This is a really good example of how capitalism doesn't work so well in a digital economy. Normally there is are various arguments about how the subscription pays for the development / invitation. But here we have a feature that's been there for more than a decade, the only innovation is figuring how to monetize it.
Isn't this because it's not a free market, e.g. the DMCA and other laws that prevent publishing how to work around digital locks?
Yep. IP is not true "property" either, since it is not "scarce"
Free markets are impossible under capitalism. If wealth is allowed to concentrate there will be some companies that get so powerful they can influence public policy.
At that point you get regulations designed to make competing with them expensive or risky, like DMCA or submarine patents. They also legalize union busting and get courts to declare that you can get fired for any reason and getting pressured to sign an unfair contract is your fault.
The only thing you can really do against it as a government is making sure nobody ever captures a majority of any market and workers have ultimate control over their company. But that system is a form of market socialism so you can't really call it capitalist anymore.
Correct, in a free market the returns reflect the underlying reality and if that reality means that in the capital abundance stage further capital is unnecessary and capital carries maintenance costs, then the return to capital becomes negative.
If capitalism is the pathological obsession that capital should always net a positive return, then it is incompatible with free markets by definition.