Dark Patterns and Antitrust Laws: Shedding the Light on the Artificial Barriers

[By Madhav Tripathi]

The author is a student of RMLNLU, Lucknow.

 

Introduction

Recently, a piece of news that made headlines in the antitrust arena of the world is that the Federal Trade Commission (hereinafter FTC) accused the e-commerce giant Amazon of duping millions of Americans by getting them to do recurring subscriptions of Amazon Prime by taking their consent illegally and also making hard for them to cancel it. According to FTC, Amazon has used ‘dark patterns’ to trick consumers into enrolling in automatically renewing Prime subscriptions, seeking civil penalties and a permanent injunction to prevent future violations.

Nowadays, digital businesses are snowballing, especially in the post-Covid era, where the digital economy is the new normal. One of the many tactics these giants have used successfully to proliferate and crush their competitors is the “Dark Patterns”. Dark Patterns have many sub-types. One of them  is tricking users with different manipulative schemes influencing the choice of users on the internet.

The article will try to analyze this aspect of the dark patterns and how the tech giants use them for their benefit. It will try to shed light on the latent harm  of the “Dark Patterns” on the market, and how this practice violates the antitrust law of the country. . The article will further delve into the current anti-trust framework of the country and analyse the extent to which the present Indian anti-trust regime is equipped to tackle this particular challenge.

Demystifying Dark Patterns: Uncovering Manipulative User Interface Techniques

In the words of  Harry Brignull, a user experience researcher in the U.K., Dark Pattern is a design or user interface technique intentionally crafted to manipulate or deceive users into making certain choices or taking specific actions that may not be in their best interest, such as buying overpriced insurance with their purchase or signing up for recurring bills. A few common examples of ‘dark patterns’ are spam mailing, confirm shaming, nudging, roach motel, etc. Dark patterns are numerous and exploit myriad biases in individuals.

Amazon, for example, displays information on the number of stocks left for the product that one is currently viewing on its website. It is known as ‘scarcity bias’. It tends to emotionally nudge the customer into buying a product he would not have bought otherwise. In another instance, Spotify indulges in dark patterns through the ‘roach motel’ technique, which makes opting out of a subscription hard and cumbersome, thus increasing the chance of a continued subscription.

Now, after understanding the modus operandi of these tech -giants, our focus must be to understand  the rationale behind such activity? If we see from a perspective, these big techs are referred to as giants because of the range of services they offer, catering to billions of customers across the globe. They have entered into every market and want to make every customer as their customer because they are presenting themselves as a “one-stop shop” for every product, which when done illicitly on the e-market, gives rise to the phenomenon called the “Walled Garden Approach”.

Explaining the Phenomenon of Walled Garden Approach

The definition explains the phenomenon as- On the internet, a walled garden is an environment that controls the user’s access to network-based content and services. It directs the user’s navigation within particular areas to enable access to a selection of materials or prevent access to other materials. It does not always prevent users from navigating outside the walls, but often makes it more difficult than staying within the environment. Apple’s App Store is a prime example of the use of a walled garden.Now, looking our current examples of Amazon or Spotify through the lens of the aforementioned definition, we can   undertand rrthe rationale of their modus operandi. In today ‘s internet universe, these giant firms are “world of themselves”. Amazon caters to every kind of customer when he/she takes its Prime membership. A Prime member to binge-watch uses “Amazon Prime”, to buy something, uses “Amazon e-commerce”, and, when paying for that, uses “Amazon Pay”. To listen to music, there is “Amazon -music”, which connects by using “The Amazon Eco-dot device”. This means in the world of Amazon; prime membership is a ticket. Once you enter it, Amazon will try all methods to compel the customer not to leave “Amazon’s Platform for another alternative platform” which throws light on the anti-trust angle.

One such method is “Scarcity Bias”. As we saw in the example above, Amazon Compels the user by manipulation; after understanding that the user has spent considerable time on one product and likes the product, Amazon will trick the customer by showing “few left in the stock”. The user gets manipulated, does not check the same product on the other alternative and buys from Amazon. From this whole chain of actions, the rationale that we can understand is that –Amazon uses a “dark pattern” to “Wall Garden “its customer manipulating them not to leave its platform to avail the same service from other platforms. The recent accusation by FTC of forcing the customer to buy the prime or continue it or making it hard for them to cancel is also because of the same rationale of keeping the customer in its “Walled Garden.”

Explaining the Anti-trust Angle in the Walled Garden Approach

To understand the anti-trust angle in the Walled Garden Approach , we first need to understand the genesis of competition law beyond anti-competitive agreements or Abuse of Dominance. Competition means “In the commercial world, a striving for the customer and business of people in the marketplace making profits by the business strategies endeavor rather than any other illicit, unscrupulous or under-hand tactic and the prices of commodities is being dictated by the law of demand and supply.

