{"id":16571,"date":"2019-08-28T18:04:37","date_gmt":"2019-08-28T18:04:37","guid":{"rendered":"http:\/\/www.publicknowledge.org\/?p=16571"},"modified":"2019-08-28T18:04:37","modified_gmt":"2019-08-28T18:04:37","slug":"keeping-thumbs-off-the-scale-nondiscrimination-on-digital-platforms","status":"publish","type":"post","link":"https:\/\/publicknowledge.org\/keeping-thumbs-off-the-scale-nondiscrimination-on-digital-platforms\/","title":{"rendered":"Keeping Thumbs Off the Scale: Nondiscrimination on Digital Platforms"},"content":{"rendered":"

In a recent\u00a0podcast episode<\/a>, economist Luigi Zingales related a joke familiar in tech circles: \u201cWhy did it take police years to find the body?\u201d \u201cIt was buried on page two of Google\u2019s search results!\u201d The witticism rings all too true to internet users. We know that our likelihood of selecting a digital pathway is based on where it appears in our feeds. Our trust in these rankings gives the companies that control them a great deal of power in online economies. This is why experts are increasingly convinced that we need a new cop on the beat, to make sure the gatekeepers who generate those feeds aren\u2019t putting their thumbs on the scale to stifle competition.<\/p>\n

The method that first made Google Search famous was its algorithm, which relied on users to determine a site\u2019s search ranking by linking to it and clicking on it (and thus attesting to its value). This method solved the age-old problem of search: how to make sure the most relevant and valuable sites come first.\u00a0Digital platforms<\/a>, be they search engines like Google or marketplaces like Amazon and the Apple app store, rely on similar algorithms, which have since conditioned us to trust the top search results by virtue of the Wisdom of Crowds. But this logic assumes that the algorithms doing traffic control only discriminate based on the user\u2019s preferences. And in\u00a0recent years<\/a>,\u00a0reports<\/a>\u00a0have\u00a0emerged<\/a>\u00a0that some of the large platforms may nudge their algorithms to favor their own results over competitors.<\/p>\n

Gatekeepers<\/em><\/strong><\/p>\n

Consider the implications for competition online. If the top results on Amazon\u2019s Marketplace\u00a0become reserved for AmazonBasics<\/a>, start-up retailers may find themselves cut out of a huge portion of e-commerce. The same could be said for apps\u00a0in Apple’s app store<\/a>. Google may not sell their own products, but if Search\u00a0prioritizes Google services<\/a>\u00a0over rivals (for instance, prioritizing Google Maps over Yelp or Youtube over other video-streaming sites), they can keep surfers on-site and hoard critical ad revenue. Such was the subject of the EU\u2019s\u00a0$2.7 billion fine levied on Google<\/a>\u00a0in 2017.<\/p>\n

This is known as commercial or vertical discrimination, and its not a new phenomenon; cable operators and railroads have been accused of similar abuses in the past. However, Harold Feld of Public Knowledge\u00a0argues that<\/a>\u00a0digital markets are uniquely susceptible to anticompetitive discrimination. Digital platforms benefit from powerful network effects and vast repositories of data that can enable them to dominate their particular lane (search, e-commerce, apps, etc.). And dominant platforms can be gatekeepers for potential rivals. Observers increasingly believe that one of the only ways to compete with these platforms is to rise to the top in a narrow set of products or services that fills a particular demand, sometimes called a \u201cvertical.\u201d Competitors can then expand into other \u201cadjacent\u201d sectors. Think about how Amazon started as a bookseller before adding other products, and Google as merely a search engine before adding Maps, Gmail, etc. However, new competitors to these giants may be forced to rely on them to get off the ground in any vertical at all. For example, a news app or navigation app may rely on Google Play store or Apple App store to be found. Similarly, a video streaming site likely relies on Google Search to be noticed. These platforms likely have the ability and the incentive to prevent a new competitor to one of their verticals from getting a fair shake.<\/p>\n

Common Carriage: Not a Perfect Fit<\/em><\/strong><\/p>\n

In the past, the answer to problems of platform discrimination has often been a policy called common carriage. By declaring something like a railroad or a phone company a common carrier, the state requires them to provide the same level of service to all traffic. This is why we expect phone companies to treat all phone numbers equally when connecting our calls.<\/p>\n

But common carriage falters when it comes to ranking and preferencing online. The whole point of digital platforms is to advantage the options that their algorithms think are most useful to users. Requiring all websites, products, or videos to be treated the same defeats the purpose of the service, and breaks the streamlined user experience that platforms have developed. However, there are two other possible solutions being discussed: Requiring structural separation and\/or vertical nondiscrimination.<\/p>\n

Structural Separations<\/em><\/strong><\/p>\n

Structural separations could be created between the platform and the subsidiary that competes on the platform. This could mean separate boards, accounting streams, and a prohibition on coordination between the two companies.\u00a0Antitrust attorney Lina Khan<\/a>\u00a0and\u00a0presidential candidate Elizabeth Warren<\/a>\u00a0even suggest that complete separation might be necessary to address the problem online. This would mean a digital platform is completely barred from owning companies that compete in that marketplace.<\/p>\n

Even with full structural separation, platforms could leverage favoritism toward completely unaffiliated sellers. For example,\u00a0Amazon offers<\/a>\u00a0sellers its shipping services, \u201cFulfillment By Amazon,\u201d in return for a fee.\u00a0Investigative journalists<\/a>\u00a0and\u00a0consultants<\/a>\u00a0have found that sellers who pay for FBA are more likely to be chosen as the default seller on an Amazon product page.\u00a0Sellers also claim that<\/a>\u00a0Amazon leverages its platform control to discourage them from offering lower prices elsewhere or\u00a0selling to other outlets<\/a>\u00a0(this is allegedly done by offering better page placement, or working to curtail counterfeiters\u00a0if\u00a0<\/em>sellers work exclusively with Amazon). Amazon\u00a0denies any favoritism and claims<\/a>\u00a0that third-party sellers regularly out-perform its own products.<\/p>\n

With or without structural separation, we could protect competition and build trust right away with the creation of vertical nondiscrimination rules.<\/p>\n

Nondiscrimination<\/em><\/strong><\/p>\n

When we hear \u201cnondiscrimination,\u201d we often think of equality for all people of all demographics, or the First Amendment\u2019s protections for speech and religion. However, nondiscrimination in this context refers to vertical nondiscrimination; policies designed to ensure a fair and competitive economic playing field. Platforms may have an incentive to discriminate against companies that currently rely on the platform (in other words, that have a \u201cvertical\u201d relationship to the platform), but also are, or may in the future become, a competitor to the platform. In a vertical nondiscrimination regime, the algorithm could prioritize based on any neutral criteria (say, whatever diapers are selling, or whatever news is getting the most clicks). Platforms could also remove content that violates community guidelines and policies. Debates about content moderation and how platforms handle hate speech online are important, but a separate conversation. However, what companies couldn\u2019t do is put their thumbs on the scale to down- or upgrade certain results for economic advantage. The\u00a0report by<\/a>\u00a0the United Kingdom\u2019s Competition & Markets Authority (also known as\u00a0the Furman Report<\/a>) lays out a sample \u201ccode of competitive conduct\u201d to \u201censure that business users are:<\/p>\n