CMA publishes research on algorithms, showing how they can reduce competition in digital markets and harm consumers if they are misused.
The CMA has launched a call for evidence inviting views and evidence on the harms outlined in its paper on algorithms and information on specific issues with firms that the CMA could examine and consider for future action. Algorithms have enabled considerable gains in efficiency and effectiveness, such as repricing portfolios of thousands of products in real time. Importantly, algorithms are at the heart of many technology companies, including some of the world’s most strategically significant firms. However, algorithms can be used in ways that reduce competition and harm consumers. As algorithmic systems become more sophisticated, they are often less transparent, and it is more challenging to identify when they cause harm.
The paper identifies potential harms to competition and consumers from the use of algorithms, focusing on those the CMA or other national competition or consumer authorities may be best placed to address. These include direct harms to consumers, such as personalisation of prices and other aspects of online choice architecture such as dark patterns. They also include harms to competition, such as the use of algorithms to exclude competitors (for example, to facilitate self-preferencing) and the potential for algorithms to facilitate collusion.
The CMA points out that in the UK, traders have a general duty not to trade unfairly and act in accordance with the requirements of professional diligence. Compliance with equality and data protection law is part of these requirements.
The paper also summarises techniques that could be used to analyse algorithmic systems and the role of regulators in addressing these harms.
The CMA’s consultation asks:
The consultation ends on 16 March 2020.