Following a two-year investigation into its practices as a retailer and platform, EU regulators announced antitrust charges against Amazon on Tuesday. The European Commission said that it takes issue with what it says is Amazon’s collection of non-public data on its platform that is used to benefit its own retail business. And if that doesn’t stick, a second formal investigation has officially been opened.
The commission, which represents the EU’s top antitrust regulator, said in a statement that its preliminary view is that Amazon’s marketplace collects voluminous data on the sales of third-party retailers and then uses that data to launch its own products and undercut its competition. The commission writes:
As a marketplace service provider, Amazon has access to non-public business data of third party sellers such as the number of ordered and shipped units of products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, data relating to shipping, to sellers’ past performance, and other consumer claims on products, including the activated guarantees.
The Commission’s preliminary findings show that very 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
This complaint is one of the most common charges against Amazon as an anti-competitive outfit, and it was one that Senator Elizabeth Warren focused on in her plan to break up big tech in the United States.
A congressional report from October said that around 2.3 million third-party sellers do business on the Amazon marketplace. The reasoning goes that, according to the report’s findings, Amazon essentially uses those businesses for intensive real-time market research that’s used in selecting which products are included in its Amazon Basics line, just to give one example. It can then monitor competition for, say, a cheap coffee pot and adjust placement or pricing accordingly, creating an uneven playing field for competitors, the report found.
But the EU moves very slowly and its procedural steps can be confusing. Amazon still has the right to respond and try to argue its way out of this before the machinery really kicks into gear. But the European Commission also announced this morning that it is opening a second antitrust investigation into whether Amazon’s use of its “Buy Box” for adding items to a cart “leads to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.” We’ll probably have to check back in on that one in a couple of years.
Amazon did not immediately respond to Gizmodo’s request for comment, but a spokesperson for the company told CNN that it disagrees with the EU’s position and it intends to “continue to make every effort to ensure it has an accurate understanding of the facts.”
In 2017, the EU ordered Amazon to pay $295 million in back taxes. By March of this year, Amazon was still continuing to make every effort to ensure the EU has an accurate understanding of the fact that it does not want to pay those back taxes.
The European Commission’s Executive Vice-President, Margrethe Vestager, said in a statement:
We must ensure that dual role platforms with market power, such as Amazon, do not distort competition. Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers. The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services. With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.
Vestager has built a reputation as an effective punisher of big tech’s misdeeds, and Amazon should hope that it figures out a way to ensure she has “an accurate understanding of the facts” because CNN Business estimates that the fines for the case focused on marketplace data could reach up to $37 billion.