November 11, 2020
After months of anticipation, the European Union, led by competition chief Margrethe Vestager, is finally filing antitrust charges against Amazon, with the belief it has enough hard evidence to charge the Big Tech company. The EU claims that Amazon used data to build copycat products that undermines independent businesses, especially in France and Germany. EU regulators also have an ongoing investigation into Amazon’s alleged practice of favorable treatment for its “Buy Box” and “Prime Label” features.
Engadget reports that, “officials suspect that independent sellers that use Amazon’s own logistics network are able to use features that those with their own logistics networks do not.” It notes that, although Amazon lets “independent, unaffiliated companies … piggyback on Amazon’s vast logistics and warehousing network … if a small seller makes a surprisingly popular product, Amazon can see that sales data on its own system.”
Former Amazon employees claimed the company does not resist the temptation to make similar products and favor them on the e-commerce site with competitive pricing. Amazon countered that every major retailer offers “private label” goods and that it “isn’t a threat to the independent brands they sell.”
The European Commission press release can be found here.
“The case, which had been expected for months, is the latest front in a trans-Atlantic regulatory push against Amazon, Apple, Facebook and Google as the authorities in the United States and Europe take a more skeptical view of their business practices and dominance of the digital economy,” notes The New York Times.
The EU opened its formal investigation into Amazon in July 2019, but Vestager charged the company three years ago with receiving state aid from Luxembourg, which is against the EU compact to keep the free market free. In fact, “officials found that Luxembourg had handed over around €250 million ($294 million) in illegal state aid,” a finding that Amazon denied.
“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,” said an Amazon spokesperson. “Amazon represents less than 1 percent 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.”
Amazon points out that 150,000+ European businesses sell through its platform, which generates “tens of billions of Euros in revenues annually.”