One of the tenets of capitalistic theory is that of perfect information. When consumers have access to complete information about the quality and cost of competing products, they are better informed to make purchasing decisions.
As mentioned, this is merely a theory, an unattainable state that nonetheless has helped form the foundation of our economic system. But one of the biggest benefits of e-commerce has been to move consumers closer to having perfect information. Now, shoppers may instantly compare price information for similar products available all over the world, and they also have access to product reviews from other consumers.
Seattle-based Amazon long has understood the sea change that has been provided by online commerce. Indeed, the company helped invent the practice, growing from a nascent bookseller into one of the world’s largest retailers, featuring hundreds of thousands of product lines in categories ranging from appliances to wine. Along the way, Amazon’s website has become a leading provider of customer reviews, and that has led the company to file suit in federal court against more than 1,000 individuals suspected of placing false reviews at Amazon.com.
The practice is simple in its deviance. Perpetrators offer to write glowing reviews — or negative reviews — for a particular product in exchange for pay, even if they are not familiar with that product. Because Amazon’s customer reviews often are a must-view for consumers, the practice serves to bastardize the notion of perfect information.
This goes beyond satirical reviews at Amazon.com, such as ones for the Mountain Three Wolf Moon Short Sleeve Tee (http://amzn.to/1M2s4f1) or for Tuscan Whole Milk (http://amzn.to/1jSf2X9) that have become Internet memes. This speaks to an intentional effort to fool the public in a disingenuous effort to sell products, and the suit seeks unspecified damages for “manipulation and deception.”
On the surface, the action might seem like a notoriously cranky multibillion company picking a fight with people trying to make $5 for writing a couple paragraphs about a product. But Amazon is right to attempt to preserve the integrity of reviews. As Bloomberg View wrote editorially: “The Internet’s lovable but frustrating toddlerhood may be coming to an end. That doesn’t mean, however, that it’s getting easier to impose adult supervision.”
Meanwhile, Amazon is signaling to consumers that it takes the reviews on its site seriously, recognizes their importance and values their credibility. As Evan Schuman wrote for Computerworld, “Amazon sends the best possible message to its customers when it’s seen as proactively and aggressively seeking out such evildoers: ‘We believe in our products and services and know that honest reviews will be of the greatest value.’ ” The lawsuit reads, in part: “Amazon pioneered customer reviews 20 years ago and is now home to hundreds of millions of unique reviews. Reviews provide a forum for sharing authentic feedback about products and services — positive or negative. … Amazon believes all helpful information can inform its customers’ buying decisions.”
For centuries now, Adam Smith’s notion of perfect competition fueled by perfect information has been a myth. Consumers often have not had access to competing products because all of the retailers in a market might carry only one or two brands of, say, hammers (or widgets for you economists out there). The Internet has altered that, and Amazon is wise to protect that move toward a more efficient economy.
