European Commission Opens Formal Investigation into Amazon

While Amazon is facing scrutiny from Congress and the Federal Trade Commission in the U.S., European regulators have launched an investigation of the online giant.

On Wednesday, July 17, the European Commission (EC) announced that it had opened a formal antitrust investigation to assess whether Amazon’s use of sensitive data from independent retailers that sell on its marketplace is in breach of European Union (EU) competition rules. The EC is the executive arm of the EU.

News of the EC investigation came in the same week that the U.S. House of Representatives Antitrust Subcommittee held a hearing looking into possible antitrust violations by Amazon, Apple, Facebook, and Google, and that the American Booksellers Association wrote the FTC urging it to investigate Amazon for violation Sections I and II of the Sherman Act.

“European consumers are increasingly shopping online,” Commissioner Margrethe Vestager, in charge of competition policy, said in a statement. “E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behavior. I have therefore decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”

The EU noted that Amazon has a “dual role as a platform,” in that it sells products on its website while also providing a marketplace where independent sellers can sell products to consumers.

The Booksellers Association of the U.K. and Ireland (BA) had reached out to the EC in 2015 with concerns over Amazon, and it hailed the EC’s decision to investigate the online giant. “We are delighted with this action and hope the investigation results in much more robust regulation of online platforms,” said Meryl Halls, managing director for BA, “and signals an appetite for a curbing of the relentless power of the online giants.”

Halls said the investigation marks a “significant development” for Amazon Marketplace traders, some of whom are booksellers. “It’s heartening to see the authorities putting Amazon’s business practices under scrutiny once again,” said Halls. “The level playing field has been absent a long time in retail, and one of the ways more traditional high street retailers have responded is to use Amazon Marketplace to reach customers online — only to have the company which is effectively their online landlord also allegedly compromising their proprietary sales data.”

In a statement, Amazon said, “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow,” as reported by the New York Times.

When providing a marketplace for independent sellers, Amazon continuously collects data about the activity on its platform, according to the EC, which noted that “Amazon appears to use competitively sensitive information — about marketplace sellers, their products and transactions on the marketplace.”

The EC investigation will focus in part on the standard agreements between Amazon and marketplace sellers that allow Amazon’s retail business to analyze and use third-party seller data. The investigation will also look at how Amazon’s accumulation of seller data impacts competition.

In related news, Amazon, along with Apple, Facebook, and Google, are under increased scrutiny from U.S. lawmakers and the FTC. On Tuesday, July 16, the U.S. House of Representatives Antitrust Subcommittee held a hearing to examine the impact of market power of online platforms on innovation and entrepreneurship. The subcommittee, led by Chairman David N. Cicilline (RI-01), heard from two panels of witnesses, including Stacy Mitchell, co-director of the Institute for Local Self-Reliance (ILSR), as well as representatives from Google, Amazon, Facebook, and Apple.

The American Booksellers Association is urging the Federal Trade Commission Bureau of Competition Technology Task Force to investigate Amazon’s anticompetitive conduct and rapidly growing dominance in the technology sector. In a comprehensive 21-page letter, ABA CEO Oren Teicher makes the case against Amazon for antitrust violations, providing FTC regulators with a thorough examination as to how “industry trends and data clearly indicate that Amazon is well on its way to becoming a tech industry monopoly, and it is already a monopoly in the book industry.”