Accusation of preferring own products: Amazon refuses to disclose search algorithm

• Australian Competition and Consumer Commission investigates online retail marketplaces
• Hybrid marketplace search algorithms are of particular concern
• Amazon does not disclose details about the product search system

ACCC examines online retail marketplaces

Online retail marketplaces such as Amazon Australia, Catch, eBay Australia and Kogan have recently come under investigation, Australia’s Competition and Consumer Commission (ACCC) published a report on April 28. For this purpose, the consumers and sellers who use these platforms were surveyed. Among other things, it examined whether online marketplaces promote fair and competitive markets for consumers and sellers.

Functionality Concerns

During the course of the investigation, a number of shortcomings were identified that address the functioning of the platforms. In particular, the use of algorithms “that decide how products are ranked and displayed (including the fact that some marketplaces prefer their own products), the collection and use of consumer data, inadequate dispute resolution procedures and the need for stronger consumer protections” emerged as of concern, according to the ACCC. Accordingly, the platforms were shown to have a high level of control and involvement in transactions between consumers and sellers. ACCC Chair Gina Cass-Gottlieb explains that such platforms need to be more transparent to their consumers and sellers about how they operate. “For example, they should explain to consumers and sellers why their search functions and other tools favor certain products over others.”

So-called hybrid marketplaces such as Amazon, which also sell their own products in competition with third-party providers, are particularly worrying. This is because there can be conflicts of interest as they may benefit their own products, which in turn negatively impacts third party sellers and consumers.

Amazon will not disclose search algorithm

The report also explains that Amazon refuses to describe its product search system to ACCC. Accordingly, Amazon is said to have explained to the ACCC that its own products are not preferred, but further details on the algorithm should not be shared. Michael Cooley, Amazon Australia’s director of public policy, says the company’s offerings are “those that we think customers prefer, whether they’re from Amazon or one of our seller partners.” It also aims to provide direct data to selling partners to help them manage their businesses, including online tools that analyze data about their own sales, the number of customers viewing the products they sell, and their conversion rates.

E. Schmal/Redaktion finanzen.net

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