The CMA has published new research on algorithms, showing how they can reduce competition in digital markets and harm consumers if they are misused.
The Competition and Markets Authority (CMA) is now seeking evidence from academics and industry experts on the potential harms to competition and consumers caused by the deliberate or unintended misuse of algorithms. It is also looking for intelligence on specific issues with particular firms that the CMA could examine and consider for future action. The research and feedback will inform the CMA’s future work in digital markets, including its programme on analysing algorithms and the operation of the new Digital Markets Unit (DMU), and the brand-new regulatory regime that the DMU will oversee.
Much of people’s lives is spent online, be it consuming news, socialising, dating, ordering food, or arranging travel. Many of these online activities and the markets that underpin them could not exist without algorithms, often in the form of artificial intelligence, and these have enabled considerable gains in efficiency and effectiveness. However, they can negatively impact consumers in various ways.
Algorithms can be used to personalise services in ways that are difficult to detect, leading to search results that can be manipulated to reduce choice or artificially change consumers’ perceptions. An example of this is misleading messages which suggest a product is in short supply.
Companies can also use algorithms to change the way they rank products on websites, preferencing their own products and excluding competitors. More complex algorithms could aid collusion between businesses without firms directly sharing information. This could lead to sustained higher prices for products and services.
The majority of algorithms used by private firms online are currently subject to little or no regulatory oversight and the research concludes that more monitoring and action is required by regulators, including the CMA.
For more information, visit the algorithms paper web page of the CMA.
For media enquiries, contact the CMA press office on 020 3738 6460 or firstname.lastname@example.org.
FEBIS Regulatory Committee will see with Industry Partner BIPA if there is a need to provide joint answer on the consultation.