How Your Digital Helper May Undermine Your Welfare, and Our Democracy

Posted by Social Science Research Network

How Your Digital Helper May Undermine Your Welfare, and Our Democracy

By Maurice E. Stucke (University of Tennessee) & Ariel Ezrachi (University of Oxford)

Abstract:         “All you need to do is say,” a recent article proclaimed, “’I want a beer’ and Alexa will oblige. The future is now.” Advances in technology have seemingly increased our choices and opened markets to competition. As we migrate from brick-and-mortar shops to online commerce, we seemingly are getting more of what we desire at better prices and quality. And yet, behind the competitive façade, a more complex reality exists. We explore in our book “Virtual Competition” several emerging threats, namely algorithmic collusion, behavioural discrimination and abuses by dominant super-platforms. But the harm is not just economic. The potential anticompetitive consequences go beyond our pocketbooks. The toll will likely be on our privacy, well-being and democracy.

To see why, this Essay examines the emerging frontier of digital personal assistants. These helpers are being developed by the leading online platforms: Google Assistant, Apple’s Siri, Facebook’s M, and Amazon’s Alexa-powered Echo. These super-platforms are heavily investing to improve their offerings. For those of us who grew up watching The Jetsons, the prospect of our own personal helper might seem marvelous. And yet, despite their promise, can personalized digital assistants actually reduce our welfare? Might their rise reduce the number of gateways to the digital world, increase the market power of a few firms, and limit competition? And if so, what are the potential social, political, and economic concerns?

Our Essay seeks to address these questions. We show how network effects, big data and big analytics will likely undermine attempts to curtail a digital assistant’s power, and will likely allow it to operate below the regulatory and antitrust radar screens. As a result, rather than advance our overall welfare, these digital assistants – if left to their own devices – can undermine our welfare.

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