The Rise of the Machines – How Automated Digital Assistants Can Reduce Competition (and the Cash in Your Wallet)

Who wouldn’t want a personal digital butler? Many of us already benefit from basic digital assistants such as Google Assistant, Apple’s Siri, Facebook’s M, and Amazon.com’s Alexa. The future heralds faster, smarter and more human-like versions that can transform the way we access information (in suggesting restaurants, news stories, hotels, and shopping sites) and communicate. But as we welcome these intelligent, voice-activated helpers to our homes, we may not recognize their toll on our well-being.

As we shift from a mobile-dominated world to an AI-dominated platform, our digital butler will increasingly control our mundane household tasks, like regulating room temperature, adjusting our water heater and playing our favourite music. It will be harder to turn our butler off. Moreover, it will be tempting to increasingly rely on the butler for other activities, such as the news we receive, the shows we watch, and the things we buy. The more we communicate primarily with our personal assistant, the less likely we will independently search the web, read independent customer reviews, use multiple price-comparison websites, and rely on other tools. We will entrust our butler to undertake this effort and report its results.  In relying on our butler, we become less aware of outside options.

That increase reliance on the digital assistant (and provider’s online platform) is the Holy Grail for the super-platforms, which provide us with the digital butlers. Their aim is to increase the time we spend on their platform and to control as many aspects of our online interface.

Take, for example, the Google assistant, which forms part of the company’s ‘effort to further entrench itself in users’ daily lives by answering users’ queries directly rather than pointing them to other sources.’  Likewise, Facebook, through its digital assistant – M – seeks to replace most of our web searches and apps with a function within Facebook Messenger.  As our personal assistant becomes our default, so too will its operating platform’s applications and functions.

Thus the intent is for the digital butler (and the platform on which it operates) to become our key gateway to the World Wide Web. But in controlling this interface and accessing our communications and data, the gatekeeper could also abuse its significant market power.

For instance, the digital butler may help the platform refine its  profile about us, including our likely reservation price, use of outside options, shopping habits, general interests, and weaknesses (including moments when our willpower is fatigued).  This information can enable ‘behavioural discrimination’, where the platform can facilitate our buying products that we otherwise wouldn’t, at prices closer to our reservation price.  The more we rely on the butler, the less likely we will be aware of this discrimination. Even if we search the web, the ads, products, or search results we see may be orchestrated by our butler.  

While providing us with a distorted view of available options and market reality, our trusted butler can also exclude rivals.  When the butler promotes its affiliated products and services, it may become harder and costlier for retailers unaffiliated with the platform’s advertising business to reach us.  Even when the retailer can gain our attention, the personal assistant may interject with its own recommendation, suggesting a special deal by a member of its platform’s ecosystem. In this multisided market, the assistant may subtly push certain products and services and degrade or conceal others, all in the name of personalization.

Rather than deter such abuses, market forces, given the data-driven network effects, can actually increase entry barriers. The strong platforms (and their butlers) become even stronger, extracting even more personal data, and commanding even higher rents to allow others to target us. Not only will our pocketbooks be affected. Our political and social discourse could also be manipulated, as we increasingly rely on our butler for our news and entertainment.  The gatekeeper could subtly, but effectively, intellectually capture its users in this unique bubble –– where users happily roam, unaware of the outside market for products, services and ideas.

For a more detailed discussion, see our new book ‘Virtual Competition: The Promise and Perils of the Algorithm-Driven Economy’.

Ariel Ezrachi is the Slaughter and May Professor of Competition Law at the University of Oxford, and Maurice Stucke is a Professor of Law at the University of Tennessee (Knoxville).