EU charges Amazon with misusing data, opens new probe over Buy Box
Brussels alleges unfair practices toward third-party merchants; fresh investigation targets use of tech giant’s logistics and delivery services
Amazon just got hit with a one-two punch from Margrethe Vestager.
Europe’s competition chief charged the e-commerce giant Tuesday over misusing the data of third-party merchants that rely on the tech giant’s online marketplace to favor Amazon’s own products.
The Dane also opened a separate investigation into potential anticompetitive practices linked to Amazon allegedly unfairly pushing sellers to use the company’s logistics and delivery operations, including its Prime service.
The announcement comes as antitrust officials in Europe, the United States and elsewhere are increasingly taking aim at how a small number of Silicon Valley companies dominate vast sections of the digital economy.
Those investigations — Google already has faced billions of euros in fines in Europe, and Brussels is pursuing separate cases into Apple and Facebook — have increasingly focused on how these companies collect people’s personal information in ways that may undermine competition online.
“This is a case about big data,” Vestager told reporters on Tuesday. “We must ensure that dual role platforms with market power, such as Amazon, do not distort competition.”
While the Commission announced charges against Amazon, the company has yet to be found guilty of wrongdoing.
How big is Amazon really?
Brussels must now provide the tech giant a right to respond to the allegations which stem from a review of the European Union’s e-commerce market in 2015. If found guilty, Amazon could face fines of billions of euros and be forced to revamp how its online marketplace operates.
The tech giant said in a statement that it disagreed with the Commission’s so-called statement of objections, or charge sheet, and that it would now work with Vestager and her team to put across its own views about how the online economy works.
“Amazon represents less than 1 percent of the global retail market, and there are larger retailers in every country in which we operate,” Amazon said.
Despite its objections, the company faces an uphill challenge.
As part of the Commission’s announcement Tuesday, Vestager said Amazon held a dominant position, in both France and Germany, as a provider of so-called marketplace services, or online platforms that both offer space for third-parties to sell their wares and sell their own goods directly to customers.
Brussels used this definition in its investigation, and not Amazon’s position in the broader retail market.
“The European Commission, in its investigation, reflects the underlying belief that platforms benefit from significant power because they are gatekeepers through which sellers have to operate,” said Ariel Ezrachi, a competition professor at the University of Oxford. “That is a central battleground.”
In its charges, the Commission said that Amazon collected massive amounts of third-party data from across its online marketplace that its executives then used to determine what products the company should market itself on its global platform.
Such behavior, according to EU officials, distorted competition for rivals that were selling similar products by giving Amazon preferential treatment and an unfair advantage.
Vestager said Amazon listed its own goods in less than 10 percent of the categories available on its marketplace, but generated about 50 percent of the revenues from those categories.
“We come to the preliminary conclusion that the use of this data allows Amazon to focus on the sale of the best-selling products, marginalizes third-party sellers and caps their ability to grow,” she told reporters.
Consumer rights group BEUC said scrutinizing Amazon is doubly important given the increasing reliance on e-commerce during the COVID-19 pandemic.
“It would be very harmful for consumers if a powerful player like Amazon could abuse its strong position as a marketplace to unfairly undermine independent retailers and to deprive consumers of genuine choice,” Monique Goyens, the group’s director general said.
BEUC said it requested to intervene in the Commission’s investigation, whereby it could have access to the legal proceedings by proving it has an interest in the case.
A new investigation
The separate probe into Amazon, also announced Tuesday, may eventually have a bigger impact on the e-commerce giant.
Brussels said that it was investigating if the company may have unfairly favored third-party sellers and its own products that relied on Amazon’s logistics and delivery services, including access to the company’s Prime subscribers.
That includes an in-depth look at the criteria Amazon uses to select the winner of its so-called “Buy Box,” or pop-up window that shows customers additional products when they proceed with a purchase. EU officials said that roughly 80 percent of all Amazon transactions were linked to this Buy Box, and the investigation would center on how third-party sellers were chosen to be included.
A final decision on whether to charge Amazon over those allegations is expected in roughly a year.
“Our concern is that Amazon may artificially push retailers to use its own related services,” Vestager said. “This may potentially lock them deeper into Amazon’s own ecosystem.”
Those concerns — the use of preferential treatment by tech companies to keep others within their online empires — have become central to ongoing antitrust investigations on both sides of the Atlantic.
Similar accusations have been leveled at Apple, Facebook and Google, though the companies deny any wrongdoing.
On Tuesday, Vestager framed the two Amazon announcements as part of this wider review on how the online world was policed.
“There is now a global conversation about how to deal with the fact that some of the platforms seem to be either gatekeeper or de facto monopolies in a number of markets that are very important for the development of our economies,” she said.