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Algorithms under the spotlight amid harm and misuse concerns

Paloma Kubiak
Written By:
Paloma Kubiak

The competition regulator is calling for evidence to assess the potential harm for consumers by the “deliberate and unintended misuse of algorithms”.

The Competition and Markets Authority (CMA) said that algorithms underpin many of the online activities carried out whether it’s consuming news, socialising, dating, ordering food or arranging travel.

While they have “enabled considerable gains in efficiency and effectiveness”, the CMA added that algorithms can also “negatively impact consumers in various ways”.

It explained that algorithms can be used to personalise services while search results can also be manipulated to reduce choice or artificially change consumers’ perceptions. An example, Brits could see misleading messages which suggest a product is in short supply.

Companies can also use algorithms to change the way they rank products on websites, giving preference to their own products and excluding competitors.

Further, the CMA warned that more complex algorithms could aid collusion between businesses without firms directly sharing information which could ultimately lead to higher prices for products and services.

It also added that the majority of algorithms used by private firms online aren’t usually subject to regulation and therefore more monitoring and action is required.

Kate Brand, director of data science, said: “Algorithms play an important role online but, if not used responsibly, can potentially do a tremendous amount of harm to consumers and businesses. Assessing this harm is the first step towards being able to ensure consumers are protected and complements our wider work in digital markets to promote greater competition and innovation online.

“We want to receive as much information as possible from stakeholders in academia, the competition community, firms, civil society and third sector organisations in order to understand where the harm is occurring and what the most effective regulatory approach is to protect consumers in the future.”

Rocio Concha, Which? director of policy and advocacy, said: “Algorithms can help consumers find suitable products and services as well as good deals, but can also be used to track and monitor behaviours in ways they are unaware of, leading to them being manipulated or misled – either accidentally or by design.

“From pressure-selling tactics by online accommodation booking sites to unscrupulous sellers using fake reviews to game their way to a valuable Amazon’s Choice endorsement, too often algorithms can lead to consumers losing out.

“If the regulator finds that some companies are using algorithms to harm consumers, it must work alongside the new Digital Markets Unit and be prepared to step in and take action.”