EU Opens Antitrust Probe Into Amazon's Marketplace Tactics (Updated)

Updated, 7/17/19, 6:35am PT: The European Union officially announced today that it's opening "a formal antitrust investigation to assess whether Amazon's use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules." It also said the Commission will "now carry out its in-depth investigation as a matter of priority."

Investigators will specifically focus on "the standard agreements between Amazon and marketplace sellers" as well as "the selection of the winners of the 'Buy Box' and the impact of Amazon's potential use of competitively sensitive marketplace seller information on that selection." From there it will determine whether or not Amazon's practices violate EU competition regulations.

"European consumers are increasingly shopping online," EU Commissioner Margrethe Vestager said in the announcement. "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 behaviour. 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."

Original article, 7/16/19, 1:52pm PT:

It's a good thing Amazon got its Prime Day celebration out of the way on Monday. Bloomberg today reported that the European Union is planning to open a formal investigation into the retailer "within days" as part of its continued efforts to better regulate US tech companies.

The report claimed that EU competition division leader Margrethe Vestager has wanted to "escalate a preliminary inquiry into how Amazon may be unfairly using sales data to undercut smaller shops on its Marketplace platform" for months. If the anonymous sources are correct, Vestager will have finally gotten her way, allowing her to open a full antitrust probe into how Amazon manages its online marketplace.

It's easy to forget that Amazon lets other companies sell products on its website. Many products are sold by the company itself, and many of the ones sold by third-party merchants are fulfilled by Amazon regardless. The company benefits either way, but it gets a greater cut of the profit for its own sales, which means it has a clear incentive to convince shoppers not to buy products from outside companies.

This wouldn't be the first time Amazon's been accused of anti-competitive practices. It's also faced EU investigations over tax practices and e-book sales. The difference now is that Vestager is said to be targeting the core of Amazon's business--its marketplace--rather than a secondary aspect of it. (Although much of the company's profit is actually derived from Amazon Web Services rather than its storefront.)

EU regulators have also been harder on US tech companies than in the past. The introduction of GDPR in 2018 also introduced stricter rules to protect the privacy of European citizens alongside higher maximum fines to encourage companies to abide by those rules. Amazon would merely join Google, Facebook, and Apple on the list of companies that are currently facing antitrust probes in the EU for their practices.