On the Impossibility of Information Intermediaries

Abstract

Some argue that are the solution to the costs imposed by the ease of communication on the World Wide Web. Intermediaries are agents that facilitate relationships between buyers and sellers, and information intermediaries serve this role for information markets. Information intermediaries are said to reduce the costs of communication on the Web by helping users locate information (through portals, like Yahoo, and search engines, like AltaVista), by helping them filter information (through organizations like NetNanny), and by restricting how Web sites gather and use information (through privacy-certifying organizations, like TRUSTe). My purpose in this essay is to question whether information intermediaries are likely to provide consumers with useful and objective information. For many intermediaries, it may be more profitable, at least in the short term, to accept payments to skew the information they provide to consumers than it would be to provide objective information. And there may be little to restrain such conduct, because there may be little profit, again in the short term, in providing consumers with information about it, such information being a public good. Whether longer term factors, such as consumer experience and reputational effects, will cause intermediaries ultimately to provide objective information is less clear. To the extent that the market currently does not provide competition sufficient to induce information intermediaries to serve their users, the legal doctrines directed at maintaining competition might provide appropriate remedies. Those doctrines are contained largely in the various bodies of law addressing unfair competition, and particularly in the laws against false advertising and in antitrust law. It is the latter that is likely to be more useful, though the former might be applicable in some instances. However, to the extent that these legal remedies deny intermediaries the opportunity to provide non-objective information, they might make the intermediaries unprofitable in their current forms. In the end, information intermediaries might become public sector entities, like libraries, or the intermediaries might begin charging users directly for the information they provide.