Mid-point Remarks of Commissioner Mozelle W. Thompson

Before

The FTC Public Workshop on Emerging Issues for Competition Policy in the World of E-Commerce

Washington, D.C.

May 7, 2001

Good morning, everyone. I join the Chairman in welcoming you to the Federal Trade Commission's second workshop on competition policy in the world of e-commerce and B2B electronic marketplaces. I see some familiar faces from last year's B2B workshop; to you, welcome back and thank you for joining us once again. Thanks also to Susan DeSanti, Director of Policy Planning, and her staff for their excellent and enthusiastic work in organizing this event.(1) I hope that you've enjoyed this morning's panels as much as I have.

A great deal has happened in the world of B2B marketplaces since the Commission held its B2B workshop last June, and I believe we are at an interesting juncture in the world of e-commerce, generally, and B2B marketplaces specifically. Since June, we have witnessed a shakeout of the dot-com players. While the shakeout's effect in the Business-to-Consumer (B2C) sector has been well publicized, the shakeout's impact on the Business-to-Business sector is no less significant. Here too, companies that predicted revolutionary changes in how companies buy from each other, have found themselves scrambling to stay in business. This shakeout does not signal the wholesale demise of e-commerce, but it does demonstrate a needed market-focusing on the issue of value, how it is generated, and to whom it belongs. So, while we may not yet have heard the sounding of the dot-com death knell, I think what we are hearing is a warning bell; perhaps one that asks businesses to place their customers at the center of their value proposition by spending less attention on the "e" and more time on the "commerce."

This is where I remain optimistic. Although many e-commerce/B2B entities have not been successful in the marketplace, there is still value in Internet-based technology and the promise it holds for consumers and businesses alike. While recent research figures from Forrester Research predict that e-marketplaces will capture 53% of all online business trade by 2004, totaling over $1 trillion dollars in annual transactions, (the Gartner Group puts that number at $5.3 trillion), it will be interesting to see if reality meets these time and dollar projections. Furthermore, it will be interesting to see how the dot-com shakeout has affected whether the success of B2B models will come from the collective accretion of buying or selling power, and how much will be attributable to the development of new and innovative products, such as inventory and customer relationship management tools. My guess would be that the latter will be more significant. I would also hazard a guess that private/proprietary e-marketplaces will also comprise a significant portion of that total.  

So what can companies do to reduce the risk of getting voted off the "e-commerce island?" While many New Economy stars have flared out of existence, those who remain in the industry by necessity are becoming more sophisticated in their consideration of the integration issues relating to e-commerce. Included in this evaluation process are both analysis of the market competitiveness of the business model, and compliance with the antitrust laws. Whether or not a proposed exchange, or the behavior in which it engages, runs afoul of the antitrust laws remains a fact-based inquiry. While the business form is new, the applicable law is not so - for relevant guidance, I refer you to the FTC/DOJ Guidelines for Collaborations Among Competitors. 

When we convened last year, we observed that the B2B model was in its nascent stage, full of possibilities, as well at potential pitfalls. B2B at this adolescent stage can still be likened to an orchestral work in progress. For the most part, what we've heard so far sounds pretty good - but the question remains whether each finished piece will result in harmony or in discord with the antitrust laws. We will, when appropriate, use our baton gently to shape the process, and, when necessary, direct the players toward consonance. It's up to you to find an audience.

1. My remarks here today are my own and not necessarily those of the Commission or any other Commissioner.