Big tech's hidden DNA hates competition
Author: Brian Dodge
Source: Retail Dive
While the internet gives us much to celebrate, disturbing trends that erode free-market competition and threaten consumers are emerging, writes RILA's Brian Dodge.
This contributed piece was written by Brian Dodge, chief operating officer at the Retail Industry Leaders Association. Views are the author's own.
There has never been a better time to be an American consumer. The disruptive nature of the internet and growth of e-commerce have ushered in an era of intense competition in retail. The winner in this environment isn't a single store or brand — it's the American consumer, who is at the center of the retail universe thanks to virtually limitless options. The intense competition to win customers' business has transformed retail to deliver great prices, quality and experiences, both in-store and digitally.
While the internet gives us much to celebrate, disturbing trends that erode free-market competition and threaten consumers are emerging. A few dominant tech platforms control how consumers discover, compare and make purchasing decisions. Dominant search engines, social networks and ISPs that control the vast majority of internet traffic lie at the epicenter of today's access to information and choices. These dominant platforms increasingly throttle the information consumers receive. Amazon and Google alone represent 60% of product search. They have the power to skew markets and shape consumer behavior in ways that circumvent traditional price competition.
Retailers use internet search as a roadway to connect with potential customers. Consider the average consumer "Googling" the latest features and best price for a new TV. Consumers expect to see a variety of models, prices and retailers to choose from. But what if the results favor a particular model? Or if certain retailers are removed from view?
Left unchecked, technology has the power to subvert, rather than empower consumers: blocking choice, deceiving customers and steering business toward favored corporations. Is a consumer empowered or disenfranchised if the best quality product is buried on page five of the search results? Is the consumer experience enhanced or degraded if a search steers them toward a counterfeit product instead of the authentic brand they are seeking?
Case in point: the Williams-Sonoma lawsuit against Amazon. Consumers searching on Amazon for a Williams Sonoma product get an array of options to choose from. With Prime membership, you can get Williams Sonoma food products, towels and gadgets for your kitchen "as soon as tomorrow." Amazon displays these products in ways that lead consumers to believe that they are new, or authorized, or coming directly from Williams-Sonoma.
Here's the catch: Williams-Sonoma doesn't sell products on Amazon.com. Unbeknownst to customers, these products are likely either stolen, used or counterfeit. Amazon is indifferent to how the sale of such items impacts the Williams Sonoma brand or the customer. They just want the sale, and the data on the individual searching for Williams Sonoma products.
Get retail news like this in your inbox daily. Subscribe to Retail Dive:
The central role of a tiny number of tech platforms in the 21st Century economy demands scrutiny. That's why leading retailers are urging policymakers to investigate companies that are impeding free-market competition or deliberately deceiving consumers. This isn't about picking sides; it's about ensuring that consumer access to information enhances — rather than corrodes — free-market competition and choice. Consumers can only make price-driven decisions if they get accurate, trustworthy and timely information about prices. The same is true for information about product quality, availability and authenticity.
Congress and regulators responsible for safeguarding free markets and consumers have largely taken a "hands off" approach to the internet, but the internet's ascension to the center of modern consumer decision making means it's time for policymakers to act. Control over information can drive anticompetitive effects just as much as market power and price control. To ensure free markets work for consumers, it's time for policymakers to step in and ensure the market is free of coercive monopolies that control access to information.