Amazon Faces Antitrust Charges From European Regulators

By Alina Selyukh

Published November 10, 2020 at 5:56 AM PST

Amazon has long argued that it does not use seller-specific data to directly compete with its own products and has generally rejected accusations of anti-competitive behavior.

Updated at 3:06 p.m. ET

European Union officials are accusing Amazon of breaking EU competition rules by exploiting the data the company collects from other sellers on its platform for its own benefit. These are the first formal charges against the tech and retail giant in a spate of antitrust investigations around the world.

"The Commission's preliminary view ... is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market," the European Commission, the EU's top antitrust enforcer, said on Tuesday in the so-called statement of objections.

The commission's investigation found Amazon used "very granular, real-time" data about listings and sales by other merchants on its platform to help decide what new products to launch, what prices to set, how many items to stock and which suppliers to use, said EU antitrust chief Margrethe Vestager.

Vestager's team has also opened a second antitrust investigation to focus on how Amazon selects sellers to feature in its "buy box," a prominent display that "generates the vast majority of all sales," the commission said. The EU will investigate whether Amazon "might artificially favour its own retail offers and offers of marketplace sellers that use Amazon's logistics and delivery services."

Tuesday's charges are the first step in what could be a months-long process during which EU officials would finalize their initial findings, review Amazon's response and consider a potential settlement or punishment. Amazon could face a demand to change how it operates or a fine of up to 10% of its global revenue. Measured by 2019 numbers, that top bar would be $28 billion.

Amazon is expected to negotiate and ultimately could also challenge the case in an EU court. The company has long argued that it does not use seller-specific data to directly compete with its own products and has generally rejected accusations of anti-competitive behavior.

"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," the company said in a statement on Tuesday. "No company cares more about small businesses or has done more to support them over the past two decades than Amazon."

In recent years, as Amazon's power has grown, it has attracted a lot of scrutiny. It is a $1.5 trillion company that employs over a million workers. The company's CEO, Jeff Bezos, is the world's wealthiest person. Amazon operates the largest cloud-computing business and has one of the fastest-growing delivery networks in the U.S. and the most prominent online shopping platform.

A growing chorus of critics and concerned politicians and regulators are scrutinizing the work conditions at Amazon's warehouses, its impact on the climate, the use of its facial-recognition technology and doorbell cameras by law enforcement — and the dynamics of its powerful digital marketplace.

Last month, Amazon and other tech giants were called "gatekeepers of commerce and communications" by a sweeping 449-page report by Democrats on the House Judiciary Committee's antitrust panel. The report made a detailed case for stripping Amazon, Apple, Facebook and Google of the power than has made each of them dominant in their fields.

EU regulators had launched their investigation in July 2019, and zoomed in on Amazon's unique dual role as both the rule-setting owner of its marketplace and a retailer who competes against other sellers on this platform.

Since 2015, third-party sellers have accounted for more than half Amazon's global sales, Bezos told shareholders last year. The company often touts this as a success story for many small- and medium-sized businesses.

In the U.S., the Federal Trade Commission and state attorneys general are also investigating Amazon's retail marketplace, warehouse conditions and other parts of its business.

Amazon often points out "intense competition" in every segment of its operations — and that shopping on Amazon still represents a small fraction of overall retail sales, the overwhelming majority of which continue to happen in physical stores.

"We are very fortunate to have ... become a significant and an important company. And with that, of course, it's completely normal we be scrutinized," Bezos told shareholders in May. "We welcome the scrutiny. It's good for us."

Editor's note: Amazon is among NPR's financial supporters.