A two year investigation has found that Amazon used data to gain an edge over merchants using its platform, just weeks before the retailer’s Black Friday event.
The online retail giant Amazon has been hit with anti-trust charges by the European Union’s competition commissioner Margrethe Vestager, following a two year investigation into its position as both a vendor and marketplace.
On Tuesday (10th November), Margrethe announced that charges had been sent to Amazon, with the EU believing that the retailer had broken anti-trust rules by distorting competition in online retail markets.
The allegations against Amazon include that it ‘systematically’ collects data from independent companies and vendors, and uses the data to gain an edge over them. Reports indicate this data includes “the number of ordered and shipped units of products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, data relating to shipping, to sellers’ past performance, and other consumer claims on products, including the activated guarantees”.
The EU’s preliminary findings suggest that “very large quantities of non-public seller data are available to employees of Amazon’s retail business”, which goes “directly into the automated systems of that [retail] business, which aggregate these data and use them to calibrate Amazon’s retail offers and strategic business decisions to the detriment of the other marketplace sellers”. An official statement adds: “For example, it allows Amazon to focus its offers in the best-selling products across product categories and to adjust its offers in view of non-public data of competing sellers”.
In a statement, Margrethe said: “Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers. With eCommerce booming, and Amazon being the leading eCommerce platform, a fair and undistorted access to consumers online is important for all sellers.”
A second anti-trust investigation will now be opened, which will look into concerns surrounding the ‘preferential treatment’ of Amazon’s own retail offering, as well as those of vendors that make use of the platform’s logistics and delivery services.
The company now faces a potential fine as high as 10% of its global turnover if it is found guilty of breaching competition law – about £15b ($19b).
Amazon has denied any wrongdoing, saying no firm “cared more” for small businesses. In a statement it said: “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.”
Amazon isn’t the first company to full under the gaze of Margrethe Vestager; her office has previously ordered £11.5b in taxes be repaid to the Irish government, while Google was fined £7.1b over competition issues.