Put regulations on the Market Places to tighten up their process for accepting new sellers, and direct punishment of the Market Places themselves for selling bad products. These Market Places have no skin in the game when it comes to the stuff they sell, they need a reason to care. If they care, these problems start to sort themselves out.
For example, instead of just fining the AirBNB host for an illegal rental, they should also fine AirBNB say $50k per rental. Something high enough that they do their own verification of product. Or fine Amazon a similar amount every time they send out a fake SD card.
1. The incentives of the platform
2. The incentives of the individual
For 1, a big part of the problem is the growth-at-all-costs mindset coming from VC incentives. In this case, having more hosts and deleting bad reviews directly helps the platform because it increases the market size and short-term profitability. You could argue that it hurts in the long-term when quality drops to unacceptable levels, but most companies don't care about that. Founders have already exited and executives have gotten paid. Also, by not growing quickly you're vulnerable to competitors that do grow more quickly. The only solution that comes to mind is to not have for-profit entities where founders/VC get rich behind these kind of platforms. It needs to be fully community-driven.
For 2, I think it's about skin in the game and trust. In many industries you can't go out and scam people without facing serious consequences. On these online platform you can, but you don't face real consequences. It's just another ban. Regulation with serious fines or jail time is one solution. Another solution is a (hypothetical) world where online identity is connected across services and tied to your real identity. Imagine getting a bad review on Airbnb actually has real-life consequences because it's tied to your identity. Perhaps that's what you get with the CCP, where people's online accounts for many services are associated with their government identities. I'm not saying these are desirable solutions, but they certainly would deter hosts from trying to game the system.
Does anyone have any thoughts about how marketplace operations could prevent this sort of race to the bottom rot? It does kind of feel like an inevitability these days and I wonder if there’s a real solution.
I suppose part of the problem is that the growth-at-all-costs mentality exists in conflict of quality-at-all-costs. Maybe the answer is just to stay small and niche, which enables quality control without scaling issues.