Ripping off regular consumers? The antecedents and consequences of consumers’ perceptions of e-commerce platforms’ digital power abuse

Abstract

Leveraging a large consumer base and algorithmic technology, e-commerce platforms exercise digital power, notably via algorithmic price discrimination. Consumers acutely perceive this power inequality and platforms’ digital power abuse. Meanwhile, platforms that practice algorithmic price discrimination are generally in a fiercely competitive oligopolistic market and are concerned about consumer loyalty. This study investigates the internal mechanism through which algorithmic price discrimination affects consumer loyalty. Based on consumer ethical perception theory, we develop a model of algorithmic price discrimination’s influence on consumer loyalty and examined the moderating effect of consumer types. Analyzing 597 consumer responses, findings suggest price discrimination negatively influences perceived platform ethics and corporate social responsibility, thus reducing loyalty. This effect is more pronounced for consumers with high price sensitivity and initial trust. This study sheds light on algorithmic price discrimination’s influence from a novel digital power-abuse perspective, reveals the underlying mechanisms, and provides specific suggestions for platform management.