Just about everyone started buying online during the pandemic, from groceries to houses and cars. That is if you could (and still can) afford to support online markets.
Image: iStock
Although smartphone access is growing, only consumers who have enough money and credit cards to process payments can really use online shops. Online markets are limited by the country’s enormous wealth inequality, while competition is curtailed by contracts and clauses that makes it very difficult for other players to enter the market.
According to the recently released Competition Commission’s Online Platforms Market Inquiry, that was released after 14 months of evidence gathering and in-camera hearings into online intermediation platforms that included eCommerce, app stores, travel and accommodation platforms, food delivery and online classifieds, the online market does not encourage competition.
The inquiry wanted to identify market features that curtail competition among platforms and between businesses using these platforms, as well as the participation of SMEs and historically disadvantaged persons (HDPs) as platforms.
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The Inquiry identified leading entrenched platforms that get the most consumer traffic in each category, which business users relatively depend. These leading platforms are Apple App Store, Google Play Store, Takealot, Booking.com, Airbnb, Mr Delivery, Uber Eats, Property24, Private Property, AutoTrader and Cars.co.za, as well as Google Search, including its specialist search units such as Google Shopping and Google Travel.
The findings and recommendations apply to these platforms. The inquiry provisionally found that Google Search plays an important role in directing consumers to different platforms, shaping platform competition.
According to the report, the prevalence of paid search results at the top of the search results page, without adequate identifiers as advertising, increases platform customer acquisition costs and favours large and often global platforms.
In addition, preferential placement of their own specialist search units also distorts competition in Google’s favour and, therefore, the inquiry provisionally recommends that paid results are prominently labelled as advertising with borders and shading to be clearer to consumers and that the top of the page is reserved for organic, or natural, search results based on relevance only, uninfluenced by payments.
The inquiry also recommends that Google allows competitors to compete for prominence in a search by having their own specialist units and with no guaranteed positions for Google specialist units, while also exploring whether the default position of Google Search on mobile devices should come to an end in South Africa.
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In terms of competition amongst platforms, the inquiry made provisional findings and recommendations, such as:
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The inquiry also made these provisional findings and recommendations in terms of competition among businesses on the platforms and consumer choice:
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Regarding the participation of historically disadvantaged persons (HDPs) the digital economy is far less transformed than many traditional industries, with considerably more challenges resulting from historic disadvantage, especially in funding and support.
The inquiry provisionally recommends that guidelines or regulations be considered to address new leading platforms in established or new categories in future.
Stakeholders and the public can now make submissions to the inquiry on the provisional findings and recommendations by sending submissions to oipmi@compcom.co.za by close of business 24 August 2022.
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