Retail group urges antitrust probes of big tech companies
July 11, 2019
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A US retail group is pushing for federal antitrust regulators to look at the dominance that big tech companies have in the ecommerce realm.
In a lengthy letter dated June 30, the Retail Industry Leaders Association (RILA) urged the Federal Trade Commission (FTC), one of two antitrust regulators in the US, to take a closer look at Amazon and Google for their control over online product searches and how product information reaches consumers. The retail group offered to help with any antitrust investigations.
The letter came not long after announcements that various investigations are gearing up to look into whether certain tech companies compete fairly.
The FTC and Department of Justice (DOJ) are moving towards launching antitrust investigations after dividing oversight of the four big tech giants – the FTC is looking into Facebook and Amazon, while the DOJ is handling Google and Apple. The House Judiciary Committee also recently launched a “bipartisan investigation into competition in digital markets.” Plus, a group of state attorneys general is reportedly preparing an examination into the tech giants based on antitrust concerns.
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Competition the hallmark of retail
Everyone in the retail sector knows competition drives innovation. It’s what leads to new services, practices, products, and, of course, lower prices.
As the RILA noted: “Intense competition is the hallmark of America’s core retail industry.”
But while competition fuels the retail sector, antitrust practices can have the opposite effect. The group said the FTC has a responsibility to protect consumers by ensuring that healthy competition is maintained throughout the retail sector.
“This requires pursuing policies and enforcement actions that curtail anticompetitive business practices, remove roadblocks to innovation, and ensure the ability of all retailers to improve the customer experience, unconstrained by the market power of other actors who can shape that experience to their own benefit.”
In a statement, Amazon said the retail market “is fiercely competitive,” and that the company accounts for “less than 4% of US retail” while the “vast majority of US retail sales – 90% – still occur in physical stores.”
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According to the RILA, it’s important that antitrust policies, and its enforcers, recognize how essential information flows are to the competitive process, especially in the digital age.
In its letter, the RILA said tech companies create an “information bottleneck” that has so much power it can skew markets and alter the traditional means of price competition.
The retail group argued that digital enterprises can use data to favor their own products over those of sellers in search results. This situation puts smaller retailers at a particular disadvantage, said the RILA, as they use Amazon because of its prominence, but the ecommerce giant can then use the data it collects to give its own products an advantage over smaller merchants.
Just as important as what sort of practices hinder competition, is how to determine antitrust breaches. Echoing sentiments expressed recently by Makan Delrahim, head of the DOJ’s antitrust division, the retail group said pricing shouldn’t be the only measure of anticompetitive harm.
“While classical antitrust analysis assumes that consumer behavior is driven by prices, the reality is that consumers can only make price-driven decisions if they have accurate, trustworthy, and timely access to information about prices. The same is true for information about product quality, availability, and the like,” wrote the RILA.
“It should thus be quite concerning to the Commission that Amazon and Google control the majority of all of Internet product searches, and can very easily affect whether and how price and product information actually reaches consumers.”
The RILA said its comments should be taken as a desire to see more competition, not less, but that the crux of the issue is for all competition to be “fair and on a level playing field.”
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