Amazon has unlawfully distorted competitors in online retail markets, according to the preliminary conclusions of an EU Commission investigation into the tech giant’s use of delicate information.
The investigation, which started in July 2019, discovered that Amazon “unlawfully abused its dominant position as a market service company in Germany and France.” The Commission also revealed it will start a second investigation into the company’s eCommerce practices.
This conclusion was reached after the discovery that granular, real-time business information associating with 3rd party sellers’ listings and transactions feed into Amazon’s retail business algorithms, upon which it makes decisions on locations such as brand-new item launches, costs, and stock management.
Therefore, Amazon acquires deep insights into over 800,000 active sellers in the EU using its platform. This includes the variety of orders of private products, the sellers’ profits on the marketplace, and the consumer claims of sellers’ items, enabling it to “draw exact, targeted conclusions.”
The Commission expressed issue that through this aggregation of data of third-celebration sellers, Amazon is able to prevent the threats that other sellers have to take when investing in new items or selecting a particular rate level. It noted that in much of the most popular product categories, Amazon makes 50% or more of all the revenues despite noting under 10% of the items available on them.
The Commission included: “This marginalizes 3rd party sellers and caps their ability to grow,” thus breaking EU competition law.
Amazon will have the chance to react to these conclusions in the coming weeks.
A 2nd investigation will look at whether Amazon has set rules on its platform that synthetically favor its own retail deals and those of sellers that utilize its logistics and shipment services.
The Commission commented: “Both investigations into Amazon’ company practices focus on competitors issues that are crucial in today’s platform economy where increasingly more services depend on dominant platforms, and where increasingly more consumers use these platforms’ services. It is the function of competition police to keep these markets open and to ensure undistorted competitors.”
In response, an Amazon spokesperson stated: ” We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has a precise understanding of the realities.
“Amazon represents less than 1% of the worldwide retail market, and there are bigger sellers in every country in which we operate.
“No business cares more about small companies or has done more to support them over the past 20 years than Amazon.”