Consumers could be "manipulated" into choosing products by unregulated online shopping algorithms, the competitions watchdog said as it launched a probe into potentially misleading practices.
The Competition and Markets Authority (CMA) said it is concerned that consumers could be manipulated in their shopping choices or end up paying too much for products either by “deliberate or unintended” use of algorithms.
It said that these algorithms could be used to personalise services and create search results that “can be manipulated to reduce choice or artificially change consumers’ perceptions”.
This could be by using “nudges” on a website, such as the placement of the “buy” button, or could even go as far as “personalised pricing”, the CMA said.
The effect of algorithms can be difficult for shoppers to detect, the regulator warned, although it did say that they also bring benefits by showing consumers search results they are more likely to be interested in.
Kate Brand, director of data science at the CMA, said: “Algorithms play an important role online but, if not used responsibly, can potentially do a tremendous amount of harm to consumers and businesses.
“Assessing this harm is the first step towards being able to ensure consumers are protected and complements our wider work in digital markets to promote greater competition and innovation online.”
The CMA is asking for evidence from academics and industry experts on the potential for consumers to be disadvantaged.
It said: “The majority of algorithms used by private firms online are currently subject to little or no regulatory oversight and the research concludes that more monitoring and action is required by regulators.”
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Another potential issue the CMA is concerned about is firms using algorithms to determine which of their customers are likely to leave positive reviews for a product or service, in order to manipulate online review scores.
More complex algorithms could aid collusion between businesses without firms directly sharing information, potentially leading to “sustained higher prices for products and services”, the CMA said.
Rocio Concha, director of policy and advocacy at consumer group Which?, said: “Algorithms can help consumers find suitable products and services as well as good deals, but can also be used to track and monitor behaviours in ways they are unaware of, leading to them being manipulated or misled – either accidentally or by design."
She said that "pressure-selling tactics" or the use of fake reviews, too often lead to consumers losing out.
The research and feedback will inform the CMA’s future work in digital markets and that of the Digital Markets Unit, which has been established to better regulate the sector.