The four largest Australian online marketplaces – Catch, Amazon Australia, Kogan and Ebay – are under scrutiny by the Australian Competition and Consumer Commission (ACCC) over the way they use algorithms to influence consumers’ purchasing behaviour.
The consumer watchdog’s Digital Platform Services Inquiry report found that online marketplaces have a “high level of control and involvement” in transactions between consumers and sellers on their platforms
While the report stopped short of proposing any legal action, it also highlighted a range of operational and privacy concerns regarding the use of consumer data, lack of dispute resolution mechanisms and raised concerns over how products are preferentially ranked on some of the sites.
ACCC chair Gina Cass-Gottlieb said online marketplaces have an important role in connecting Australian consumers and sellers.
“Online marketplaces need to be more transparent with consumers and sellers about how they operate. For example, they should explain to consumers and sellers why their search functions and other tools promote some products over others,” she said.
ACCC is particularly concerned about so-called hybrid marketplaces which sell their own products in competition with third-party sellers that use their platform.
“Hybrid marketplaces, like other vertically-integrated digital platforms, face conflicts of interest and may act in ways that advantage their own products with potentially adverse effects for third-party sellers and consumers.”
Gottlieb further stressed that given the nature of the intermediary role performed by online marketplaces, they should have protections in place for consumers using their service.
Some marketplaces have joined the voluntary Product Safety Pledge which provides consumers with additional protection by removing listings of unsafe products within two business days.
ACCC would have significant concerns if one of the online marketplaces reaches a ‘dominant position’ in Australia. A dominant position would make the market ‘tip’ in favour of a single marketplace, greatly reducing competition.
On that note, Amazon Australia’s sales are growing faster than the other platforms although it remains well below Ebay Australia and other retailers such as Kmart, Myer, Target and David Jones.
The ACCC is considering introducing a new regulatory framework to address more broadly address competition and consumer concerns with digital platform services.