ACCC concerned about how online retail markets use algorithms and data

After scrutinizing online retail marketplaces such as Amazon Australia, Catch, eBay Australia and Kogan as part of its investigation into digital platform services, the Australian Competition and Consumer Commission (ACCC) has raised a number of concerns about the operation and functionality of these sites. the impact it has on sellers and consumers.

By releasing his fourth gear [PDF] In Thursday’s investigation, the ACCC acknowledged that while there are a small number of relevant products in an online marketplace that can help consumers make purchasing decisions, it also found examples where online marketplaces used algorithms to decide on the ranking and display of products. , including self-preference of their own products.

“Online marketplaces need to be more transparent with consumers and sellers about how they work. For example, they should explain to consumers and sellers why their search functions and other tools promote certain products over others. ‘others,” ACCC President Gina Cass-Gottlieb said.

Catch and Kogan were named in the report as examples of “hybrid marketplaces” – retail marketplaces that sell both third-party products and their own products – that used algorithms to give an extra “boost” to search results. research. products sold on their marketplace.

“We are particularly concerned about so-called hybrid marketplaces, which sell their own products in competition with third-party sellers using their platform,” Cass-Gottlieb said.

“Hybrid marketplaces, like other vertically integrated digital platforms, face conflicts of interest and may act in ways that benefit their own products with potentially negative effects for third-party sellers and consumers.”

Another concern noted by the ACCC relates to data collection and use of consumer data, believing that more consumer protections are needed, such as acceptance of the Voluntary Product Safety Pledge, which commits signatories to remove lists of products deemed unsafe within two working days. .

“We believe consumers should be given more information and control over how online marketplaces collect and use their data,” Cass-Gottlieb said.

“Given the important intermediary role played by online marketplaces between consumers and sellers, it is also important that marketplaces have protections in place for consumers using their services.”

The report also raised concerns about the lack of dispute resolution mechanisms available to sellers and consumers. The ACCC has reinforced the need for online marketplaces to introduce minimum internal dispute resolution requirements and an ombudsman system to resolve complaints and disputes. This is a recommendation made by the ACCC as part of the Digital Platforms Inquiry Final Report.

“Other measures supported by the ACCC, including the prohibition of certain unfair commercial practices, the introduction of a general security provision and the illegality of unfair contract terms, could help solve other problems identified in this report,” Cass-Gottlieb added.

Additionally, the report noted that while Amazon Australia’s sales remain significantly lower than eBay Australia and other Australian retailers, such as David Jones, Myer, Kmart and Target, it is experiencing the fastest growth. of all online platforms reviewed.

According to the ACCC, eBay Australia’s current share of overall online sales in Australia is around 10%, while Amazon Australia’s share is around 2.5%.

As next steps, the ACCC said it is currently consulting on the need for a new regulatory framework or tools to address competition and consumer concerns identified with respect to digital platform services. The findings will be presented in the ACCC’s fifth digital platform services investigation report, due in September 2022.

“Such a framework should be able to be applied to an online market if it reaches a position where it could exert some level of market power or, potentially, act as a gatekeeper between businesses and consumers,” Cass said. -Gottlieb.

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Anne G. Cash