EU files charges against Amazon over use of data
10 November 2020, 15:44
Amazon has rejected the accusations.
European Union regulators have filed charges against Amazon, accusing the e-commerce giant of using data to gain an unfair advantage over merchants using its platform.
The EU’s executive commission said on Tuesday that the charges have been sent to the company.
The commission said it takes issue with Amazon’s systematic use of non-public business data to avoid “the normal risks of competition and to leverage its dominance” for e-commerce services in France and Germany, the company’s two biggest markets in the EU.
The EU started looking into Amazon in 2018 and has been focusing on its dual role as a marketplace and retailer.
In addition to selling its own products, the US company allows third-party retailers to sell their own goods through its site. Last year, more than half of the items sold on Amazon worldwide were from these outside merchants.
Executive vice president Margrethe Vestager, the EU commissioner in charge of competition, said it is not a problem that Amazon is a successful business but “our concern is very specific business conduct which appears to distort genuine competition”.
Amazon faces a possible fine of up to 10% of its annual worldwide revenue, which could amount to billions of pounds.
The company has rejected the accusations.
“We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts,” the company said in a statement, adding that it represents less than 1% of the global retail market and that there are bigger retailers in every country where it operates.
The company can, under EU rules, reply to the charges in writing and present its case in an oral hearing.
Investigators analysed data covering 80 million transactions and 100 million products listed on Amazon’s site.
Ms Vestager said they found that “very granular, real time business data” on third-party product listings and transactions was fed into algorithms for Amazon’s retail business that decide which new products to launch, their price and supplier.
“In other words, this is a case about big data,” Ms Vestager told a press briefing in Brussels.
Ordinary retailers take risks when they invest heavily to find new products, bring them to market and decide how much to sell them for, Ms Vestager said.
“Our concern is that Amazon can avoid some of those risks by using the data it has access to,” she added.
The preliminary conclusion, she said, is that by using the data Amazon can focus on the best-selling products, “and this marginalises third-party sellers and caps their ability to grow.”
Ms Vestager also opened a second investigation that will look at the criteria Amazon uses to decide which seller’s product gets chosen for the “buy box” and for its Prime membership service, and whether that means they get preferential treatment by the company’s logistics and delivery services.
The buy box, found on the right side of Amazon’s site, lets shoppers add items directly to their shopping baskets. The box features a single seller’s product even though multiple merchants might offer it.
The second investigation excludes Italy, because the country’s competition watchdog has already launched a similar probe last year.
It is the EU’s latest effort to curb the power of big technology companies, following a series of multi-billion pound fines against Google in previous years.
