MOSCOW, 6 sen — Dow Jones. Internet giants have tried for years to sit on two chairs, but now approaching the day of reckoning. The only question is, who will have to pay.
Companies like Amazon and Facebook, have changed the world, creating a virtually ubiquitous platform for online shopping, services and information. However, most of the content and products for these platforms do not produce them. In the past it was quite possible for them to evade responsibility. In the end, if the owner of the flea market is not responsible for the fake Rolex that you bought for one of his shelves, that’s why Amazon should be responsible for things purchased by its customers from independent sellers on its website?
However, Amazon is not a flea market. Now it is the third value of a public company in the world, second only to Microsoft and Apple. At the end of this year it should be the third company with the annual revenue of the S&P 500, ahead of both Apple and ExxonMobil. Amazon, Facebook and Google Inc. the owner of Google is three platforms, generating a total of more than 460 billion dollars of annual revenue.
These growing companies have for years evaded legal responsibility for the actions of malicious users on their sites. On their side was the law: section 230 of the Law on decency in the media protects Internet platforms from liability for user-posted content.
However, now that these platforms have become global giants, many people think that the growth of their influence should be accompanied by increasing responsibility. Earlier this year the court of Appeal third appellate district of the United States ruled that a client from Pennsylvania may sue on Amazon because of the product, which he considers unsafe. Meanwhile, Facebook recently was fined $ 5 billion for violating users ‘ privacy. It is the largest fine for such violations in the entire history of the Federal trade Commission (FTC) of the United States. In addition, the FTC fined Google $ 170 million for violations on its YouTube service, after which the company adjusted the operation of the service, in particular, by disabling comments to baby video.
The problem lies in expectations. Online users reasonably expect to find on reputable platforms reliable and well-advertised products — as, for example, in a hypermarket. However, they expect this not only from the largest companies. Consumers think that the smaller players specializing in categories such as Dating, travel and childcare, will offer them the same level of service.
Arguments in the style of “we are just a technology platform” is no longer taken into account. This year Facebook is investing heavily in increased security measures on the platform and including on the site of the Marketplace where, as found earlier this month The Wall Street Journal, was carried out despite the prohibition, disguised arms sales. Most of the last two years, the company has responded to the criticism from regulators, legislators and the press in connection with various disputes, the General meaning of which boils down to the question of the legality of content posted on the website.
Now it was the turn of Amazon. Last month, the WSJ found thousands of offers unsafe products on the website Amazon.com mainly from third-party sellers. Amazon claims that its security tools blocked 3 billion items on the website last year alone. However, the company may have to take additional measures, given the increasing attention to its activities.
The smaller platforms also have to pay. Earlier this year the WSJ had another journalistic investigation revealed several incidents with a tragic outcome for parents who used the services for the care of children from Care.com. The CEO of the company resigned a few months after the first article in the WSJ, and one of the investors-activists are currently encouraged to think about selling this business. In may, the company said it will conduct in-depth reviews biographies and other data personnel to care for the children.
Improved security of online platforms is of paramount importance. Stock Care.com fell by 57% since the publication of the results of the investigation by the WSJ in March. Last month the company said that the news contributed to a slowdown of growth in the number of paying users. Identifying unscrupulous players and harmful foods may undermine consumer confidence in the model itself online platform that will endanger the growth of all companies in this sector.
So far, investments in extra safety mostly platform company.
And although most of these expenses will probably pay investors, customers may also face some higher prices. As for Amazon, the e-retail trade generates much lower revenue than online ads, which leaves the company less money for additional expenses. Amazon’s operating margin over the last four quarters amounted to only 6% versus 34% at Facebook and 26% in the core business of Google. Stricter quality control can deprive customers of some best buy and get them to return to the traditional retailers.
Investors should prepare for the profitability of the technology platforms will be under pressure.
— The authors Laura Forman, [email protected] Dan Gallagher, [email protected]; translation PRIME; + 7 495 974 7664; dowjonesteam @ 1prime.biz.
Dow Jones Newswires, PRIME
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