How can consumers make meaningful choices in the digital world?
This week, Amanda Long, Director General of Consumers International spoke at EDPS-BEUC conference on Big Data: Individual Rights and Smart Enforcement in Brussels which brought together issues of competition, consumer protection and data protection.
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. Google has a 71% share of the search market globally, rising to 90% in the European Union. WhatsApp is the top messaging app in 109 countries, or 56% of the world.
Consumers are feeling the direct impact that such large players have on their individual choices: from privacy tools disappearing from app stores, or WhatsApp users seeing the service bought out by Facebook, followed by changes to the terms of data sharing , to the impenetrable terms and conditions which people must agree to in order to access digital services. 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. 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.
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 – 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.
- 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.