Q&A: FTC commissioner says panel is still learning about online exchanges

Aspen, Colo. -- Federal Trade Commission (FTC) member Mozelle W. Thompson spoke last Friday at the Net Returns Conference organized here by The Industry Standard, one of ITworld.com's sister companies. Following his speech, Thompson spoke with Computerworld about the issues raised by online business-to-business marketplaces and the FTC's approach to monitoring them.

What are some of the issues that the FTC is interested in with regard to online business-to-business marketplaces?

A: We're learning more about the B2B exchanges. I think what's kind of interesting ... is that [the] term covers a lot of things, a lot of which is not new at all. We've been involved with [regulating business-to-business relationships] for a long time, and we have some rules about how businesses should conduct themselves to avoid antitrust problems, including avoiding opportunities for collusion and price fixing and joint purchases that have a negative market effect. What we're doing now is spending time with the folks who are involved in B2B exchanges to understand a little bit about what they're doing, but also to remind them and to get them to think a little bit more about some of those areas I just talked about.

In June, the FTC held a two-day workshop on B2B exchanges. What did you take away from that event?

FTC Commissioner Mozelle Thompson A: I think they were among the most popular workshops we've ever had. There were 500 people [there]. I also think that we learned a lot and [the attendees] learned a lot. I expected to hear a lot more of the normal, hard-core tech responses: "Government should stay away. It shouldn't be involved." [But] I think that there are a lot of folks who actually see some real value to government involvement in two ways: one is to legitimize the fact that some of these B2B marketplaces can provide real value, and second is to give them some guidance as to how to avoid problems. The one thing that is very clear to me as a product of our workshops is that one size does not fit all. The marketplaces that have presented themselves ... are all different. Some are intended to provide real supply-chain [efficiencies]. Some are intended to provide services in conjunction with goods. Some are intended just to provide information. Some have different ownership structures. I think we're taking a circumspect approach and that we want to see what develops in the market in order to understand where competitive pressures are actually going to lie. And it's still a little early to find that.

In what other ways has the FTC attempted to raise awareness of potential trouble spots for online marketplaces?

A: In March, we worked with the [Department of Justice] and came out with joint venture guidelines that talk about the various issues involved [in] competitive collaborations among different businesses. I personally think that those guidelines provide a lot of insight for the practitioners in B2B marketplaces about areas to look out for because, in many cases, these marketplaces are essentially joint ventures or collaborations to share innformation or to develop a certain kind of product or whatever.

The FTC is currently investigating B2B marketplaces promoted by the automotive and airline industries. Can you comment on some of the broad issues involved in those two cases?

A: I don't think I really can. But the one thing that I would tell people is that there are some very highly visible and large B2B exchanges that are sort of on the radar screen right now. As I said before, we have found that this is not a one-size-fits all proposition. So I would be very careful [about thinking] that whatever happens on any given [investigation], especially early on, is indicative of how we're going to view everything in the B2B space.

In other words, you don't see these cases as precedent-setting.

A: Right. Not necessarily, because I think that it's still very early on.

Do you foresee the FTC developing any formal policy with regard to online marketplaces?

A: I don't see that right now.

Have you noticed any differences between the B2B and the business-to-consumer issues that come before you?

A: What's really interesting about B2B and B2C is that there's greater convergence to how people are beginning to regard those issues. A lot of people believe that, for example, the idea of consumer privacy is a pure B2C issue and companies [that] are really in the B2B space don't have to worry about it. Well, it's not that [simple]. It's an information practices issue. It's how you gather and use information. And I think that businesses [that] are in the B2B space are beginning to recognize that their customers are asking them, "How are you using my information? Where's it going and what are you doing with it?"

Is there any message you'd like to get across to corporate IT staffers whose companies are jumping into electronic marketplaces, or at least thinking about doing so?

A:I think they need to get good advice. One thing that I tell people is that in the online space [in general], there's always a fair amount of hype involved. [They should] begin to get away from the hype and ... try to figure out what the real value proposition is to them of getting involved in a given marketplace or an exchange. What I would also say -- and maybe this is especially important for companies [that] are moving from bricks to clicks [and] have maybe a little bit longer track record - is that it's not the Wild West out there. Just because it's online doesn't mean that it's that much different.

This story, "Q&A: FTC commissioner says panel is still learning about online exchanges" was originally published by Computerworld.

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