AMAZON: THE NEW EAST INDIA COMPANY?

Author: Nishtha Mittal Year of study: 5th year (B.A. L.L.B. (Hons.)
Institute of affiliation: Amity law school Delhi (GGSIPU)

ABSTRACT

E- Commerce platforms have become the new supermarket for the world. Having great advantages like- door to door delivery, variety of options at affordable prices, it also acts as a great threat to privacy of personal and financial information of an individual.

Right to privacy is an inherent fundamental right of every citizen but ability to collect personal data is a quality of internet. Some information related to one’s personal life is written in indelible ink on the internet. No matter how much we try to remove it, it still exists somewhere in far corners of the internet, bringing itself to light at the worst possible time.

One of the fundamental rights is ‘Right to privacy’ that is crucial in current digital world. In this blog we shall examine the threats posed by these E- Commerce platforms to our privacy and try to elucidate a solution to the same.

KEYWORDS

E- Commerce, privacy, personal information, internet, fundament rights, constitution.

INTRODUCTION

E-commerce has been developing at a faster pace from last 2-3 years. But with popularity comes great deal of responsibility and competition which these e-commerce giants seek to avoid. It is a double-edged sword, where we cannot seem to live without these e-commerce platforms but at the same time compromise our privacy using them. Growing use of E- Commerce platforms also increases the threat to privacy of the consumers thus robust legal framework is the need of the hour for proper shopping experience. Not only the consumer rights of consumers are at peril but there are privacy concerns with them. One of the tech giants Amazon poses a perfect example of the issues consumers need to be cautious against. In this article we shall analyze how Amazon and its policies are detrimental to both sellers (un-preferred) and its consumers.

WHAT IS E- COMMERCE PLATFORM?

Before evaluating the Amazon case, we shall look at the definition and scope of the term ‘E- Commerce’. These platforms are the ones involved in commercial transactions among themselves or with buyers/ consumers. The sale and purchase activities ensue via digital media or internet only thus the name. There are several types of E- Commerce models stated as follows-

  1. Business to Consumer (B2C)- the most popular and frequently used model is B2C where the commerce ensues between the business and the consumer. Amazon is an example of B2C commerce model as it enables consumers to purchase variety of products via site or app.
  2. Business to Business (B2B)- the transaction is generally of higher value that ensues between the two businesses where the purchasing business intends to re-sell the products purchased to their consumers thereafter. The purchasing business acts as an intermediary between the original business and the final consumer.
  3. Consumer to Business (C2B)- businesses enable the consumers to sell the products to companies in order to increase competition in market and increase the price value of such product.
  4. Consumer to Consumer (C2C)- the transaction takes place between two consumers where one consumer can list their products on such platforms for sale/ rent at their own price. Subsequently, they are purchased by another consumer for the price stated or if there is a possibility, it may allow the consumers to interact and negotiate the price. Examples of such platforms are- E-Bay, OLX etc.

CCI VS AMAZON-FLIPKART (partial treatment to preferred sellers)

Amazon was allegedly involved in vertical agreement with flipkart according to the case filed by Delhi vyaparsangh in 2019 where investigation was launched by the competition commission of India. The complainant allegedly filed complaint based on section 4 (abuse of dominance) and section 3 violating competition in market)of the competition act, 2002 accusing Amazon of indulging in preferential trade treatment with specific sellers leaving out non preferred sellers that results in discrimination. Facts of the case state that Amazon has been listing its preferred sellers on first page of search whereas products of different sellers of same rating is listed on later pages. It has been discriminatory to non preferred sellers as they have to compete with the rates provided by preferred sellers who in turn have benefit by Amazon so they give predatory prices instead of real ones. Predatory pricing is harmful to consumers as well because it creates a trap with no escape. Consumers have a right to variety which has been violated by these e-commerce giants due to their monopoly on the market.

