Platform Neutrality means that the E-Commerce website/Application shall perform its functions in an impartial/ unbiased manner and are expected not to confer preferential treatment to any particular seller/sellers. However, the much-awaited report of The Competition Commission of India dated 8th January 2020 has highlighted the various issues with regard to platform neutrality on E-Commerce platforms.
The report suggests that Platform Neutrality in the E-Commerce Platform is influenced by following factors:
Numerous issues are also highlighted in the category of Food Supply Services provided on Online Platforms.When the online platforms list their own cloud kitchen at the platform it causes conflict of interest to their role as intermediary on one hand and competitor on the other.
The Online Sellers were of the standpoint that E-Commerce platforms are distorting the Competition in the following manner:
1. TA. Manipulation of Data- When E-Commerce platforms enter into the market of sellers or service providers, they have control over their platforms through variety of mechanism such as ranking of search results. Ranking of search results may be manipulated by any platform to obtain advantage over other sellers.Further, intermediaries accumulate market sensitive information viz Selling Price, number of quantities sold, demand etc. which may be exploited by them to initiate Platform owned Private Brand or may be given to “Preferred Seller” to increase its sale.
2. Ranking Bias- Consumers prefer sellers based on their ranking on the Online Platform, although such ranking is generated by the algorithm.However, Online Platform is in the full power and control of the search results. It is highlighted in the report that Platform owned Private Brands in majority cases are shown as the bestsellers, which makes hard for the consumers to recognize the biasness.
3. C. User Review- Lack of transparency in user review and user rating permits the Online Platform to manipulate the results which affects the ability of seller to effectively compete with other players.
4. Discriminatory Commercial Terms- It is highlighted in the report that seller and service providers are of the view that terms of agreement such as Commission and penalties are discriminatory in nature for them as compared to the Platform owned Private Brands.
On the contrary, Online Platforms put-forth that all the sellers including those owned by them, are listed in fair and impartial manner and they cannot prefer any seller at the expense of quality of product on their platform. However, the Food Delivery players having their own cloud kitchen were of the opinion that through their partner restaurants and platform owned kitchen they have filled the supply gap in the market.
The Online Seller advanced that they lack countervailing power due to presence of beaucoup sellers in the market. It is evident from the fact that they are unable to go offline individually even when they find the contract terms imposed by the platforms to be abusive and unacceptable. Concludingly, it has been opined by the CCI that there exists imbalance between the bargaining power of the E-Commerce Platforms and Online Sellers and through various methodologies information of the online sellers is being exploited by the E-Commerce Platforms. The Commission is of the view that E-Commerce platforms are required to adopt self-regulatory measures such as clear and transparent policy on data collection and their utilisation by the Platform and there should be transparency in the rating mechanism and publishing of user review for the Consumers.