Today, the Australia Institute published a report on the online environment which seeks to raise awareness of why a concentration of market power online is just as great a threat to diversity as in any other industry. It also examines what can be expected should market power be allowed to grow without appropriate checks. The Australia Institute has incorporated the results of a survey, commissioned by ICOMP, in which over 1000 Australian consumers’ attitudes towards internet use and online competition were examined in July 2011.
“What you don’t know can hurt you: How market concentration threatens internet diversity” reveals that Australians are unaware of and often unconcerned by rising concentration in the online marketplace. The report highlights the way in which search engines can amplify the market concentration that big retailers already enjoy. Around half of online shoppers (46 per cent) admit that the order in which search results appear always or sometimes influences their purchasing decisions.” However, despite a lack of understanding on the part of many Australians about certain basic features of search as well as the possible consequences of their own behaviour online, the public’s desire for an online environment characterised by healthy competition and diversity is unmistakable: most respondents preferred the government to intervene if necessary in the interests of competition rather than leaving the internet to evolve on its own with no guidance from regulators.
Dr Denniss The Institute’s Executive Director – and the paper’s co-author – said, “Unless regulators pay more attention to the need for online diversity, and there is greater understanding of how search engines function, online retail could come to resemble today’s shopping centres, in which the appearance of choice exists but actual choices are limited to a small number of players.”
The research, undertaken by and Dr. Richard Denniss and Josh Fear, notes that the dangers behind having an internet oligarchy, can lead to situations where “tiny and seemingly arbitrary decisions by search engine providers can have massive consequences for online retailers and for many other businesses with an online presence. And it is the sophisticated opinion of one particular firm – its search algorithm – that is at the centre of this Gordian knot”.
This report provides some crucial insights into the various concerns and trends impacting the evolution of the Australian online ecosystem in a market where e-Commerce is rapidly growing.
The report in its entirety can be found here.
The ICOMP Secretariat