Amazon’s use of marketplace data breaks competition law, EU charges
November 10, 2020
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by admin

A sign outside an Amazon warehouse in Germany.
Enlarge / A sign outside an Amazon warehouse in Germany.

Europe’s top competition regulator filed charges today against Amazon, alleging that the company has 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 is centered on the firm’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 those other merchants’ online business, which it then gathers and uses anticompetitively to get a leg up in its own retail operations, the EU alleges.

This is not just an infrequent or occasional lapse, the EC determined, finding instead that “very large quantities of non-public seller data” are available to Amazon and “flow directly into [Amazon’s] automated systems.” Amazon then allegedly uses that data to make its own determinations, “to the detriment of the other marketplace sellers.”

The Wall Street Journal reported earlier this year that Amazon employees in the US were accessing and using that data—even though an Amazon executive told Congress to their faces in a hearing that the company does no such thing.

“We knew we shouldn’t,” access that data, one former Amazon employee told the WSJ. “But at the same time, we are making Amazon branded products, and we want them to sell.”

“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” said Margrethe Vestager, head of the EU’s competition bureau. “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 conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favor Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services.”

The Commission also announced that it has begun a second antitrust probe into Amazon’s business. The new investigation will determine whether the factors that go into amazon’s “buy box,” and its leverage of “Fulfilled By Amazon” logistics and delivery services, add up to unlawful abuse of a dominant market position.

The beginning, not the end

This EU probe into Amazon’s Marketplace formally launched in 2019 after a “preliminary fact-finding” indicated there was likely an antitrust violation taking place. That the first investigation has spawned a second is not surprising, and European regulators have company on this side of the Atlantic as well.

Here in the US, both 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 divide-and-conquer approach to probing the behavior of the country’s biggest tech firms, and investigating Amazon fell to the FTC.

The FTC has not spoken publicly about the probe, but media reports that surfaced through 2019 and into this year indicate that here, too, regulators are concerned about the way Amazon leverages its power over Marketplace vendors.

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

Congress, too, is displeased with the Internet’s Everything Store. The House Antitrust Subcommittee last month published a blockbuster report into Amazon, Google, Facebook, and Apple, in which it found, among other things, that
that some statements Amazon made to Congress “appear to be misleading, and possibly criminally false or perjurious.”

“Amazon has monopoly power over most third-party sellers and many of its suppliers,” the committee concluded. “Numerous sellers told Subcommittee staff in interviews that they cannot turn to alternative marketplaces, regardless of how much Amazon may increase their costs of doing business or how badly they are treated.”

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