Amazon hit with antitrust charges
LONDON — European Union regulators brought antitrust charges against Amazon on Tuesday, saying the online retail giant broke competition laws by unfairly using its size and access to data to harm smaller merchants that rely on the company to reach customers.
The European Commission, the executive branch of the 27-nation bloc, said Amazon had abused its dual role as both a retail store used by scores of vendors, and a merchant that sells its own competing goods on the platform. Authorities accused Amazon of harvesting nonpublic data from sellers that use its marketplace, spotting popular products and then copying and selling them, often at lower prices.
“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” Margrethe Vestager, the commission’s vice president for digital issues, said in a statement. “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 case, which has
been expected for months, is the latest front in a trans-Atlantic regulatory push against Amazon, Apple, Facebook and Google as authorities in the United States and Europe take a more skeptical view of their business practices and dominance of the digital economy. Last month, the U.S. Justice Department brought antitrust charges against Google, and Apple and Facebook are also facing investigations in both Washington and Brussels.
Many in Europe will be waiting to see how the Amazon announcement is received by Joe Biden, the projected winner of the U.S. election who is expected to pursue policies that limit the industry’s power. The Trump administration has criticized Vestager for aiming at U.S. companies such as Apple, even as the U.S. initiated its own investigations of the industry.
In the Amazon case, the announcement Tuesday is still preliminary and is just one part of the regulatory process. Amazon now has a chance to respond to the charges. It can take many months, or even years, before a fine and other penalties are announced. The commission also could reach a settlement with Amazon, or the case could be dropped.
The European Commission said it has also started a parallel investigation of Amazon policies around its “buy box,” an important piece of real estate on Amazon’s website that makes it easy for consumers to quickly click to make purchases.
The commission is studying whether Amazon gives preferential treatment for the buy box to its own products and those of other sellers that pay to use Amazon’s logistics services.
LEGAL FIGHT
Amazon denied any wrongdoing and said it supports thousands of businesses in Europe.
In Brussels, Amazon has been gearing up for a legal fight. It has hired a team of lawyers and economists, including several who in the past were encouraging tougher enforcement against Google and Microsoft.
“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. “No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”
About 2.3 million thirdparty merchants around the world use Amazon to reach customers, including about 37% who rely on the company as their sole source of income, according to a U.S. congressional report published last month. In the European Union, Amazon has information on about 800,000 active sellers using its platform, covering more than 1 billion products, according to the European Commission.
Vestager has warned that the biggest companies will only grow stronger, blocking new companies and innovations from emerging, without tougher antitrust enforcement and new regulations.
Next month, the European Commission is expected to unveil a package of measures that would represent one of the world’s most sweeping sets of regulations of the tech industry. It could include rules prohibiting the self-preferencing of products and requiring the biggest companies to share data with smaller rivals.
DUAL ROLE
In the Amazon case, European authorities spent two years investigating the company’s dual role as both a retail store and seller of its own goods.
Amazon argues that it only makes up a small sliver of the global retail market, but for many smaller merchants, the company is the main gateway to online sales. Worries about Amazon’s power have only grown during the pandemic, as internet sales become increasingly vital to businesses grappling with lockdowns and lost foot traffic. Since 2015, e-commerce sales in the European Union nearly doubled to about $850 billion.
Sellers have long raised concerns that if Amazon sees a particular product doing well on its website, the company will create its own version, sell it at a lower price and then give it better placement on the Amazon website.
The European Commission said those concerns were supported by a review of data on more than 80 million transactions and 100 million products. Vestager said it showed how Amazon used the data from outside sellers to determine what computer accessories, kitchen tools or other products to introduce, as well as where to set prices and how to manage inventory .
The real-time information that Amazon collects includes order totals, numbers of visitors to certain products, and merchants’ revenue.
“This is a case about big data,” Vestager said. She said the investigation centers on Amazon’s behavior in France and Germany, where she said Amazon has a “dominant” position in the market.