A group of the biggest retailers in the country, including Target, Walmart, Best Buy, Apple, and T-Mobile, is asking federal regulators to do something about the outsized power digital competitors Amazon and Google have in the marketplace.
The Retail Industry Leaders Association, a trade group representing dozens of major retail chains, submitted lengthy comments this week (PDF) to the Federal Trade Commission urging an update of antitrust policy for the “information infrastructure” era, in business-to-business interactions as well as equal access to consumers, and for the FTC to “take the next step with investigations and actions against companies impeding free market competition.
The organization wants the FTC to act “not to complain about competition” from companies such as Facebook, Google, or Amazon, “but to ask for competition,” RILA VP of Innovation Nicholas Ahrens said in a written statement. “Modern antitrust investigation and enforcement needs to be driven by a greater recognition that control over information can drive anti-competitive effects just as much as market power and price control.”
The major theory of harm in US antitrust regulation in recent decades has been a question of pricing effects. If a merger of two businesses eliminates competition, the effect will likely be to raise prices and reduce quality, and therefore the merger may be blocked. Similarly, if a company has achieved complete market dominance in another way, the effect of its monopoly status will likely be to raise prices and reduce quality, and therefore some kind of regulatory action or legal challenge may be warranted.
The financial cost to the end consumer of using a service like Google is generally $0, though, so a solely price-based argument has been difficult for advocates, lawmakers, or industry groups like RILA to mount. Instead, the organization writes, regulators should focus on , including both businesses’ access to consumers and consumers’ access to correct and timely information about those businesses.
It should be “quite concerning” to the FTC that “Amazon and Google control the majority of all of Internet product search, and can very easily affect whether and how price and product information actually reaches consumers,” RILA writes, adding that the commission should reshape its approach “driven by a recognition that control over an information bottleneck by such a company has the power to skew markets and shape consumer behavior.”
In short, RILA says, there should be rules against hiding, masking, or making it difficult to see potentially lower prices from consumers in search results.
The organization also focuses on Amazon’s behavior, saying, “it is now part of Amazon’s business model to create the impression that every brand is sold new and can be found there—even though that is not true and tends to deceive consumers.”
This practice misleads shoppers with search results that “incorrectly suggest that Amazon is an authorized source of products ‘by’ well-known retailers who prefer to remain” off the platform, RILA says, and “allows Amazon to erode the brand loyalty” other companies need in order to compete.
Amazon is facing global scrutiny over its third-party marketplace. Since November, Germany, Austria, Italy, and the European Union have all launched separate antitrust investigations regarding Amazon’s use of marketplace data.
RILA also raises the specter of everyone’s favorite Internet policy bugaboo, net neutrality. Retailers are “particularly dependent” on ISPs in order to reach customers and optimize backend operations, the organization notes, but they are “concerned about becoming the target of rent-seeking by ISPs who control the flow of indispensable information to and from consumers.”
RILA’s full membership list is a veritable Who’s Who of malls and shopping centers nationwide. Among the more than 70 businesses on the list are big-box retailers such as Target, Walmart, Home Depot, and Lowe’s; department stores such as Macy’s, JCPenney, Kohl’s, and Sears; the parent companies of nearly every major US supermarket chain; CVS, Walgreens, and Rite-Aid; and an array of apparel, accessory, beauty, home goods, discount, automotive, and pet retailers.