Amazon’s data deal invites DC scrutiny, consumers underpaid for information

Source:Global Times Published: 2019/7/18 18:28:40's data deal is inviting DC scrutiny. As its executives appeared at an antitrust hearing in Congress alongside those from other tech firms, the e-commerce giant offered its customers $10 to track their web browsing. It's a smart way to grab business from rivals, and the price low-balls the value of user data. That's a demonstration of how dominance works.

There's nothing new about retailers extending discounts for information on shoppers. Companies used to offer a few bucks or a prize entry to those who filled out surveys. Amazon is offering $10 to new users of Amazon Assistant, its shopping comparison tool, if they spend $50.

What's different is the scale of information being collected, and the potential anti-competitive effects given Amazon's size. 

The tool collects and processes information such as search results and page content from rivals. It also shows Amazon offers and reviews to consumers as they browse rival sites.

Amazon is worth nearly $1 trillion because it has a commanding lead in e-commerce. Google parent Alphabet and Facebook have also grown hugely valuable by dominating search engines and social networking. It's difficult to prove that these businesses harm consumers under conventional antitrust theories. Amazon's profit margins are razor-thin. Alphabet and Facebook don't even charge for most of their offerings.

One reason these firms dominate their respective categories is because of their huge collections of data. 

Amazon, for example, can use its trove to figure out the best way to price goods - attracting skinflints with cheap prices and charging more to those who can't be bothered to compare prices while shopping. It can also precisely target potential buyers with its own-label offerings. The value is snowballing over time. Amazon's growing collection of product reviews, for example, makes the site useful and draws customers.

While the value of consumer data to these behemoths is high, the price isn't. Consumers are willing to part with it free, or for a song in this Amazon case. 

It would be hard for consumers to band together to demand higher remuneration, even if they wanted to. That leaves it to lawmakers to consider measures such as limiting data collection, or requiring firms to pay a data dividend to consumers. That might start to level the playing field.

The author is Robert Cyran, a Reuters Breakingviews columnist. The article was first published on Reuters Breakingviews.

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