AI, APIs, and the End of the Firm as We Know It

Forget traditional business structures. AI agents demand radical efficiency through APIs, forcing a complete overhaul of how businesses survive.

Hi there,

The world of AI marches on. This week, I did some research on industrial organisation, a part of economics that includes concepts like the theory of the firm, market power, and platform economics.

What follows is a speculative piece of thinking. It’s a work-in-progress, and I have more essays planned in this vein, but it argues that AI accelerates the firm’s collapse into a flexible concept centred on AI agent optimisation of APIs.

An API, or application programming interface, is a systematic way of getting something from a computer. Every app relies on APIs to deliver everything from internal application data to maps or payment capability. Human coordination could be considered a less efficient form of API. You are asked to perform a task, then execute it, in a much more variable way than an API call.

Stripe built a business around making payment APIs easy for developers. Instead of optimising for developers’ happiness, firms must now optimise for AI agents’ ease of interactio…