The Netherlands Authority for Consumers and Markets (ACM) found in a study that paid to rank has risks for competition and consumers. The authority has also stated that it could also have some advantages for the consumers.
Paid ranking allows persons who pay an extra fee to have a higher ranking on search results. If it is unclear that the ranking is influenced by payments, consumers may be misled. Moreover, it could restrict competition among providers.
However, the study also showed that paid ranking can also have benefits for consumers. In order to signal quality to consumers, paid rankings should be recognizable by the consumers. Paid ranking can also help in introducing new products.
Nevertheless, ACM indicated that in practice, transparency statements about paid ranking are often difficult to spot or unclear. In order to gain effectiveness of transparency and to gain knowledge on paid ranking, ACM studied the introduction of a label to spot the paid ranking. Unfortunately, the introduction of this label had barely an effect on the purchasing behaviors of users. One of the reasons could be that users did not see or understand the label, or because users found the sponsored results just as relevant as the non-sponsored results.
Finally, ACM has indicated that the platform must be transparent about the paid result. This means that consumers should see the label, but more importantly, consumers should be able to understand this label. Thus, ACM is currently conducting a follow-up study in order to improve transparency for paid rankings.
(The Netherlands Authority for Consumers and Markets (ACM) – 02.02.2021)
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