As technology flattens the world, the way we conduct our daily lives – travel, entertain, educate, shop, communicate and even get food – is undergoing a radical change. This has affected a variety of state stakeholders differently – there are clear winners and losers. The nature of our success in dealing with this change lies in the ways in which we address the concerns of all players.
The proliferation of a wide range of e-commerce platforms has brought convenience and increased consumer choice. But in hindsight, initial cashbacks and deep discounts turn out to be a precursor to addiction. Online aggregation platforms have also harmed large segments of SMEs with their dominant position and the malpractices that this site allows them to engage in. There is a clear pattern that shows the dominance of a few large platforms.
These companies resort to predatory pricing to gain clients even as they experience ongoing financial losses – SEBI is reconsidering the valuation criteria for these companies looking to list. They take away from suppliers and consumers. This can be seen, in the long run, as an exclusionary exercise that eliminates other players from the market. The ultimate loss holder is the consumer who will have a lower bargaining position due to less competition and will be subject to the arbitrariness of monopolistic behaviour.
Whether it’s online marketplaces like Amazon and Flipkart, food service aggregators like Zomato or Swiggy, or travel aggregators like MakeMyTrip and OYO, they have all been accused of distorting the market. The story of big tech companies like Google, Facebook and Apple is different, and it’s best left for another time.
While neutrality is the basic foundation of the market, equal opportunity in the suitability of things, the claims of groups such as Flipkart or Amazon to be a marketplace for a variety of sellers can be called into question. A few select sellers, generally affiliated with the platform, reap the benefits of greater visibility and better trading terms – reduced commissions and platform-funded discounts. Zomato, like other food complexes, is said to operate cloud kitchens. Many of them run private label products in categories where other sellers have succeeded. Associates are prominent sellers on their platform. It is alleged that an undue advantage is given while recommending or listing these products.
Online travel collectors are often accused of forming cartels. The Competition Commission of India’s investigation into the OYO-MakeMyTrip complicity case resulted in MakeMyTrip being ordered to re-register Treebo and FabHotels properties. Other arbitrary removals or cancellations of listings of competing products and services have also been heard.
While using these platforms, citizens voluntarily and involuntarily share their data. Aggregators collect shopping habits, consumer preferences, and other personal data. Platforms are accused of using this data – data that is neither generated by them (created by customers) nor for them (created for product/service sellers) – to create and improve their products and services, while taking it apart from other sellers on their platform. They take advantage of this data and information about other brands to launch competing products in their markets. This information asymmetry is exploited by aggregators to gobble up the organizations they promise to support. They provide more prominent listings for their own labels and because they have complete control over customer ratings and ratings on the platform; Manipulation and arbitrary removal have also been reported.
Another issue that is often noticed is the lack of a fair and transparent dispute resolution mechanism for sellers on these platforms. Late payments, unreasonable fees and hidden fees are common. The power of these platforms is at the expense of small, hard-working businesses. Small restaurants complain that the inability of food service aggregators to serve the customer’s order is due to the inability of the restaurant. Likewise, hotels listed on these platforms are held responsible for customer complaints arising from over-compliance. In some cases, restaurants and hotels are arbitrarily shown as closed. Large restaurants with their own delivery networks are forced to use collection delivery services.
Unreasonable and one-sided contracts allow travel compilers to have a discrepancy clause (in rates) that allows them to offer rooms at a much cheaper rate but prevents hotels from doing so. Restaurants often have to accept orders at prices well below their agreement. refusal to write off hotels from the podiums; Other exit terms are restricted. Taxis linked to aggregators such as Ola and Uber are pressured to use the company’s payment system and are often on the receiving end of arbitrary fees.
All over the world, small businesses suffer from the unethical practices and unequal bargaining power of these large platforms. It’s time to put a set of blanket rules and regulations together. These regulations must be comprehensive, they must eliminate the conflicts of interest inherent in current market practices, and prevent any anti-competitive practices. A model agreement should be implemented that is fair and allows a level playing field between the compilers and their trading partners. There is much to learn from the EU Digital Markets Act that seeks to address unfair practices by these gatekeepers. Strong and rapid mechanisms to address grievances and resolve disputes must be established. The rules should allow for penalties for unfair practices. Market dominance and the subsequent recall of fair competition rules must be activated at the level of small markets and product sectors.
This column first appeared in the print edition on June 28, 2022 under the headline “Tilanton”. Writer Rajya Sabha MP and former Deputy Chief Minister of Bihar