E-commerce giant Amazon is facing antitrust fines after being accused of misusing customer data to assert dominance, with the European Union leveling charges against Amazon for abusing its power.
The European Union has charged Amazon with breaching antitrust laws and damaging its retail competition by misusing merchant and customer data to gain an advantage that the EU’s lawmakers are saying is illegal.
Margrethe Vestager, the European Union’s Chief of Competition has labelled Amazon’s misuse of merchant and customer data illegal, stating that it hinders a third party competitor’s “ability to grow.”
Vestager’s comments came after a preliminary investigation from the European Union’s Competition agency who analysed agreements between Amazon and its third-party vendors, and determined that the data obtained from its third-party vendors was being used to give Amazon a competitive advantage selling its own products.
“The use of these data allows Amazon to focus on the sale of the best-selling products and it marginalises third-party sellers and caps their ability to grow,” Vestager said. “We must ensure that dual role platforms with market power, such as Amazon, do not distort competition,” she added. “Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” Vestager said.
“Our concern is that Amazon may artificially push retailers to use its own related services, which locks them deeper into Amazon’s ecosystem,” Vestager added.
A breach of the European Union’s antitrust laws, if prosecuted, would result in fines of up to 10% of Amazon’s annual sales revenue, which could amount to $37 billion in fines based on Amazon’s predicted sales for the year.
According to a report from CNET “In Europe, the Commission has been investigating Amazon’s dual role as a platform for merchants and as a rival to those merchants for the past two years. Vestager announced that following the investigation, the Commission had found Amazon guilty of abusing its dominant position as the biggest online marketplace in France and Germany – Europe’s two biggest markets.”
Reports state that 70% of French and 80% of German citizens have made a purchase through Amazon in the past year. Competition Commissioner Vestager has said that “we do not take issue with the success of Amazon or its size, our concern is the very specific business conduct that appears to distort competition.”
Amazon has issued a statement denying that it abused its dominance of the market and leveraged merchant data for its benefit. A spokesperson has said that “we disagree with the preliminary assertions of the European Commission and we continue to make every effort to ensure it has an accurate understanding of the facts.”
“Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate,” the company said.
Amazon is facing similar allegations in its home country of the United States, where a Congressional report commissioned to examine antitrust practices raised similar concerns to the issues raised by the European Union.
U.S. Democratic representative and chief antitrust lawmaker, David Cicilline has praised the moves from the European Union in criticising Amazon’s practices, while suggesting that the U.S. Federal Trade Commission should look at taking similar measures to ensure Amazon does not abuse its market dominance.
“As we found as part of a 16-month bipartisan investigation, Amazon has monopoly power over sellers on its platform,” Mr Cicilline said.