RealTime IT News

A Little Lobbying Music, Please

Did you catch that study that came out this week claiming that "e-commerce barriers will cost consumers $32 billion in 2002 and $200 billion over the next five years?"

That was the headline, and it certainly got my attention. The report, entitled "The State of eCommerce 2002: Beyond the Bubble, Beware the Barriers," went on to say that "anti-competitive efforts by middlemen could threaten the future of e-commerce."

The report was released by an outfit called NetChoice in Washington, D.C., which perhaps not surprisingly turns out to be a lobbying group that calls itself "a coalition of trade associations, e-commerce businesses and online consumers, all of whom share the goal of promoting convenience, choice and commerce on the Net."

In fact, they say on the site that "the future of e-commerce is threatened by restrictions sought by off-line companies, discriminatory laws and regulation, and misinformation about the Net."

E-commerce barriers include "any law, regulation, rule, or business practice that significantly impedes more cost-effective, more efficient, and more direct delivery of goods and services to the consumer," NetChoice says.

I was curious about which e-commerce businesses are members of this outfit, and it turns out they include eBay, Orbitz eRealty.com and 1-800-Contacts. That probably explains why this study is focused specifically on the airline travel, automotive sales, residential real estate and contact lens markets.

Other members include The Association for Competitive Technology, the Information Technology Association of America (ITAA), the Electronic Commerce Association, the Electronic Retailing Association, the Wine Institute, and the American Vintners Association.

Well, I guess everybody has a right to lobby in Washington. Remember, however, that these dollar figures on how much consumers will "lose" are merely estimates.

What exactly is NetChoice?

It is "a coalition of businesses, not necessarily a trade association," eBay spokesman Kevin Pursglove told me. "Much more ad hoc in its nature ... currently, no fee schedule to join."

NetChoice says that "with online retail sales growing 10 times faster than overall retail sales, many traditional middlemen (car dealers, alcohol distributors, real estate agents, etc.) are trying to preserve existing barriers and create new ones as a way to prevent online competition."

Actually I think that many of these folks are struggling to incorporate e-commerce into their businesses, not prevent it from developing.

But eBay feels that it's a problem worth addressing.

"One example that poses a challenge to eBay's growth," Pursglove said, "is auctioneering laws that were enacted before the creation of the Internet. Many states regulate auctioneers or auction houses and want existing laws to cover eBay."

Pursglove said "requiring ... sellers to register as a traditional auction house or auctioneer may accomplish nothing more than to exclude them..."

According to the report, barriers to direct sales of automotives will cost consumers nearly $25 billion this year and an estimated $150 billion over the next five years. In the residential realty market, anti-competitive efforts by off-line Realtors and laws preventing commission rebates will cost consumers $7 billion this year and nearly $46 billion over the next five. Efforts to prevent patients from buying contact lenses online and laws prohibiting multi-channel sales will cost consumers $470 million this year and $3 billion over the next five. The anti-competitive tactics of travel agents and green-screen computer reservation systems have slowed the implementation of newer, faster and less expensive technologies that would save consumers more than $1 billion over the next five years.

"We found that the greatest threats to e-commerce are old-economy middlemen and their lobbyists," said Steve DelBianco, executive director of NetChoice. "... it's time for governments and consumers to start fighting back."

Of course, by fighting back, one benefits eBay, Orbitz, eRealty, etc. My take on this is that it's largely part of a war of words and public relations positioning. Orbitz, for example, which is a travel site operated by a consortium of airlines, has been fighting a rear-guard action almost since it was founded.

The company felt so hard-pressed at one point that it sent an open letter to President Bush after execs from rivals Expedia.com and Travelocity.com spent a day in Washington trying to persuade the Administration to curb the venture. So I guess it's no wonder that lobbying efforts are under way.

eBay clearly is big enough to worry about any legislative efforts that might pose a threat.

NetChoice says it wants state governments "to dismantle vertical restrictions and re-examine rules that prevent direct sales. Congress can preempt state restrictions and help businesses and consumers avoid the costs of a patchwork of state laws."

The complete report — including the methodology for coming up with the financial estimates — is available as a PDF here.