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BW Businessworld

Neutrality Vs Bias

The neutrality controversy may continue to rage but for me "disintermediation" is one of those words of curious interest

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You come across a whole bunch of new buzzwords these days. Some of these words are new to the world. Some are coined, some Hinglish and a lot many other types. Oftentimes it is quite funny. Sometimes we remember words, and where we were when we heard them, but cannot recall who said them. Internet Neutrality is probably something of a cult word now.

The neutrality controversy may continue to rage but for me "disintermediation" is one of those words of curious interest. When I first heard the word "disintermediation," it sounded odd to me. Like the sesquipedalophobia of Tharoor, who has a fondness to use tough words when more comprehensible alternatives are available. Or, like a jargon thrown at keynote speeches to impress jargon-loving executives. (Even when we all know it is fundamentally against the very definition of good communication).

I think it was at one of such numerous conferences that I speak at, or organise, that I heard this word first. I remember vividly how the speaker described the risks of being a stockbroker, a travel agent or a car salesman in the networked world of today and in the years to come. It sounded like everything would soon be disintermediated. The rise of the Internet would connect buyers and sellers in a frictionless way, the speaker warned. If you made your money playing in the middle, find new work. You would soon be toast. The term was new to me so I was somewhat skeptical at first.

When the major airlines joined hands in eliminating commissions for travel agents, it brought me back to that funny-sounding word. The likes of Travelocity, Expedia, Orbitz, Yatra, Makemytrip, etc have made the life of the independent travel agent a lot less comfortable and a lot less profitable. But, now that we have made the paradigm shift to the networked economy that was envisioned in the early '90s, what are the new words on the horizon, of which we should take note?

One word that may have as much impact on the operators of big consumer sites as disintermediation had on their predecessors is probably the word “bias”. Let me explain. We have created large-scale technology-driven Websites that sell apparel, books, transportation, music, airline tickets and hotel rooms. How do we know these marvellous sites are providing us fair access to goods and services at reasonable prices? How do we know whether there are behind-the-scene deals with suppliers that bias our selection and availability of goods and services as well as the price? Remember the controversy over Airtel Zero and net neutrality a year or so ago? Airtel had to go out of its way to clarify and spend a lot of resources in PR, controlling damages when companies like Flipkart opted out of the service.

About the same time as the airlines withdrew their commissions from the travel agents, there were incidents of bias against certain airlines by a few online travel agencies. For instance a leading travel website refused to display Air Asia fares when the carrier launched their services sans commissions to online agents. When customers searched for lowest fares on this site, Air Asia flights were not displayed.

Well, I suppose if I were a shopkeeper, I would stop displaying the products of a supplier who was not paying me to sell its wares. But it makes me wonder. Most consumers don't think about bias toward any one supplier, they think about getting low prices. If you go to Big Bazaar, and find Patanjali products lower-priced, so much the better. But, what if Patanjali or ITC, along with a few other companies, owned shares in Big Bazaar and decided to exclude Hindustan Unilever or Colgate from the shelves? How should the consumers feel then? Should they be concerned about bias?

As analysts of the online travel industry worldwide see, American, Continental, Delta, Northwest and United Airlines banded together in 2001 to form Orbitz, ostensibly to compete with Travelocity. Investigations are on based on complaints that Orbitz gets cheaper fares through marketing agreements with its owners that are not available to competitors. Meanwhile, Travelocity has agreements with American, Continental, Northwest, Delta and British Airways, while Expedia has agreements with Delta, Continental and USAir, according to reports.

Wasn't the Web supposed to democratise the buying process? I guess not. All this feels a little like oligarchy. That's supposed to be the rule of the best, but it more often becomes the rule of the pushy and the few. You might say that Internet technology allowed disintermediation. This led to consolidation and the rule of the oligarchs. Now online customers have no real way to determine if the oligarchs are neutral or biased. I suppose that's the job of the regulators. Still, all this led me to remember another old-fashioned word: “Reputation”. If I were running one of the oligarchic, online travel services and were busy signing complicated marketing agreements with my suppliers, I'd remember that all my investments in information technology could become irrelevant overnight if customers or the regulators thought I was biased.

Managers of leading online stores should take note: There can be a worse fate than disintermediation. So stay away from services that proclaim neutrality but actually promote bias to consumers. And, caveat for consumers: Use multiple online stores to find the best deals and don’t get swayed by a sense of obligation to be loyal.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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net neutrality

Dr M Muneer

The author is Co-founder and Chief Evangelist at the non-profit Medici Institute Foundation for Diversity and Innovation; and also the CEO of CustomerLab Solutions, a strategy execution and disruptive innovation consulting firm.

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