Amazon Becomes Target of EU Antitrust Probe

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By Published On: September 21, 20180 Comments

European authorities have reportedly launched a preliminary investigation into how Amazon treats third-party sellers on its marketplaces that operate within the EU.

The same woman who has rained down hell on some of the biggest names in Silicon Valley, including Google and Apple Inc. has now set her sights on Amazon’s Chairman and CEO, Jeff Bezos.

On Wednesday in Brussels, European Antitrust Regulator, Margrethe Vestager told the media that investigations into Amazon’s treatment of third-party sellers are underway.

“We are gathering information on the issue and we have sent quite a number of questionnaires to market participants to understand this issue in full,” she told the media.

Margrethe Vestager

Margrethe Vestager, EU Commissioner for Competition launches Amazon investigation.

The inquiry has been launched after regulators began to question how Amazon uses the customer data it gathers from billions of transactions made on its platform, and whether this data is used to boost its own sales, putting its smaller third-party merchants at a disadvantage.

Google recently faced similar threats when European antitrust regulators fined the US tech company a record €4.34 billion for using its Android mobile operating system to block rivals from appearing in its search engine.

This figure is almost double the previous record of €2.4 billion back in 2017 when Google was also penalised for being unfair to competitors in its online shopping search service. While these fines are barely a dent in the company’s $102.9 billion cash reserve, onlookers have said it has increased tensions between Brussels and Washington and set a precedent for the EU to come after prominent US businesses.

Reports from Bloomberg, however, question the likelihood of the EU passing disciplinary action against Amazon, as the EU and US have different antitrust laws that could make it more difficult for Vestager to pass a guilty verdict even if she does find that Amazon abuses its market power.

At this stage, her main smoking gun appears to be alleged discrepancies in Amazon’s business practices considering its dual role as both an online store in its own right, and a marketplace. She believes that third-party sellers who stock the same, or similar items as Amazon itself, are at a competitive disadvantage when trying to sell goods through the company’s global marketplace.

By acting as a conduit for other retailers and as a retailer itself, Amazon’s access to widespread consumer and retail data could be conceived as unfair. For instance, if Amazon and a number of smaller merchants all sell the same product, does Amazon have a competitive advantage? What if sellers are making a reasonable profit selling brand-name dish soap, only for Amazon to launch its own private label dish soap that’s similar in appearance and marketed prominently across the platform?

According to Vestager, this makes the lines between Amazon’s role as both retailer and marketplace blurry.

This is the second time Vestager has come after Amazon, with the European commissioner for competition also ordering the online giant to pay €250 million in back taxes last year, for an illegal tax deal that was made back in 2003.

“Almost three-quarters of Amazon’s profits were not taxed,” she said at the time. “In other words, Amazon was allowed to pay four times less tax than other local companies subject to the same national tax rules.”

Amazon is yet to comment on accusations it’s abusing data to gain a competitive advantage.

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