The European Commission has charged Amazon with breaching EU antitrust rules over its use of third-party seller data.
Announced earlier this week, the European Commission said it takes issue with the company “systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third-party sellers”, according to its preliminary findings.
In other words, the Commission objects to Amazon’s access to non-public data gathered by retailers selling products through its website, while selling its own products that are in direct competition with them. According to the Commission, this means it can “avoid the normal risks of retail competition”.
This follows a lengthy investigation into whether Amazon adversely impacted levels of competition in the retail market. Its preliminary view is that the company distorted “competition in online retail markets”.
The Commission has also opened up a second investigation looking into whether Amazon has shown preferential treatment towards its own products, and those from sellers using its logistics and delivery services under Article 102 of the Treaty on the Functioning of the European Union which prohibits the abuse of a dominant market position.
Executive vice-president of the European Commission Margrethe Vestager said that considering the current boom in ecommerce “a fair and undistorted access to consumers online is important for all sellers”.
If found guilty, Amazon faces a possible fine of 10% of its turnover. In the 12 months prior to its most recent quarterly results in September, Amazon reported revenue of $347bn, which means the tech giant could be liable for a fine of around $34bn. However, given Amazon’s accelerated growth during the pandemic, this figure would likely increase in the event a fine was levied.
In a statement, Amazon said:
“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.”
Colin Constable, CTO of data privacy and new internet protocol at The @ Company said:
“Amazon works as a flywheel, getting more and more powerful by offering independents access to its enormous network. An unfortunate outcome of this and other companies like them that enable access to their network of services is that they start tracking these businesses. The implication is that while initially, these services enable small businesses, these companies pay a data tax for being too successful. It’s a data fiefdom of sorts. We applaud the European Union for taking a first step toward breaking the flywheel and freeing small businesses from this damaging long-term outcome.”
This is the latest in a string of antitrust investigations involving Big Tech, with the European Commission launching an investigation into alleged anticompetitive practices involving Apple’s app store.
Google has also received antitrust fines from the European Commission, amounting to $9.3bn.