The European Commission believes that Amazon violated competition rules by unfairly benefiting from non-public data on independent sellers who use its marketplace, it said in its preliminary findings from an antitrust investigation it has been conducting against the American e-commerce giant since last year. The European Union’s executive body added that it was also launching a new probe into possible preferential treatment of marketplace sellers that use Amazon’s logistics and delivery services.
In a statement of objections, which followed the opening of an investigation into Amazon’s use of sensitive data from independent sellers in July 2019, the Commission outlined its initial view that the use of private marketplace seller data “allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany,” which are Amazon’s biggest markets in the EU.
More than 70 percent of consumers in France and more than 80 percent of consumers in Germany that made online purchases bought something from Amazon in the last 12 months, according to the Commission.
The Commission said that initial findings from that investigation had shown that large quantities of non-public seller data “are available to employees of Amazon’s retail business and flow directly into the automated systems of that business, which aggregate these data and use them to calibrate Amazon’s retail offers and strategic business decisions to the detriment of the other marketplace sellers.”
An expert explained that Amazon apparently uses special algorithms and artificial intelligence to process quickly sellers’ data such pricing conditions, inventory positions, double orders etc. to optimize its own direct retailing business and increase its dominant position in the market.
“We do not take issue with the success of Amazon or its size,” said Margrethe Vestager, the EU’s antitrust commissioner, at a press conference. She added that the investigation focused on “very specific business conduct” tied to Amazon’s role as both a retailer and a platform for smaller competitors.
Amazon said it disagreed with the Commission’s findings and “will continue to make every effort to ensure it has an accurate understanding of the facts.” Amazon added that it represents less than 1 percent of the global retail market. “No company cares about small businesses or has done more to support them over the past two decades than Amazon,” the e-tailer said.
The Commission also opened a new antitrust probe into Amazon’s business practices, looking into whether the criteria the company uses to select the winner of its so-called “Buy Box” and to enable sellers to offer products to users of its Amazon Prime loyalty program leads to preferential treatment either for Amazon’s own retail business or for sellers that go as far as to use its logistics and delivery services.
This second probe covers the European Economic Area, with the exception of Italy, whose competition authority started to investigate partially similar concerns last year. It will cooperate with the European Commission throughout this investigation.
“Online shopping has become almost essential in recent months for many consumers because of the Covid-19 crisis,” commented Monique Goyens, the director general of the European consumer organization BEUC. “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,” she added, welcoming the European Commission’s investigations.
Whatever the outcome of these investigations, which could take a long time, Amazon is sure to take the issue all the way up to the European Court of Justice, a process that will save more extra time for Amazon, unless it reaches is a settlement with the Commission. It could end up in a fine of up to 10 percent of Amazon’s global revenues. On the other hand, the European Commission is trying to cope with these problems in drafting its Digital Services Act, which will have to be approved by the member governments. Some of the details may be unveiled in early December.
While the European Commission’s scrutiny of Amazon increases, India’s antitrust regulator opened an investigation regarding Google for alleged abuse of its dominant market position to promote its payments service Google Pay over other payment options.