The Retail Industry Leaders Association (RILA), whose members include Walmart, Target, The Home Depot and Best Buy, wrote a 10-page letter to the Federal Trade Commission dated June 30 urging the FTC to look into competitive conduct by big tech companies such as Amazon, Google and Facebook.
RILA plans to stand behind the FTC’s work as it completes its review, and it gave an in-depth outline of how the association believes the federal government should adopt [antitrust laws.
“RILA members believe the commission has a responsibility to protect consumers by ensuring that competition exists throughout the retail ecosystem,” RILA wrote.
According to RILA, these efforts require pursuing policies and enforcement actions that curtail anticompetitive business practices, removing roadblocks for innovation and giving all retailers the ability to improve the customer experience.
In the letter, RILA said the FTC should ensure that competition among retailers benefits the consumer rather than seeing those benefits stifled by dominant players from digital marketplaces, tech platforms, payment networks or telecommunication systems.
“It should be quite concerning to the Commission that Amazon and Google control a majority of all of internet product search and can easily effect whether and how price and product information actually reaches consumers,” said RILA.
RILA explained to the FTC that these platforms and online marketplaces offer benefits such as fast and efficient access to consumer markets and providing products and services at scale that exceeds what is available in the physical realm.
However, concerns arise among consumer groups when these platforms achieve a level of dominance that enables them to disregard consumer interests
“The Commission should consider rules or enforcement actions requiring bottleneck technology platforms to convey information to consumers in ways that are transparent and do not mislead consumers,” RILA wrote.
Another consequence of these monopolies is the collection of data by the dominant platforms holding significant market power, which masks an excessive focus on prices.
As a result, platforms such as Google, Facebook and Amazon have enormous power on the “seller” or “advertising” side of their platforms, and consumers benefit with free or very low-cost products or services on the other.
However, according to RILA, modern antitrust enforcement needs to be driven by a greater recognition that control over information can drive anticompetitive effects just as market power and price control.
RILA also said product quality is often overlooked in a favor of price.
“The quality of those products and services are degraded as these companies shifted from fierce competitors to dominant monopolists,” RILA wrote.
These companies fail to protect user privacy and manipulate their attention in an unfriendly way that represents an ever-increasing trade-off for using their services, according to RILA.
“For example, two-thirds of consumers search directly on Amazon when looking for a consumer product; it has a massive amount of data on consumer shopping needs and behaviors,” said RILA.
According to its Privacy Notice, Amazon can and has shared consumer data with many unaffiliated companies, including the largest wireless carriers. Moreover, Amazon does not offer the consumer a choice to opt-out of this data sharing.
RILA wrote Amazon has begun to degrade the consumer experience on its own platform through information asymmetry, for example, which is a feature designed to steer consumers to particular products. They’ve also created the illusion of carrying a product that is not sold on its platform. As such, RILA said Amazon’s platform masks Amazon’s own responsibility for problems with the experience.
“It is now Amazon’s business model to create the impression that every brand is sold new and can be found there – even though that is not true and deceives consumers,” RILA wrote.
This model lets Amazon capture sales from other retailers with pages and product-search results that incorrectly suggest that Amazon is an authorized source of products by well-known retailers who prefer to remain off the platform.
It also lets Amazon erode brand loyalty with these retailers when the consumer doesn’t get the quality product they wanted, causing the consumer to blame the brand not Amazon.
RILA cited a report by antitrust scholars at the University of Chicago on the challenges retailers and brands face selling on Amazon:
“By selling logistics services to many of its sellers, Amazon gains an advantage when it wishes to launch a store brand,” said the report. “It can analyze the data from its rivals to develop an entry plan against those sellers.”
Last month, reports emerged that the FTC and the Department of Justice have divided up the four big tech companies between them for antitrust scrutiny, according to Business Insider. The FTC has responsibility for Facebook and Amazon, while the Department of Justice has Google and Apple.