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Internet markets are under fire for influencing customer behavior

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The Australian Office of Competition and Consumer Protection, ACCC, is guarding Australia’s four largest trading platforms, Catch, Amazon Australia, eBay and Kogan for using algorithms to influence their customers ’buying behavior.

The ACCC report on the Digital Platform Services survey, which found that online markets have a high level of control and influence over consumer transactions on their platforms, criticized four major marketplaces.

The study examined whether online markets promote fair and competitive markets for consumers and sellers. The report found that Australia has potential problems with competition and consumers in providing online retail markets in Australia, including:

  • the intensity of competition in the relevant markets
  • trends in online shopping and general online retail
  • relationships between markets and third-party vendors
  • relationships between markets and consumers as well as third parties and consumers.

“Online markets play an important role in connecting Australian consumers and sellers and make up an increasing share of consumer sales. But we are concerned about their impact on both consumers and third-party vendors who rely on online markets to reach their customers, ”said ACCC Chair Gina Cass-Gottlieb.

Hybrid markets under fire

Cass Gottlieb said the ACCC is particularly concerned about how these retail giants demonstrate and evaluate products, especially where they sell their own product in competition with third-party vendors – which could be a conflict of interest.

“Internet markets need to be more transparent to consumers and sellers about how they work. For example, they need to explain to consumers and sellers why their search functions and other tools promote one product over another, ”said Cass-Gottlieb.

“Hybrid marketplaces, like other vertically integrated digital platforms, face conflicts of interest and can act in a way that benefits their own products with potentially adverse consequences for third-party vendors and consumers.”

Cass Gottlieb said algorithms on platforms that give preferential treatment to the market’s own products are a matter of deep concern.

“We have concerns about specific examples of the dedication of hybrid markets in Australia that reflect similar concerns expressed by foreign regulators,” Cass-Gottlieb said.

Raised privacy issues

The report also highlights the large amount of consumer data collected and used by online platforms that may not meet the preferences or expectations of many consumers.

Cass-Gottlieb said consumers need to have more control over how platforms collect and use their data.

“Given the important mediating role that online markets play between consumers and sellers, it is also important that markets are protected for consumers who use their services.”

Security concerns and controversy

Cass Gottlieb said some platforms have joined the voluntary pledge of product safety, which provides consumers with additional protection, including commitments to signatories to remove lists of unsafe products within two business days.

“The ACCC encourages other online markets to join the promise of product security to further strengthen the security of the online marketplace,” she said.

The report also expresses concern about the lack of dispute resolution mechanisms and the need to establish an ombudsman scheme to resolve consumer complaints.

“Other measures supported by the ACCC, including a ban on certain unfair trade practices, the introduction of a general security provision and the recognition of unfair contract terms as illegal, may help address other issues identified in this report,” Gottlieb said.

Download the full version Request for digital platform services – interim report for March 2022


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