WASHINGTON – A trade group representing major U.S. retailers, including Target Corp. and Best Buy, has encouraged the Federal Trade Commission (FTC) to apply trustbusting scrutiny to online giants Amazon and Google.
In a 10-page letter dated June 30, the Retail Industry Leaders Association (RILA) said Amazon and Google exert too much control over access to information shoppers need, especially price information.
“To put the matter as simply as possible, a firm does need to have the power to control prices if it has the power to control effective access to price information,” RILA Chief Operating Officer Brian Dodge wrote.
The ability of search engines to compile and manipulate digital data give Amazon and Google the ability to use competitors’ experience in online markets in an unfair way to craft their own competing products, the letter argues.
Also, online sales platforms can turn a blind eye to counterfeit brands sold on their sites, further undercutting name brands.
The letter comes as the FTC and the Justice Department are looking into Facebook, Google and Amazon and is part of a larger discussion of antitrust issues in the digital age.
According to Bloomberg, Amazon has said it controls only a small percentage of the total retail market and faces stiff competition from companies such as Walmart.
Marketplace Pulse, which studies e-commerce, estimates that Amazon’s share of U.S. online sales has risen to 56% in the first quarter of 2019, up from 15% in the fourth quarter of 2002.
Google’s dominance among search engines is another concern.
At a recent University of Chicago conference on competition in the digital age, presenters suggested new methods for determining unfair market concentration. One recommendation was for a federal “Digital Authority” to deal specifically with challenges presented by online sales platforms and information gathering.
Researchers also noted that courts have been reluctant to change the ways in which they measure monopoly markets. “Antitrust enforcement better suited to the challenges of the Digital Age may therefore require new legislation,” the scholars concluded.
University of Minnesota business Prof. Akshay Rao says RILA’s appeal to the FTC tests the theory that “competitors are harmed by information being collected passively.”
The idea is that companies can build alternative products “from information acquired because of their status in the marketplace,” Rao said.
Some scholars have found that detailed information extracted from online buyers without their knowledge does not ultimately lead to competition that lowers prices, Rao added.
At the beginning, garnering minutiae about preferences and habits allows producers to tailor to individual consumer wants. But the detailed knowledge can be exploited.
Controlling how and when shoppers are exposed to price information, said Rao, can have a “tremendous effect” on what they pay.