European regulators have launched a formal investigation under antitrust law into whether use of data belonging to third parties selling through its e-commerce platform was legal.
Commenting in a statement, the responsible Commissioner, Margrethe Vestager, said: “European consumers are increasingly shopping online. E-commerce has strengthened retail competition and brought more choice and better prices. We need to ensure that large online platforms do not eliminate these benefits through unethical behaviour. We have therefore decided to look very closely at Amazon’s business practices and its dual role as a trader and retailer, in order to assess its compliance with EU competition rules.”
The move is not surprising as Amazon has long been in the crosshairs of the law.
Specifically, last fall the Regulatory Authority conducted preliminary investigations into Amazon's use of third-party seller data, in order to determine whether merchants selling on the platform are at a competitive disadvantage compared to products that Amazon sells.
“Dual-role” platforms – which host sellers on platform and sell themselves – raise questions about what happens to third-party data.
Based on the Commission's preliminary investigation, Amazon "appears to be using competitively sensitive information about marketplace sellers, their products and their transactions on the platform." Although it is worth emphasizing that this is a preliminary conclusion and does not prejudge the outcome of the formal investigation.
The Commission said its in-depth investigation into Amazon's practices will focus on:
- On the signed agreements between Amazon and third-party sellers, saying it will focus specifically on the question “whether and how use of third-party seller data as a retailer affects competition.”
- on the role that data plays in selecting the 'Buy Box' winners and the impact of the giant's potential use of third-party sellers' sensitive information for this selection.
The Buy Box refers to a coveted section of website where consumers who see a product can click to add it to their shopping cart.
The seller(s) whose products have the most clicks are likely to gain an advantage over competing sellers of the product.
Responding to the Commission's announcement of the formal investigation, an Amazon spokesperson sent this statement: "We will cooperate fully with the European Commission and continue to work hard to support businesses of all sizes and help them grow."
Yesterday, the giant was among several companies questioned by US over antitrust concerns.
Earlier this year, EU institutions also reached an agreement on new regulations aimed at enhancing transparency regarding online platform businesses and reducing unfair practices to support traders and other businesses that rely on digital intermediaries for sales.
New rules on fairness and transparency for online platforms could come into force in the EU next year.
