European Union regulators filed antitrust charges Tuesday against Amazon, accusing the e-commerce giant of using its access to data to gain an unfair advantage over merchants using its platform.
The EU's executive Commission, the bloc's top antitrust enforcer, issued the charges after it started looking into the company two years ago. Adding to Amazon's regulatory headaches, the EU also opened a second investigation into whether the company favors product offers and merchants that use its own logistics and delivery system.
It’s the latest effort by Executive Vice President Margrethe Vestager, the EU commissioner in charge of competition issues, to curb the power of big technology companies. She has slapped Google with antitrust fines totaling nearly $10 billion and opened twin antitrust investigations this summer into Apple. The U.S. has started taking a tougher line as well, suing Google this year for abusing its dominance in online search and advertising.
It’s not a problem that Amazon is big and successful but “our concern is very specific business conduct which appears to distort genuine competition," Vestager said.
EU officials focused on the company’s dual role as a marketplace and retailer. In addition to selling its own products, the U.S. company allows third-party retailers to sell their own goods through its site.
The commission took issue with Amazon’s systematic use of business data that it has exclusive access to, allowing it to avoid the normal risks of competition and leverage its dominance for e-commerce services in France and Germany, the company’s two biggest markets in the EU.
Amazon faces a possible fine of up to 10% of its annual worldwide revenue, which could amount to as much as $28 billion based on its 2019 earnings. The company 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. Under EU rules, it can reply to the charges in writing and present its case in an oral hearing.
It could still be a while before a final decision as there are no legal deadlines for bringing an EU antitrust case to an end.
Investigators analyzed data covering 80 million transactions and 100 million products listed on Amazon's site. 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," 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, Vestager said. “Our concern is that Amazon can avoid some of those risks by using the data it has access to."
The preliminary conclusion, she said, is that by using the data Amazon can focus on the best-selling products, “and this marginalizes third-party sellers and caps their ability to grow.” She didn't give specific examples of merchants affected by Amazon's behavior.
The stakes have risen for retailers as many European countries have shut nonessential shops temporarily to try to contain the coronavirus pandemic, pushing more shopping online, where Amazon is a major presence.
The EU's second investigation 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.