Twenty years ago, the internet was promised to level the playing field allowing small fry to compete with the bigger, entrenched players. But online digital markets have tended towards monopoly, or a small number of dominant firms.
The British government wants to know why. In August it established an expert panel headed by Professor Jason Furman – formerly President Obama's chief economic advisor – to look at how competition authorities handle the dominant players, and find ways new companies can compete. Consumer privacy is one of the areas being examined – another is how on earth you compete with "free".
This has coalesced into an official call for evidence, issued today. Ten questions are posed. The second asks why only a small number of firms dominate digital markets, and why it's often the same names (hello, Google).
The inquiry will also mull whether vast data hoards affect competition, and what benefits and harms come from paying for "free" services through personal data.
Intriguingly, it also wants to explore the question of algorithmic pricing, where the price is set by AI.
"We would welcome any evidence on whether prices set algorithmically but without explicit collusion can interact or converge in ways that would disadvantage consumers," the inquiry ponders.
Getting personal now
This potentially opens a whole new can of worms – which we contemplated at length last year. Have a read if you're not up to speed.
This ranges from personalised pricing – where the shop knows you're rich, or have just been paid – to real-time dynamic pricing, such as putting the price up at the pumps just before the school run.
Or as one company selling such a service – Artificial Intelligence PriceCast Fuel – explains (PDF), the algorithm "detects behavioural patterns in Big Data (all available data relevant to the sale) and relates to customer and competitor reactions with a frequency and level of accuracy that users of traditional pricing systems only can dream about".
The Economist, never one to miss an opportunity to fantasise about runaway machines, fretted that "a cabal of AI-enhanced price-bots might plausibly hatch a method of colluding that even their handlers could not understand, let alone be held fully responsible for".
Well, the government is on the case. Maybe just in time.
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