Amazon has violated EU antitrust rules in its use of non-public merchant data, cementing the platform’s dominance in the eCommerce market and marginalizing third-party sellers, the European Commission’s Vice President for Digital, Margrethe Vestager, has said.
Her comments came as the EU executive arrived at a preliminary decision on an investigation that was opened last year, probing Amazon’s use of sensitive data from independent retailers.
The early conclusions of the investigation, Vestager said on Tuesday (10 November), was that “Amazon illegally abused its dominant position as a marketplace service provider in Germany and France,” through its use of third-party merchant data.
“Our investigation shows that very granular, real-time business data relating to third-party sellers’ listings and transactions on the Amazon platform, systematically feed into the algorithm of Amazon’s retail business,” Vestager told reporters.
“It is based on these algorithms that Amazon decides what new products to launch, the price of each individual offer, the management of inventories, and the choice of the best supplier for a product.”
Vestager added that the Commission is concerned about the scale of Amazon’s practices in this context.
“Our concern is not about the insights that Amazon retail has into the sensitive business data of one particular sale. Rather, they are about the insights that Amazon retail has about the accumulated business data of more than 800,000 active sellers in the European Union, covering more than a billion products,” she said.
“In other words, this is a case about Big Data.”
Buy Box Investigation
Meanwhile, the EU’s Digital Chief also announced the opening of a separate case against Amazon into whether anticompetitive practices are at play in the criteria that Amazon sets for displaying sellers in its ‘Buy Box’ feature.
The Commission is concerned that the feature may prioritize sellers that use Amazon’s logistics and delivery services, thereby putting other sellers not part of the company’s network of third-party vendors at a competitive disadvantage. The EU executive will now embark on an investigation “as a matter of priority.”
For their part, Amazon came out on the defensive following the two announcements on Tuesday, denying that any malpractice had taken place.
“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,” a statement from the company in response to the Commission’s concerns on Tuesday.
“Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate.”
The company’s alleged misuse of merchant data would be a practice that may be outlawed under the scope of the Commission’s forthcoming Digital Services Act, set to be presented on 2 December. The framework aims to lay out a new regulatory environment for online services.
In leaked documents obtained recently by EURACTIV, the Commission outlined a list of potentially ‘unfair’ activities that the Commission is considering for ex-ante regulation, including tougher rules on data-gathering activities by so-called ‘gatekeeper’ platforms, which include Google, Amazon, and Facebook.
“Gatekeepers shall not use data generated and collected on the platform or on any of the gatekeepers’ other services for the purpose of its own commercial activities directed at consumers of the relevant platform unless they are making this data accessible to business users (seeking to become) active in the same commercial activities,” the document states, referring to this specific policy as a ‘prohibition of exclusive use of data.’
However, pressed by EURACTIV on Tuesday as to whether the specific case of Amazon’s data acquisition activities could be covered, Vestager refused to give more details, saying that certain practices outlined in the leaked blacklist may not be part of the final proposal.
Amazon now has the possibility to examine the documents in the Commission’s investigation file, to reply in writing and, if necessary, request an oral hearing to present their arguments.
Should the company be found to have breached Article 102 of the EU Treaty, which prohibits the abuse of a dominant market position, it could face fines or be ordered to revise the practice itself.
[Edited by Benjamin Fox]