Chapter 24: Harm to the marketplace
A healthy marketplace allows consumers to freely choose from a range of competitors and pick the services or products they feel are best suited to their needs. This includes:
- Competition: When there are multiple sellers offering similar goods and services, competition encourages them to improve their products, lower prices and innovate in order to attract consumers. Without competition, a small number of sellers can dominate the market, reducing their incentive to improve products, lower prices or innovate.
1 - Information symmetry: Consumers need to know pertinent information about the offerings on the market, so they can make an informed decision. As economist George Akerlof described in 1970, this enables buyers to distinguish good products (‘cherries’) from bad ones (‘lemons’), which thereby reduces the number of lemon providers in the marketplace because consumers choose not to use them.2
- Consumer autonomy: Consumers need to be free to act on the information they’re given in the marketplace, and make decisions based on their preferences, needs and financial resources without being interfered with.3
Deceptive patterns can interfere with all of the above characteristics, creating an unhealthy marketplace that can enable monopolies. Put simply, if a business uses deceptive patterns, they put themselves at an advantage over those that do not...
- Hindering shopping around and comparison: Businesses can design their offerings and pricing so that consumers find it hard to make comparisons with the competition (by using hidden costs, for instance, or trick wording). This means consumers can’t make an informed decision about which provider to select, and they may be tricked into a choice that is not in their best interests.
- Lock-in to existing services: Businesses can make it difficult for consumers to leave. For example, the business might have proprietary data formats that make it difficult for a consumer to take their data elsewhere; or they might have proprietary hardware formats that are not compatible with the competition, so that if a consumer wants to leave, they’ll have to throw away the hardware they’ve bought and start again, which they might not be able to afford.
- Hard to cancel subscriptions: If a consumer wants to cancel a subscription but can’t work out how, the business is effectively trapping them against their will. This effectively starves competing businesses of the income they might otherwise gain from consumers switching providers.