Amazon’s antitrust problems just hopped the pond.
European competition authorities, in preliminary findings issued Tuesday morning, accused the Seattle-based tech giant of “systematically relying on non-public business data of independent sellers” to its own benefit, leveraging its position as an online marketplace operator to compete unfairly with other retailers on its platform.
In a new twist, the European Commission opened a separate investigation into Amazon’s process of choosing which retailer gets top billing in the all-important “Buy Box” on product pages. The commission says it is seeking to determine whether Amazon abuses the Buy Box and access to its Prime subscribers to favor its own products, as well as retailers that use its logistics and delivery services.
“We do not take issue with the success of Amazon or its size,” said Margrethe Vestager, the top European antitrust official, at a news conference detailing the findings Tuesday morning in Brussels. “Our concern is very specific business conduct which appears to distort genuine competition.”
Amazon's reply: "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. … " https://t.co/P06BhmkqV7
— toddbishop (@toddbishop) November 10, 2020
The process is still playing out, but the potential implications for Amazon are big.
Under European law, regulators can order major changes in business practices in addition to fining a company up to 10% of its global annual revenue. Depending on the timing, that could amount to more than $37 billion in Amazon’s case. The company is on track for more than $370 billion in revenue this year, up from $280 billion last year, based on its results so far and the low end of its financial guidance.
In a statement Tuesday morning, Amazon disagreed with the European Commission’s preliminary findings, and said it “will continue to make every effort to ensure it has an accurate understanding of the facts.”
Amazon started by implicitly disputing the underlying premise that it holds a dominant position — seeking to define the relevant market as retail broadly, rather than online retail specifically, where it holds a larger share.
“Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate. No company cares more about small businesses or has done more to support them over the past two decades than Amazon,” a company spokesperson said. “There are more than 150,000 European businesses selling through our stores that generate tens of billions of Euros in revenues annually and have created hundreds of thousands of jobs.”
The company has also fought this battle over market definition with U.S. legislators and regulators, who have sought to define retail more narrowly, allowing them to treat the company as a dominant player for purposes of antitrust oversight.
Under its newly launched “Buy Box” investigation, the European Commission says it will seek to determine whether the criteria Amazon uses “lead to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.”
In a Sept. 25 blog post, Amazon outlined the process that it uses to determine the offer that makes it into the “Buy Box” on product pages, saying it uses objective criteria such as price, delivery speed and reliability, and the third-party retailer’s track record for customer service.
The EU’s preliminary findings related to third-party retail data were issued in what’s known as a statement of objections, stemming from an investigation announced last year. This is a formal step that gives the company a chance to respond and request a hearing before a final determination is issued.
The findings echo similar allegations against the company in a report last month from the U.S. House Judiciary antitrust subcommittee, part of a broader inquiry that also included Facebook, Google and Apple. The U.S. Justice Department filed an antitrust case against Google last month.
Amazon, which has yet to face formal U.S. antitrust charges, slammed the House report as fundamentally flawed, saying it was based upon “fringe notions” about antitrust law and policy.
