Scott Services: The EU’s Competition Commissioner is investigating Amazon

Wednesday, 19 September 2018

The EU’s Competition Commissioner is investigating Amazon

Margrethe Vestager, the European Union’s competition commissioner, said on Wednesday that the oversight agency is looking into Amazon’s business practices.

Why? While acknowledging that hosting third-party merchants provided a benefit for smaller businesses and collecting data had legitimate uses such as improving customer service, she also noted that access to third-party data may give Amazon an unwarranted competitive edge. The effort is a preliminary investigation, not yet having reached the stage of a formal inquiry.

It’s about data. Speaking during a press conference regarding the Luxembourg McDonald’s State Aid case, Vestager responded to a reporter’s question about whether the commission was looking into antitrust concerns raised about Amazon’s use of data collected from merchants hosted on Amazon’s merchant platform.

“The question here is about the data, because if you as Amazon get the data from the smaller merchants that you host — which can be of course completely legitimate because you can improve your service to these smaller merchants — well, do you then also use this data to do your own calculations? What is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things.”

She said the oversight agency has sent a number of questionnaires to third-party merchants that sell through Amazon to gather more information about the company’s practices.

What it means for Amazon. The inquiry comes at a crucial time as revenue from third-party selling services comprised nearly 20 percent of Amazon’s revenue in the second quarter of 2018. The company this week also launched a new “Storefronts” initiative dedicated exclusively to servicing 20,000 US small and medium-sized businesses featuring more than 1 million products.

While the EU inquiry is limited to the European Union at this point, the company has come under increasing criticism recently, having recently been called out by president Trump as being in a “very antitrust situation.”

The EU also has a history of levying huge fines against US tech giants. The most recent, in July of this year, was a $5 billion antitrust penalty against Google over Google Play and its role in the Android ecosystem.

The EU previously slapped Google with $2.7B antitrust fine for favoring its own content in search results.