Last week, the Retail Industry Leaders Association (RILA) called on the Federal Trade Commission (FTC) and U.S. Department of Justice (DOJ) to investigate Amazon and Google for their alleged antitrust practices. The trade group primarily represents large brick-and-mortar retailers like Best Buy, Target, and Walmart. However, its membership also includes technology brands such as Apple and T-Mobile.
RILA’s chief complaint is that Amazon and Google use their popularity to direct consumers away from their competitors.
Controlling the Flow of Information
The trade group’s argument is one that many Silicon Valley critics have previously made. The association’s position is that Amazon and Google use their search engine functionality to control the flow of information to consumers.
RILA supports its argument by referencing a lawsuit that Williams-Sonoma recently filed against Amazon. The kitchenware and home furnishings retailer alleged the e-commerce giant deceives consumers by giving them incomplete product information.
For instance, if a consumer searches for a Williams-Sonoma product on Amazon, the platform would present them with multiple options. These include the company’s listing, a reseller’s listing of a used version of the same product, and a similar product sold by Amazon. As such, the retailer believes the e-commerce corporation creates market confusion by not adequately delineating its search results.
Furthermore, the group argues that Amazon uses its ambiguous search results to trick consumers into believing its marketplace is bigger and more varied than it is.
The trade group also suggests that because most U.S. consumers use Amazon and Google to search for products, they operate as a duopoly. In the current marketplace, businesses can either advertise and list with the two tech giants or get crushed by competitors that do.
To remedy the situation, RILA wants regulators to create new rules requiring Amazon and Google to make their product listings more transparent.
Amazon disputed RILA’s claims by noting that it only represents four percent of the American retail sector. The company further stated that 90 percent of U.S. retail activity occurs in physical locations.
While Amazon and Google haven’t faced significant regulatory action in the U.S., the same isn’t true overseas. Since 2017, the European Union (EU) has slammed the search engine with $9.3 billion in antitrust fines.
In March, the consortium levied a $1.7 billion fine against the company because of how it operated its AdSense platform. EU regulators found that Google pressured companies into installing its search plug-in on their websites, excluding competing services. Moreover, the organization fined the firm $2.7 billion in 2017 for manipulating its search results to benefit its e-commerce service.
Notably, three months after the EU issued its latest sanction against Google, the DOJ opened an antitrust investigation into the firm.
It’s also worth noting that Democratic presidential candidate Senator Elizabeth Warren (D-Ma.) made dismantling of Amazon and Google a core part of her campaign. Subsequently, other presidential hopefuls have argued that the two firms need to be better regulated.
With notable politicians, foreign regulators, and now trade groups calling for antitrust action, it seems the Big Tech laissez-faire period might be over.