This
week, Amanda Long, Director General of Consumers International spoke at
EDPS-BEUC conference on Big Data: Individual Rights and Smart Enforcement [1]in
Brussels which brought together issues of competition, consumer protection and
data protection. You can read Amanda’s full speech here. Below is an extract.
Questions of size, power, competition and choice
have never been so important to our understanding of consumer protection and
empowerment in the digital world. The reach of
so many big internet companies is remarkable: one in two global internet users
visit Amazon on a monthly basis[2]. Google has a 71% share of the search market
globally, rising to 90% in the European Union[3].
WhatsApp is the top messaging app in 109 countries, or 56% of the world.[4]
Consumers are feeling the direct impact that such
large players have on their individual choices: from privacy tools disappearing
from app stores[5],
or WhatsApp users seeing the service bought out by Facebook, followed by
changes to the terms of data sharing [6], to the impenetrable terms and conditions
which people must agree to in order to access digital services[7]. These digital services that quickly link up
friends, music, events and travel are convenient and can be great fun but can
also feel a bit like a lobster pot - easy to get into but very tricky to get
out of.
Many multinational platforms and digital
companies have become indispensable to contemporary life, offering high
quality, convenient digital interactions. The data monetisation model behind
some, where people ‘exchange’ information about themselves for the service with
no upfront financial cost, makes for a tantalising offer. They are the default by which consumers
experience and interact with digital - the gateway to the internet if you like:
we don’t search, we Google, we don’t make videocalls, we Skype.
The dominance of a small number of firms is
significant because people’s
choice over whether to engage or not in the digital world is becoming increasingly
limited.[8]
If a few large companies effectively
become gateways to all the internet has to offer, then we have to ask questions
about how their size and dominance impact
consumer choice, power and protection?
In the European Union, the prospects of keeping markets competitive and consumers protected are closely tied. It is suggested that competition itself can offer a protection of sorts by creating markets where companies compete for customers on the basis of value, quality and strong consumer credentials. In reality, without a range of options, and without an easy way to move between these options, it is difficult for consumers to sever ties if they are unsatisfied with a particular service. As a result, it becomes very hard to gauge whether people are happy or unhappy with services and the way companies operate. Classic ideas of competition and consumer protection are therefore stretched.
In the European Union, the prospects of keeping markets competitive and consumers protected are closely tied. It is suggested that competition itself can offer a protection of sorts by creating markets where companies compete for customers on the basis of value, quality and strong consumer credentials. In reality, without a range of options, and without an easy way to move between these options, it is difficult for consumers to sever ties if they are unsatisfied with a particular service. As a result, it becomes very hard to gauge whether people are happy or unhappy with services and the way companies operate. Classic ideas of competition and consumer protection are therefore stretched.
Looking
ahead to the next phase of digital consumption; the internet of things, heavy
reliance on a small number of large companies could become even more
important. As well as raising privacy
and security issues, the internet of things marks a major change in how we
think about consumption, purchase and ownership. This is mostly because of
so-called ‘hybrid’ products [9]–
where physical products are owned by the customer, yet the presence of software
means the device is subject to contract terms and conditions, which could put
unexpected limitations on its use or make exiting a contract difficult.
Large
established players already marking out territory in the internet of things will have to gather and connect data to as many objects and people as possible to
make their connected services thrive. The more data points connected, the more potentially
valuable the insights, so drawing in and retaining as many customers as possible
will be top of companies’ agenda. Exercising
choice could get harder for consumers, as they lean towards contracting with
one company as an easy way of bringing together multiple services. In practice,
switching provider by exiting contracts will be time consuming or inconvenient. Add to this the difficulties in transferring
data between suppliers and lock in seems more and more inevitable.
These
limitations on choosing between providers are really important for the digital
age. If competition can no longer
effectively deliver consumer protection through providing choice, then we need
to approach things differently. In fact there is the real opportunity to forge
a positive consumer agenda for the digital age that addresses areas of consumer
concern and offers real choice over how to participate. A complex, integral and dominating set of
relationships should not put us off arguing for a fairer and more accountable
digital system for consumers.
For example:
- Data portability and system interoperability – to enable easy transfer between different services, keep different options open, and keep the value of data close to consumer control
- Smarter use of information, and more transparency on how decisions based on data are made, not just what data is collected.
- Innovations that aid consumer understanding and build consumer trust and confidence such as personal data intermediaries.
The genie is out of the bottle. Widespread digital technology is here. There is real potential for consumers to benefit but also a flip side presenting widespread negative consumer outcomes. It is up to us to work together to ensure that the practices and delivery of large digital companies stand up to the scrutiny and expectations of the people whose lives are so entwined with them.
For example:
- Data portability and system interoperability – to enable easy transfer between different services, keep different options open, and keep the value of data close to consumer control
- Smarter use of information, and more transparency on how decisions based on data are made, not just what data is collected.
- Innovations that aid consumer understanding and build consumer trust and confidence such as personal data intermediaries.
The genie is out of the bottle. Widespread digital technology is here. There is real potential for consumers to benefit but also a flip side presenting widespread negative consumer outcomes. It is up to us to work together to ensure that the practices and delivery of large digital companies stand up to the scrutiny and expectations of the people whose lives are so entwined with them.