Upon findings of the commission it was observed that Amazon along with flipkart has been involved in vertical trade agreement which is an example of agreements that violate competition law of India. Here the competitors form an agreement in order to eliminate new competition and dominate the market themselves. But there was no proper proof collected that confirms the alleged ‘abuse of dominance’. Case was filed in Karnataka High court that came to the above-mentioned conclusions but CCI appealed in Supreme Court of India. Supreme court passed the case to high court which has still not taken its final decision. By this case we can analyze the harmful trade practices of e-commerce giants like Amazon, not only in India but also in its home country USA. It is not easy for sellers to compete with preferred sellers, let alone survive in the market. On the face of it, we can see that Amazon is new seller friendly, but practically it is evident that what is on paper is not always in practice.

USER POLICY OF AMAZON (against consumer’s right to privacy?)

Let us discuss privacy policy of Amazon in brief as provided on the official website.

  1. Amazon owns or controls any type of information entered on the site or given to it in any other way that includes all types of “personal information” (words used by Amazon as it is) for example- name, address, email, phone number, credit card information, etc.
  2. Not only it uses this information for its own business use, it also transfers it to third parties with which it has any agreement related to the same mostly which are affiliated not controlled by Amazon (as claimed).
  3. It claims to collect personal information of users for showing interest based advertisements to improve the quality of services they provide.
  4. It also spies on personal data of the user from other sources such as updated delivery address of the consumers from their carriers.

We can infer from this brief that the issue for consumers revolve around balancing their privacy and their experience. With personal data collection, Amazon can optimize search results resulting in greater shopping experience for customers, seeing what they need at correct time with affordable prices. Let’s face it, who doesn’t want that? But users need to keep in mind that all this comes at cost of being spied by Amazon. Although it isn’t established that Amazon uses this information for illicit purposes, we still cannot rule out the possibility of the same. Let us take an example of major issue of privacy that involved Amazon’s Alexa. It was found that Alexa an echo device launched by Amazon used to hear personal talks of users even when not in operating mode and leaking the same to Amazon operators. Though Jeff Bezos cleared the air by introducing a new feature where users can delete history of Alexa for last three months, it does not seem to address the real issue of Alexa hearing personal information on switched off mode. It also brought to light several bugs in privacy system of Amazon that sought to leak the information in an unauthorized way.

WHAT CAN BE DONE?

Though the privacy notice is issued by Amazon publically, it still has some loopholes that need to be addressed. We need guarantee that our data isn’t being used for promotional activities, mere claims of Amazon would do no good to users. Despite claiming strict policy for protection of consumer data, we see ads all around the sites powered by Amazon, recommending us the products we last searched for (till we proceed to new search or buy the products from recommendation). It creates a sense of doubt and it is responsibility of Amazon to address them with proof. There is a dire need for new legislations (although the existing ones exist, they are not focused specifically on e-commerce platforms) which address the privacy concerns of users. With the new Data Protection Bill, it would be beneficial to include e-commerce platforms regulation along with regulations of OTT platforms and other social media houses.

Users should keep in mind that these platforms can do nothing unless we Authorize them in doing anything like collection of the personal data. Every such collection requires consent, we can withdraw our consent to share the data with third parties by Amazon. It would mean comprising with some services, some extra searches, and some extra amount to be paid on purchase of other products but all this is in lieu of our privacy (is anything else more important to us?).

LEGAL REMEDIES

It is said that prevention is better than the cure, but once prevention fails, it is the cure that is required to redress the loss. Following are some legal frameworks that govern E- Commerce platforms and their privacy issues-

  1. Draft E- Commerce policy– Ministry of commerce has proposed to draft a national policy that would regulate E- Commerce platforms by checking their misuse of dominance (supplementary to competition act) and protect consumer privacy and experience.
  2. Personal data protection bill– Data protection authority as provided in chapter- IX of the bill has been authorized under the bill to ensure compliance with the act where the data fiduciary violates any provision thereof. Data fiduciary is not allowed to transfer or use any personal information of the owner without their permission (this is applicable to all data fiduciaries including E- Commerce platforms).
  3. IT Act 2000section- 72 of the act provides penalties for contravention of confidentiality and privacy without the owner’s consent by any digital platforms that also govern E- Commerce platforms.

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