Dive Brief:
- Amazon is the subject of a preliminary investigation in Europe into the e-commerce giant's treatment of third-party sellers on its platform, officials with the European Commission's competition agency told media this week. Amazon did not immediately respond to a request for comment.
- Specifically, the probe is looking at whether Amazon uses transaction data from its Marketplace — which represents as much as 68% of the company's sales by some estimates — to give itself a competitive advantage over those smaller merchants, according to reports in the Associated Press, The Wall Street Journal and others.
- European Commissioner for Competition Margrethe Vestager said at a press conference that the probe was in its early stages. She added that her office has sent questionnaires to Amazon's third-party merchants.
Dive Insight:
Worries over Amazon's vast trove of data and potential power over smaller sellers on its e-commerce platform are by no means limited to Europe, making Vestager's probe potentially relevant to much of Amazon's business.
Another U.S. tech giant, Google, recently found out how serious the EU is about cracking down on platform companies that wield enormous leverage in the digital space. This summer the European Commission fined Google $5.1 billion over its practices regarding its Android smart phone software. That was on top of a $2.7 billion fine the year before over competition issues.
The continent has proven itself a more aggressive enforcer on market competition matters than the U.S., which doesn't mean the probe doesn't have implications for Amazon's business on its home turf. Sellers in the U.S. are jittery about the company's use of sales data, especially as Amazon expands its private labels at an explosive rate. Sellers have also in the past complained about the company's fees, the proliferation of counterfeits and other issues.
At the heart of the matter is Amazon's position as the dominant marketplace and its market share over e-commerce, which could soon reach half the market, with no other competitor even close. A detailed study in 2016 from the Institute for Local Self-Reliance, looked at how Amazon uses "its vast financial resources" to hold prices down, hoard data and supplant "an open market with a privately controlled one, giving it the power to dictate the terms by which its competitors can operate, and to levy a kind of tax on their revenue."
The company's e-commerce dominance and rapid entrance into brick-and-mortar retail has in recent years drawn scrutiny from policymakers in both major political parties. President Donald Trump has called the company a "monopoly." On the other side of the aisle, Democratic Sen. Elizabeth Warren, naming the same Marketplace data concerns that the EU is looking at, told the New York Times earlier this month that Amazon needed to "choose" between its retail arm and third-party platform.
Amazon has plenty of defenders within the industry and the legal world as well. David Kully, a partner with Holland & Knight's antitrust practice, previously served as chief of a unit in the Department of Justice's Antitrust Division, which had successfully sued Apple on what it described as an e-book price-fixing scheme. The suit contemplated Amazon's power and conduct in the e-book market, but found the prices competitive.
"Usually what we do is applaud when companies are aggressively out there every day trying to innovate to offer consumers better products at lower prices, which is what Amazon seems to do," Kully said in a 2017 interview with Retail Dive.
