Amazon’s use of market data infringes EU competition law and charges

The main European competition regulator filed charges today against Amazon, alleging that the company abused its size, position and access to data to gain an unfair advantage over the competition.

The European Commission’s Statement of Objections against Amazon focuses on the company’s “dual role” in e-commerce, where it is both a retailer and also a platform for third-party retailers. As a platform, Amazon has access to proprietary data about all of these other merchants’ online activities, which it aggregates and then uses in an anti-competitive manner to get a head start in its own retail operations. , says the EU.

This is not just a rare or occasional failure, the EC determined, finding instead that “very large amounts of non-public data on sellers” is available to Amazon and “is flowing directly into [Amazon’s] automated systems. “Amazon would then have used this data to make its own determinations,” to the detriment of other sellers in the market. ”

The Wall Street Journal reported earlier this year that Amazon employees in the United States were accessing and using this data, although an Amazon executive told Congress across the way in a hearing that the company did nothing like that.

“We knew we shouldn’t” be accessing this data, a former Amazon employee told the WSJ. “But at the same time, we’re making Amazon branded products, and we want them to sell.”

“We have to make sure that dual role platforms with market power, like Amazon, do not distort competition,” said Margrethe Vestager, head of the EU’s competition office. “Data on the activity of third-party sellers should not be used for the benefit of Amazon when it acts as a competitor of those sellers. The conditions of competition on the Amazon platform should also be level. Its rules should not be fair. artificially favoring Amazon’s retail offerings or taking advantage of offers from retailers using Amazon’s logistics and delivery services. “

The Commission also announced that it has launched a second antitrust investigation into Amazon’s activities. The new investigation will determine whether the factors that go into Amazon’s ‘buy box’, and its influence on ‘Fulfilled By Amazon’ logistics and delivery services, add to an illegal abuse of market dominance. market.

The beginning, not the end

This EU investigation into Amazon’s marketplace was officially launched in 2019 after a “preliminary investigation” indicated that there was likely a violation of antitrust laws. It’s no surprise that the first investigation spawned a second, and European regulators have businesses on this side of the Atlantic as well.

Here in the United States, state and federal regulators have taken a deep interest in Amazon’s business practices. The Department of Justice and the Federal Trade Commission took a divisive-to-conquer approach to probe the behavior of the nation’s biggest tech companies, and investigating Amazon fell to the FTC.

The FTC has not spoken publicly about the investigation, but media reports that have surfaced through 2019 and this year indicate that here, too, regulators are concerned about how Amazon is exploiting its power over Marketplace suppliers.

Bloomberg reported in August that the attorneys general in New York and California are now partnering directly with the FTC on the antitrust investigation. It is not uncommon, in major cases, for state and federal authorities to pool their resources: for example, 11 states signed a landmark antitrust case that the DOJ filed against Google last month, and several dozen others are potentially considering joining months.

Congress, too, is very unhappy with the Internet. The House antitrust subcommittee last month released a hit report on Amazon, Google, Facebook and Apple, in which it found, among other things, that
that certain statements made by Amazon to Congress “appear to be deceptive and possibly criminally false or perjurious”.

“Amazon has monopoly power over most third-party sellers and many of its suppliers,” the committee concluded. “Many sellers told Subcommittee staff in interviews that they could not turn to alternative markets, regardless of how much Amazon might increase their operating costs or the severity of their treatment. . “