Europe’s antitrust regulators have been officially looking into Amazon’s dual role as marketplace owner and marketplace participant since mid-2019, and it turns out they don’t like what they found.
On Tuesday, EU competition chief Margrethe Vestager—best known for hammering Google with $9 billion in antitrust fines—sent a statement of objections to Amazon over its alleged misuse of the data it holds on third-party merchants using its platform.
That’s a formal step on the road to an antitrust decision that could potentially include a fine of up to 10% of Amazon’s global revenues, plus an order to stop breaking the rules. It’s now up to Amazon to convince the European Commission that it shouldn’t take the matter that far.
The Commission is specifically worried about how Amazon uses its data about third-party sellers’ activities—such as their revenues on the platform, how many units they ship, past performance and so on—to adjust its own offerings that compete with those merchants. The case relates to Amazon’s behavior in France and Germany, its biggest EU markets.
Playing fair
“The Commission’s preliminary findings show that very large quantities of nonpublic 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,” it said in a statement.
“For example, it allows Amazon to focus its offers in the bestselling products across product categories and to adjust its offers in view of nonpublic data of competing sellers.”
Also on Tuesday, the Commission’s competition department opened a second probe into Amazon’s logistics activities. It wants to know if Amazon is illegally favoring its own retail offers, and those of third-party sellers who sign up to use its “fulfilment by Amazon” logistics and delivery services, by featuring those items in its coveted “Buy Box.” It also wants to check if other merchants get to “effectively reach Prime users” as easily as Amazon can.
“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” said Vestager.
“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 favor Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services.”
Amazon has responded by saying it disagrees with the Commission’s preliminary findings, arguing that “Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate.”
Global pressure
Vestager’s move adds to global antitrust pressure on Jeff Bezos’s empire. In the U.S., lawmakers recently floated the idea of breaking up Amazon and other Big Tech firms such as Alphabet and Facebook, because of their concentrating effects on the digital economy. In Canada, authorities are looking into a variety of potentially anticompetitive practices, including any Amazon strategies that might steer customers toward its own products, rather than those of third-party merchants.
In Europe, Vestager has already targeted Amazon previously, but over the issue of tax. In 2017, her department hit Amazon with a $294 million back-tax bill for its Luxembourg operations, on the basis that the company got a sweetheart deal from local tax authorities that amounted to illegal state aid.
Amazon continues to fight that decision in court. In a similar but much-higher-stakes case involving Apple, the Irish tax authorities, and a $15 billion back-tax bill, the EU General Court in July struck down Vestager’s decision on the basis that she didn’t prove Apple got special treatment. The Commission is appealing that ruling. The same court also previously reversed a similar decision regarding Starbucks’ treatment by Dutch tax authorities.
Vestager’s assault on tax deals under an antitrust banner demonstrated a willingness to use her tools in novel ways when tackling Big Tech.
In the same spirit, she has for years been keen on probing the possible anticompetitive effects of market-dominating companies’ troves of data. Indeed, that’s how her Amazon probe initially came about, and the same concept underpins her recently launched investigation into Google’s proposed $2 billion takeover of Fitbit.
