Ethics @ Work: Browsers for browsers

Amazon’s price-comparison application arouses indignation.

By ASHER MEIR
December 15, 2011 22:57
3 minute read.
A woman showing off her new iPhone 4s in NY

A woman showing off her new iPhone 4s in NY 311 (R). (photo credit: REUTERS/Brendan McDermid)

Just a few months ago, The Guardian published an article filled with righteous indignation at one of England’s largest chain stores. The target of their wrath: a policy forbidding shoppers to write down prices. The Guardian reporter was kicked out of a Tesco store when they found him recording prices with a pencil and paper; the manager told him it is against official store policy.

This week, the Guardian published another righteous-indignation piece, one that perhaps throws a little more light on the previous one. The headline: “Amazon.com branded ‘Grinch that stole Christmas trade.’” This time, their target was a very controversial new policy of the online retail giant Amazon. The company rolled out an application for mobile devices that allows shoppers to go into a physical store and rapidly compare prices with the online price. If this threat was not enough, Amazon is harnessing the prices for its own use. And if all that was not enough, Amazon is actually turning its customers into its employees by offering steep discounts to customers who use the application.

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This practice raises some serious ethical issues. The Tesco policy may have sounded strange to the reporter, but in fact, policies that work to keep prices under wraps are common and in many branches of the economy, they are the rule, not the exception. Many merchants won’t give you a price but only a “price quote,” good only for you, only for a limited time, and only if they are convinced you are a good-faith shopper. Some merchants make you promise not to divulge prices to competitors. Prices are not strictly speaking a trade secret, but they are valuable private information and merchants have a valid interest in controlling access to that information.

Another kind of information that people get from stores is the look and feel of a product. Stores invest a fortune in displaying merchandise to showcase its qualities and even in the selection of a product. Just knowing that a large chain decided to carry a product says something about the product. Amazon is taking a free ride on these investments; the local neighborhood stores are in effect providing a free showroom for their competitors. The Internet retail giant gets the best of both worlds: the huge savings in cost that come from an online store and the shopping experience that comes from a showroom.

It is only fair to mention that to some extent the free ride goes both ways. Shoppers are free to browse Amazon’s site at their leisure and take advantage of the extensive product information and the many product reviews – not to mention the transparent pricing – and then use that knowledge to select products at local stores without the wait or the shipping costs.

The issue is not so much the free ride as the deliberate effort to leverage it and take advantage of competitors. The best analogy would be if a retail store sprinkled its showrooms with monitors, and encouraged shoppers with questions to look up details and reviews on Amazon. But Amazon explicitly forbids this. Their conditions of use forbid “any downloading or copying of account information for the benefit of another merchant.”

I imagine that this loophole will be short-lived; retailers will merely adopt formal policies to protect their information from Amazon, just as Amazon has a formal policy to protect its own information from them. Then the use of the application would be even more ethically challenged, in that it would in effect be daring customers to de facto trespass in competitors’ showrooms.

Markets thrive on free competition, but they also thrive when the legal and ethical environments enable merchants to benefit from investments they make in their product or service. In this context, I see Amazon’s policy as a step back, one that will probably be shortlived.

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Asher Meir is the research director at the Business Ethics Center of Jerusalem, an independent institute in the Jerusalem College of Technology (Machon Lev).


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