In their pursuit of limiting costs and growing fast, internet businesses leave algorithms largely unpoliced. In the latest example, an FT investigation has revealed that 9 out of the top 10 UK reviewers on Amazon are fake and are profiting from their reviews.
The FT’s analysis suggested nine of Amazon’s current UK top 10 providers of ratings were engaged in suspicious behaviour, with huge numbers of five-star reviews of exclusively Chinese products from unknown brands and manufacturers. Many of the same items were seen by the FT in groups and forums offering free products or money in exchange for reviews... Amazon’s longstanding problem with fake or manipulated reviews appears to have worsened since the coronavirus pandemic turbocharged the number of people shopping on its site. One estimate, from the online review analysis group Fakespot, suggested that the problem peaked in May, when 58 per cent of products on Amazon.co.uk were accompanied by seemingly fake reviews...
Observers of Amazon’s marketplace say the site’s algorithms greatly incentivise paying for positive reviews, even if it means doling out expensive products. Alongside price and delivery time, reviews are a crucial factor in pushing the product up Amazon’s rankings and help gain algorithmically calculated endorsements, such as the influential “Amazon’s Choice” badge.
Consider this. Reviews are an important feature of the e-commerce platform. But 9 out of top 10 reviewers and reviews on 58% of products on the platform are suspected of being fake. The sheer level of abuse points to a chronic deficiency of internal controls within even the software itself, leave aside managerial and physical checks.
We are talking about a firm which has been elevated as the gold-standard on innovation and claims to be the leader in R&D spending, whose technological prowess is informed as being second to none, which is the run-away leader in e-commerce, and whose owner is the richest man in the world. It is hard not to believe that as long as things sell, Amazon just doesn't care about all the negative externalities its platform is inflicting on the society.
Why did it take an FT investigation to uncover such an egregious abuse? It (along with all the recurrent episodes of problems surfacing on the likes of Facebook etc) also point to the likelihood of such bugs being pervasive across these platforms.
Worse still, as the article highlights, Amazon appears to have known about these abuse and still did not take action. Evidently the higher volumes of reviews, fake or not, suits both Amazon and its sellers, and is an important driver of transactions.
Couple of observations:
1. This is a good example of regulatory arbitrage. It is inconceivable for a physical shop to host products without adhering to several regulatory standards. Similar set of standards bind manufacturers and sellers. In many respects, the internet economy has limited such restraints. Claiming themselves to be mere aggregators, they absolve themselves off the responsibilities that real world retailers (e-Commerce), publishers (social media), and employers (ride hailing and room renting) are encumbered with.
2. It is most likely the case that the systems (both software and organisational structures) in all these firms are almost completely oriented towards maximising revenues and the various drivers of growth, with limited or perfunctory attention to the various other risks of their activities. In other words, as we have seen from numerous examples in recent times, the internal controls and safeguards, even within the software, on adherence to regulatory standards on quality, conflicts of interests, safety, data privacy and security, labour protections and so on, are pretty much negligible. One should not be surprised if at least some such risks are not even notionally monitored in many of theses firms. These firms really appear to inhabit the wild-west of capitalism, spewing externalities far and wide!
Update 1 (05.09.2020)
Acknowledging the failing, Amazon deletes almost 20000 reviews written by seven of its top 10 UK reviewers.
Those who had their reviews deleted included Justin Fryer, the number one-ranked reviewer on Amazon.co.uk, who in August alone reviewed £15,000 worth of products, from smartphones to electric scooters to gym equipment, giving his five-star approval on average once every four hours. Overwhelmingly, those products were from little-known Chinese brands, who often offer to send reviewers products for free in return for positive posts. Mr Fryer then appears to have sold many of the goods on eBay, making nearly £20,000 since June.
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