The Dutch government just announced they want to invest over two billion euros in the development of artificial intelligence (AI). This investment is necessary for The Netherlands to stick with the leading European AI-countries. These countries (such as Germany and France) are also expending and developing their AI-strategies. Half of the to-be invested money will come from the Dutch government, where the other half will be invested from the private sector (NOS, 2019).

But why invest in AI? The investment is used to support the development of AI, currently used in multiple sectors such as; healthcare, police tasks and education. With more and more countries investing in AI, The Netherlands needs to keep up with this development. It can help with government tasks by making them less labor-intensive and increase quality. This requires good collaboration between humans and machines. Within AI there are three stages of development. The first one is called assisted intelligence. This is the current stadium, because of the current regulations. Here, data is used to support decision-making processes. The second stage is augmented intelligence. And the third and final stage, the one we want the end up in, is called autonomous intelligence. In this stage, all processes are digitized and automated to come up with all the necessary intelligence (Fransen, 2019).

But is investing in AI a government job? Or is it something only the private sector should do? The pros of AI are big for governments. It increases human capacities and quality, but it can also function as an incentive for economic growth. But, this development also comes with multiple risks and problems. How is the government going to pay for the systems, developing each year and getting more complex over time? And is the government prepared for problems such as the black box (Cress, 2019)? These are all things that need to be taken into account, but eventually, only time will tell.

References:

Cress, M. (2019). THE BLACK BOX PROBLEM – Artificial Intelligence Mania. [online] Artificial Intelligence Mania. Available at: http://artificialintelligencemania.com/2019/01/10/the-black-box-problem/ [Accessed 9 Oct. 2019].

Fransen, M. (2019). Hoe AI de overheid verder kan ondersteunen. [online] Emerce.nl. Available at: https://www.emerce.nl/achtergrond/hoe-artificial-intelligence-ai-overheid-kan-ondersteunen [Accessed 9 Oct. 2019].

Nos.nl. (2019). Kabinet wil kunstmatige intelligentie aanjagen met 2 miljard euro. [online] Available at: https://nos.nl/artikel/2305235-kabinet-wil-kunstmatige-intelligentie-aanjagen-met-2-miljard-euro.html [Accessed 9 Oct. 2019].

In September 2019 a detailed report appeared in the Wall Street Journal. It stated Amazon changed the search algorithm to favor its own products. In this way more profitable listings would be created. Amazon’s retail executives gave the call to change, or as they called it; optimize, the secret algorithm that, for over a decade, showed the most relevant and the best-selling results. After the change, the search results showed the most profitable products for Amazon, including its private label. Insiders say this is despite all resistance from Amazons search engineers and lawyers. They say this goes against their mission to focus on the customer’s best interests (Sterling, 2019) (Holmes, 2019)(Mattioli, 2019).

This raises the question whether Amazon can order their search results in anyway they want, or that this biased algorithm can create a distrust among marketers and consumers. With multiple surveys stating Amazon is more often used as consumer starting point on the search for product information in the U.S., didn’t Amazon acquire some kind of social responsibility? Apart from the social responsibility, Amazon faces an investigation by the Federal Trade Commission on misuse of its dominant position to gain more sales over competitors (Sterling, 2019).

E-commerce has been an important way for small retailers to sell their products. With more and more platforms offering the possibility for 3rd parties to reach new and more customers, the future ahead was a bright one. With Amazon.com being the number one e-commerce platform in the U.S., it has almost half of the online retail market. For smaller retailers Amazon offers the opportunity to sell their products on the platform. But earlier this year a report appeared in Bloomberg, stating Amazon is increasingly selling more private label products, that compete with the products offered by the much smaller 3rd parties (Smith, 2019). A recent paper observed Amazon’s behavior over time. It appeared that Amazon introduces products for niches that 3rd party retailers did the work of discovering by monitoring customer’s needs. The report also showed that Amazon private label products would appear in the search results, when searching for 3rd party products. The other way around, isn’t possible. Amazon doesn’t sell search placements for results on their own private label products (Zhu & Liu, 2019).

All this gives Amazon an easy advantage over its competitors. Amazon is slowly changing to a winner takes it all model. Can we afford to let this happen in a world becoming more and more reliant on e-commerce and platforms such as Amazon.com?

References:

Holmes, A. (2019). Amazon reportedly altered its search algorithms to favor its own products, against the advice of its own lawyers. [online] Business Insider Nederland. Available at: https://www.businessinsider.nl/amazon-search-algorithms-altered-to-favor-own-products-report-2019-9?international=true&r=US [Accessed 17 Sep. 2019].

Mattioli, D. (2019). WSJ News Exclusive | Amazon Changed Search Algorithm in Ways That Boost Its Own Products. [online] WSJ. Available at: https://www.wsj.com/articles/amazon-changed-search-algorithm-in-ways-that-boost-its-own-products-11568645345 [Accessed 17 Sep. 2019].

Smith, N. (2019). Bloomberg – Amazon’s Winner-Take-All Approach to Small Business. [online] Bloomberg.com. Available at: https://www.bloomberg.com/opinion/articles/2019-02-19/amazon-uses-search-to-undercut-small-businesses-on-its-site [Accessed 17 Sep. 2019].

Sterling, G. (2019). Report alleges Amazon manipulating search results to boost its products, profit – Search Engine Land. [online] Search Engine Land. Available at: https://searchengineland.com/report-alleges-amazon-manipulating-search-results-to-boost-its-products-profit-322147 [Accessed 17 Sep. 2019].

Zhu, F. and Liu, Q. (2019). Harvard Business School – Competing with Complementors: An Empirical Look at Amazon.com. [online] hbs.edu. Available at: https://www.hbs.edu/faculty/Publication%20Files/amazon_2018-06-05_4a83c515-af0c-4366-9fba-8fb059d0b4f6.pdf [Accessed 17 Sep. 2019].