European Commissioner Margrethe Vestager yesterday sent an official Statement of Objections to e-commerce giant Amazon, accusing the company of breach of the EU’s laws on fair competition.
The complaint is based on Amazon’s dual role as a provider of e-commerce facilities for independent sellers. The company has massive technical infrastructure which allows it to provide web space to anyone.
At the same time, the main Amazon site also displays produces being sold by independent retailers. Many of the products you think you are buying from Amazon are coming from a third party, which uses Amazon only as a shop window.
However Amazon also plays a role as a retailer in its own right, and that is where the problem arises.
“So, Amazon directly competes with the third party sellers that rely on its platform to offer their products,” Vestager said in a statement. “Third party sellers are often SMEs selling their own products through the Amazon platform.”
The Commission looked at data on 80 million transactions and 100 million product listings on Amazon’s subsidiaries in Europe, and discovered the company was using very detailed business data on third parties’ listings to feed its own algorithms.
“It is based on these algorithms that Amazon decides which new products to launch, the price of each individual offer, the management of inventories, and the choice of the best supplier for a product,” Vestager explained.
The practice is extremely broad, covering all of Amazon’s websites, and very deep, drilling down into sensitive business data of every seller using the platform – an estimated 800,000 sellers dealing in one billion products.
“Amazon has for example access to data on the number of ordered and shipped units of sellers’ products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, information relating to shipping, the sellers’ past performance, the consumer claims on sellers’ products, including the activated guarantees,” Vestager said.
“And Amazon gets these data for every seller, every listed product and every purchase on its platform.”
As well as the Statement of Objections, which Amazon now has the opportunity to respond to, the Commission also started an investigation into the company’s use of Buy Box and Prime applications.
Buy Box is a feature of product pages, and allows the customer the chance to buy directly from one retailer. Any seller that gets the chance to occupy the Buy Box wins a crucial advantage.
Prime is Amazon’s loyalty programme.
“Amazon’s Prime consumers are very important to sellers, not only because of their constantly increasing number, but also because Prime consumers spend significantly more on Amazon than others would do,” Vestager said.
“Our concern is that Amazon may artificially ‘push’ retailers to use its own related services. This may potentially lock an increasing number of sellers deeper into Amazon’s own ecosystem.”