Now, when we talk about the market, is an open market where every entity can be seen, and no other entity can act as a barrier to the presence of other competitors. As when an entity becomes a barrier, this act can cause non-price injury to the customer because a customer gets “lock-in” in one platform. Therefore, they cannot see the better options available on the other platforms.

In the example above of Amazon’s scarcity bias, the Amazon is actively using the device of dark pattern to create an artificial barrier in not only the customer’s mind but also ,most importantly on their platform. Because of this ,the customer does not check the product on an alternative platform and buys it. The customer is buying from Amazon because he likes the product is not the only reason, but also because the customer is psychologically “trapped” by Amazon. It does not stop by “Denying the access” as the Apple OS does, but uses the Dark Pattern to do it indirectly.

This unknown forced/manipulative selling must be called completely anti-competitive because, here ‘an online entity is indeed using a tool to keep the customer stick to its shop( market platform) by indirectly stopping them from going to its competitors.’

And here is evidence of  “the effect, the artificial barrier does” – A market study by CCI on Telecom operators cited a study done in US, which it found that only 1 per cent of Amazon Prime members are likely to consider competitor retail sites, while non-Prime members are eight times more likely than Prime members to shop between both Amazon and Target in the same session. In the words of one former Amazon employee who worked on the Prime team, “It was never about the US$ 79. It was about changing people’s mentality so they wouldn’t shop elsewhere.” This clearly tells that a Prime subscription is a ticket to the “Walled Garden” of Amazon, after which the world seems dark to the customers. From this, we can conclude that if the FTC investigates further on this accusation, this angle of anti-trust can be looked into.

Analysis of the Current Indian Antitrust Regime

Now, to tackle such a challenge, if we analyse our current Antitrust regime, one section which comes close to the act of these entities is  “Denial of Market Access u/s 4(2)(d) of the competition Act 2002. But if we understand the legislative intent of this section, by a case of Barmi v. BCCI, it has been contemplated for a situation when an entity is dominant and is abusing its dominance by actively denying the market access to its competitors. Also ,it comes into picture when the dominant entity is in some kind of agreement with other party like in this case.

Here in our situation the entities are “indirectly stopping” the customers by creating artificial barrier , there is no agreement or any denial of market to any competitor, So now the query is how does the current law can work this ?

Jurisprudence in the foreign Jurisdictions

On looking at  the examples of foreign jurisprudence, there is California Unfair Competition Law which prohibits unfair and unlawful business practices that deceive or mislead consumers in California. The law was applied in Geraldine Mahood v. Noom, Inc. where Noom Inc reached a settlement with FTC, accusing the app provider of tricking customers into signing up for “risk-free” trial periods only to force them into automatic and costly renewals that were difficult to cancel. There is also Section 5(a) of the FTC act which-“Prohibits deceptive acts or practices that misrepresent or omit material facts.” Unfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce, are hereby declared unlawful.

In United States v. Microsoft, the court ruled Microsoft’s conduct as anticompetitive by coercing users through its product design by integrating Internet Explorer, of inferior quality, into Windows,

So, there are bunch of laws in the foreign jurisprudence along with case laws, which have dealt with ,the impugn act of “Dark Patterns” and can be used as guiding light while forming India’s jurisprudence over the subject

Proposed Changes in the Indian Law

A thorough research on how foreign jurisdictions have dealt “Dark Patterns tells that “primarily they have dealt it in their ‘consumer act’like The USA,. Recently, South Korea FTC also has released detailed guidelines on it. The UK, France and other EU countries have dealt it in their Data Protection Law or GDPR. India (DCA guidelines) also has tried to deal it under the consumer law or prohibited few practices. But here comes the contention of author. The author is a purveyor of a certain law under the competition act, because, at the current stage , its “effect” as we saw in the aforementioned CCI report are mostly “non- price harms” , but if such practice goes on, it will lead to a distortion of market .

And indeed there are laws mentioned before along with cases which give us the glimpse of how other jurisdictions have included it in their competition law as well. Taking a leaf out of them , the author is suggesting the changes in the current act.

A bare reading of those laws and cases gives us a common “terminology” – which is” unfair and deceptive practice, violating the competition law”. Now if we compare it with our law,we would be able to understand the vacuum.It does not have any provision, which contemplates a situation, where “an unfair trade practice ” has taken place between an entity and consumer. “The Unfair trade conditions ” mentioned in the section 4  is part of an agreement between two companies or market players and therefore not applicable.

Therefore, the author is advocating for a particular and express provision in the act, which intends to cover a violation of competition law by an act of entity which is “manipulative or unfair “practice”. Covering those activities which are not part of any agreement but are the basic modus operandi of the entities directly affecting the customers. The effect of such a provision will compel the entities to change the way of functioning of their platform. And by this, the consumer will not get “lock -in” on a particular platform ,and will have an alternative competitor which will help the market to run on the principle of Demand and Supply ,therefore fulfilling the ultimate purpose of the competition act.

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