The European Commission has formally opened an antitrust investigation into Amazon’s dual role as a retailer and marketplace and how it uses data derived from independent retailers.
Europe has a track-record of taking on the industry’s biggest players on the grounds of antitrust and Amazon is next in-line. The case which the European Commission will attempt to prove is that Amazon abused its position of power as a leading eCommerce platform, using this position to aid it in selling its own products.
“European consumers are increasingly shopping online,” said Margrethe Vestager, Commissioner for competition policy. “eCommerce has boosted retail competition and brought more choice and better prices.
“We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behaviour. I have therefore decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”
This investigation is based around two points which the European Commission hopes to prove are anticompetitive. Firstly, Amazon collects marketplace data from its third-party partners to inform its own sales strategies. Secondly, with a ‘buy box’ only available to certain partners, and the Commission wants to understand what impact this differentiation has on competition.
On the first point, as the overarching platform owner, Amazon is privy to sensitive marketplace information from independent retailers who sell products through the platform. Using this insight to create more effective sales strategies is very likely to fall foul of Europe’s competition rules, should Vestager be able to prove a competitive advantage.
On the subject of Vestager, perhaps this is not the last we will hear from the bureaucrat. Vestager has worked up a reputation over the last few years for taking on some of the US’ most influential, and sometimes slippery, technology companies. With Vestager’s tenure at the European Commission ending in October, perhaps she will be aiming to make a bigger splash.
This is also not the first time Amazon has found itself on the bad-side of Vestager either. In 2017, Amazon was forced to pay €250 million in back taxes to Luxembourg, after the relief which was offered to the internet giant between 2003 and 2016 was deemed illegal.
The second point focuses on the ‘buy box’. This feature allows customers to add items from some retailers directly to their shopping carts. As not all retailers are able to access the feature, the European Commission would like to understand how this impacts competition. It is also not entirely clear why some retailers are able to access this feature and others are not.
Unfortunately for Amazon, this difficult situation is not one which will be resolved quickly. In such cases, due to the complexity of digital businesses and the vast amount of information involved, the European Commission has not set itself a deadline to conduct the investigation.
Another element to consider is the criticism faced by Amazon in the US. Not only has the eCommerce platform found itself as an enemy of the White House, the other aisle is poking. Senator Elizabeth Warren, a Democrat candidate for the 2020 Presidential campaign, wants to ban companies from operating and selling on a platform simultaneously.
With an antitrust case in Europe, potential enemies on both sides of the Presidential campaign, various Congressional committees investigating big tech, Germany’s anti-trust authority sniffing at the front door and its fulfilment centres never too far away from controversy, Amazon is not in the most comfortable of positions.