Shut down by algorithm: Small businesses suffer online nightmare

Small businesses in Australia are facing a growing crisis as their online operations are abruptly shut down by automated systems with little or no explanation, according to the Australian Small Business and Family Enterprise Ombudsman. Digital platform disputes have surged to make up nearly half of all new cases handled by the ombudsman's office in the June quarter, compared to just 12 per cent a year ago. These issues involve major e-commerce platforms and social media networks, leaving some businesses unable to access critical data and tools needed to operate effectively. The ombudsman’s office reports that many affected businesses have operated for years, generating substantial revenue through online channels. However, these enterprises are now vulnerable to sudden deactivation by algorithms, often without clear justification or human intervention. Jack Nekhala, creator of the Bed Scrunchie, a product that generated around $6 million annually, has been among those impacted. His experience highlights the challenges faced by small businesses navigating complex digital ecosystems. In recent months, several queer venues in Melbourne and Sydney have lost access to their Facebook and Instagram accounts, despite having built them over more than a decade. Meta, the parent company of these platforms, acknowledged that some accounts were flagged erroneously. The loss of these accounts disrupts marketing efforts and customer engagement, forcing businesses into uncertainty and financial strain. Nekhala has filed a formal complaint with the Australian Competition and Consumer Commission (ACCC) regarding Amazon Commercial Services, the Australian branch of the global e-commerce giant. He alleges that his Amazon account was deactivated on April 11, 2025, without prior notification or assessment by anyone based in Australia. Nekhala seeks clarification on whether the decision was made independently in Australia or automatically triggered by actions taken in the United States. His business, which relied heavily on Amazon for sales, encountered initial issues in September 2024 when Amazon accepted two patent infringement claims against the Bed Scrunchie. This led to a temporary disablement of his listings, requiring multiple attempts to resolve through Amazon’s support team. Eventually, Nekhala discovered a solution via an old Reddit post, indicating that the process was neither straightforward nor transparent. On October 30, 2024, Amazon suspended Nekhala’s accounts across multiple international markets, citing alleged violations of its review policies. This included rules governing consumer feedback and online ratings. Following this, his accounts in nine European countries were also deactivated shortly thereafter. The scale of the deactivation suggests a systemic issue within Amazon’s enforcement mechanisms. Nekhala later came into contact with someone named Jenna, who claimed to have connections within Amazon. Through a series of conversations, Jenna shared internal documents related to Nekhala’s account, revealing enforcement classifications and investigator notes typically inaccessible to regular sellers. These materials indicated that his account was deemed irreparable, with instructions not to disclose the reasons behind the deactivation to the seller. During these discussions, Jenna proposed releasing approximately $90,000 in frozen funds for a 20 per cent fee. While Nekhala declined to pay, he continued engaging with her to better understand the situation. The nature of these interactions raises questions about potential vulnerabilities within the platform’s internal processes and the accessibility of critical information to affected sellers. The ombudsman’s office has called on digital platforms to ensure greater transparency and accountability, urging them to provide direct points of contact, detailed explanations for account suspensions, and structured procedures for appeals. As the reliance on digital infrastructure continues to grow, the need for clearer governance and support structures becomes increasingly pressing for small businesses operating in this space.