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Amazon, Facebook, Google And The Question Of Trust

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Well, it looks like the tech giant is running into rough weather with anti-trust regulators all across the world. Last month, the European Commission issued a charge sheet that Amazon was abusing its dominance, and using its muscle to hurt small businesses.

In the season of Secret Santa, and last-minute Christmas shopping or new year’s gifts, the option of shopping with e-commerce is a godsend. And Amazon is the god of e-commerce in the world outside of China. It has overnight delivery; you almost always get what you are looking for; and the prices are low to the point of being unbelievable. The user interface, even on a tiny mobile screen, is a pleasant experience, and it even nudges you with suggestions to buy other stuff. With wide choices, low prices, overnight home delivery, quality assured, and an easy returns and refunds policy, it’s a customer’s delight. So what could go wrong?

Well, it looks like the tech giant is running into rough weather with anti-trust regulators all across the world. Last month, the European Commission issued a charge sheet that Amazon was abusing its dominance, and using its muscle to hurt small businesses. Specifically that it uses huge amounts of data generated by transactions on its platform to kill competitors. The European authorities are also investigating whether Amazon’s algorithms do product placement unfairly. In other words, when you are searching for a toaster, or a frying pan, it displays those vendors on top who have paid extra, giving them an unfair advantage. Of course, Amazon has denied the charges. It claims that it has, in fact, helped small businesses to sell to a wide customer base, by providing the e-commerce platform.

India’s telecom sector, in the efforts of enabling policies including more quantum of the spectrum, is set to establish new benchmarks in the next-generation network deployments and service delivery.

This is going to be a long-drawn-out battle between regulators and Amazon. And this is not the first instance of Amazon being pulled up. As if to illustrate its fair or unfair tactics, the Wall Street Journal ran a long piece recently titled ‘How Amazon wins: By streamrolling rivals and partners’. The article recalls many stories — from diapers to furniture – to show how Amazon was able to wipe out the competition by selling private-label products of well-known brands. There is the story of the Ravelli brand of tripods which were selling handsomely on the Amazon platform. But soon Amazon started selling a clone, sourced from the same manufacturer as the original company, at a price lower than Ravelli. It made it impossible to compete. Eventually, that company stopped selling on Amazon, and probably closed down. Ironically, the company which produced the Ravelli brand was called the Pirate Trading Company, and it accused Amazon of stealing its intellectual property (ie design etc) which was denied by Amazon. To undercut a rival on prices and sell an almost identical product — isn’t that what free market competition is all about? Or is it an abuse of dominance, using its deep pockets and clout, to evict a small company from its platform?

Not only does Amazon have immense data on buyer behaviour and preferences — which it can use against the very merchants who sell on it — but it can also act as a gatekeeper, choosing who can or cannot sell their wares on its platform. This is the potential for monopolistic power and its abuse.

It is this gatekeeper role of not just Amazon, but also Facebook, Google and Apple, which are under scrutiny by the European competition regulator. All of these companies act as marketplaces, and have their own, non-transparent rules, about who gets entry and who does not, thereby effectively abusing their power over millions of vendors. A US anti-trust watchdog, too, is pursuing its own investigation. At least 10 states in the US have filed charges against Facebook and Google about their anti competitive and collusive practices over the space they allocate and charge for advertising. As such Google commands two-thirds of its global revenues from advertising, long having eclipsed the revenues of television and newspapers. Events like Facebook Live or those on Twitter make them de facto broadcasters with virtually very little regulation of content, unlike those who are conventional, licensed broadcasters.

Facebook has already faced accusations of regulating content that can infringe on free speech, of being too cozy with governments and facilitating undue and unfair influence on elections. The electoral spending via Facebook and other social media is not subject to the same spotlight and scrutiny as that of conventional lobby groups.

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