There was a time when every company built everything themselves. If you wanted payments, you wrote your own billing system. If you wanted messaging, you ran your own servers. If you wanted analytics, you wired it into your own database and built dashboards by hand.
Then APIs arrived. At first quietly, like odd side doors into existing products. Amazon exposed S3. Twilio let you send an SMS. Stripe made accepting a credit card a matter of minutes instead of months. These weren’t just conveniences — they were compressions of time. Whole departments collapsed into a single function call.
And once you compress something, you change who can do it. A two-person startup could now look like a Fortune 500 company. A founder with no infrastructure background could launch a product that scaled globally from day one.
The API economy was, in a sense, the unbundling of capability. Things that used to require armies of engineers became “services.” Plug in what you need, pay as you go, scale when you must.
But every convenience has its hidden costs. APIs made us fast, but also fragile. A pricing change, an outage, or a sudden shutdown could ripple through hundreds of businesses overnight. Dependency spread silently. Companies that looked independent on the surface were, underneath, delicate chains of other people’s code.
This is the paradox of the API economy: it makes you stronger in the short term, but potentially weaker in the long term. The moat you thought you had might just be someone else’s abstraction layer.
And yet, despite the risks, the API economy isn’t going away. If anything, it will expand. As AI matures, APIs will increasingly serve not just data or transactions, but intelligence itself. Instead of calling “sendSMS()”, you’ll call “summarizeThisDocument()” or “negotiateContract()”. Capabilities that once required teams of specialists will collapse into endpoints.
The question is not whether APIs are good or bad. The question is how to use them without becoming invisible behind them. If every company has the same APIs, differentiation must come from somewhere else — design, vision, or execution.
The API economy turned business into Lego. It gave us speed. But the companies that last will be the ones that know when to stop stacking bricks, and when to carve something entirely new.