The European Union is planning an antitrust investigation into e-commerce giant Amazon over its treatment of third-party merchants that rely on the company’s marketplace to sell goods, the Wall Street Journal reported on Wednesday.
According to the Journal, the EU investigation follows a settlement between Amazon and authorities in Germany on third-party merchants that resulted in the company agreeing to change parts of its terms of service, including delivering notice 30 days before suspending accounts and “reducing confidentiality stipulations for sellers.” EU investigators are specifically interested in whether Amazon is “abusing its dual role as a seller of its own products and a marketplace operator,” the paper wrote—such as whether the company harvests data from independent merchants for the purpose of taking their business:
In particular, the EU probe will study whether Amazon is using nonpublic data from independent merchants to compete unfairly against them. Investigators will also examine what data Amazon uses to pick a seller as the default option for a given product when a user clicks the “buy” button—and whether Amazon has an unfair advantage to be designated the default for products it sells.
The investigation could eventually lead to formal charges, fines and orders for the company to change business practices, but it could also be dropped.
A European Commission official told the Journal that while German authorities had reached a settlement, the EU investigation as well as others in countries like Italy “are complementary but not overlapping.” Reports in September 2018, when the investigation began, indicated that the EU had not found any evidence of wrongdoing, and University of Liege competition law professor Nicolas Petit told the paper this time that investigators would likely face a very high bar to demonstrate Amazon’s use of such data would be anticompetitive.
Amazon and its third-party merchants have never had the best of relationships, with the latter complaining about unfair contracts, disputes over ads marketing products that fail to make the platform money, and reports of cutthroat competition between sellers that try to sabotage each others’ businesses. Vendors have also reported Amazon pushing marketplace sellers into its wholesale supply chain, where it can control prices, and vice versa.
At the same time, Amazon CEO Jeff Bezos has seemed to point to the third-party marketplace as evidence that the company should not face antitrust action. Despite controlling an estimated 38 percent of online retail sales in the U.S. (and a smaller but leading share in Europe), Bezos claimed earlier this year that Amazon “remains a small player in global retail” and that “Third-party sellers are kicking our first party butt. Badly.” According to the Journal, Bezos said that its own direct sales tallied $117 billion last year, while sellers raked in $160 billion.
Amazon declined to tell the Journal whether it “uses aggregated data from multiple sellers,” the paper wrote, but a spokesperson did say that “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”