructed through generic AI or junior replacements. His point about copyright also deserves weight: relying solely on legal reform whilst technology races ahead leaves creative workers inadequately protected against unlicensed training.
The case against
Doctorow conflates justified concerns about inflated valuations with apocalyptic scenarios about the technology itself, yet AI's core capabilities remain genuinely useful and likely to retain value even if current investment levels correct. The institutional knowledge concern, whilst worth considering, may be overstated—organisations can document critical processes, and productivity gains may offset transition costs. Historically, technological disruption has involved worker displacement, yet economies have repeatedly adapted through retraining and new role creation. A measured view recognises that appropriate regulation—including copyright reform, worker protections and investment scrutiny—can manage AI deployment without requiring the dramatic contraction Doctorow envisions.
Explained simply
The artificial intelligence industry has attracted vast sums of investment from wealthy Gulf states and billionaire investors, who have poured money into data centres and AI companies. Some analysts worry that this investment creates an unstable system where chipmakers, AI firms and technology companies fund one another, and the entire structure could collapse if major deals fail or planned share offerings are delayed.
Many businesses have sacked experienced workers and replaced them with AI systems to reduce costs. If the AI industry experiences serious difficulties, these companies may find that the specialist knowledge and institutional understanding held by their former employees cannot easily be recovered once those workers have departed.
Australia's government is considering new laws to ensure AI companies pay for their use of creative content such as music, books and news articles. However, some commentators argue that copyright protections alone will not be sufficient to protect creative industries from the disruptions caused by AI technology.
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