Amazon is facing a European Commission (EC) anti-trust investigation into how it uses sensitive data from independent retailers who sell on its marketplace, as the Booksellers Association (BA) says the probe "signals an appetite for a curbing of the relentless power of the online giants".
The EC's "in-depth" probe will assess whether Amazon's use of data is in breach of European Union competition rules. Amazon says it will co-operate fully with the EC.
As well as selling products on its website as a retailer, Amazon also provides a marketplace for independent sellers, including booksellers, to sell stock directly to consumers. When providing the marketplace, Amazon "continuously collects data about the activity on its platform," said the EC. Today's announcement comes after the EC undertook preliminary fact-finding in September 2018.
The EC added: "Based on the Commission's preliminary fact-finding, Amazon appears to use competitively sensitive information – about marketplace sellers, their products and transactions on the marketplace."
BA m.d. Meryl Halls welcomed the investigation, saying it is a "significant development" for marketplace traders and expressed hope that the investigation will result in "more robust regulation of online platforms".
Commissioner Margrethe Vestager, in charge of competition policy, said: "European consumers are increasingly shopping online. E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behaviour. I have therefore decided to take a very close look at Amazon's business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”
The investigation will look into the standard agreements between Amazon and marketplace sellers. In particular, the Commission will focus on whether and how the use of accumulated marketplace seller data by Amazon as a retailer affects competition.
The probe will also investigate the role of data in the selection of the winners of the 'Buy Box' and the impact of Amazon's potential use of competitively sensitive marketplace seller information on that selection. The 'Buy Box' refers to the white box on the right-hand side of an Amazon product detail page, where customers can add items to their shopping cart. "Winning the 'Buy Box' seems key for marketplace sellers as a vast majority of transactions are done through it," said the European Commission.
The EC says the investigation is being carried out as a "matter of priority" and added the opening of the formal investigation "does not prejudge its outcome".
An Amazon spokesman said: "We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow."
Halls told The Bookseller: “Since the Commission opened its ‘probe’ last September, we’ve been waiting with interest to see what they would do, and have also been keeping a watching brief on DG Connect (the Commission’s tech directorate) regulations on online platforms, which signalled a growing impatience in Europe with the tech giants’ alleged disregard for traders’ data privacy and potential misuse of commercial information.
"It’s heartening to see the authorities putting Amazon’s business practices under scrutiny once again. The level playing field has been absent a long time in retail, and one of the ways more traditional high street retailers have responded is to use Amazon marketplace to reach customers online - only to have the company which is effectively their online landlord also allegedly compromising their proprietary sales data. We applaud the Commission for taking a stand on this crucial issue. The BA first put forward these concerns to the Commission in 2015, so we are delighted with this action and hope the investigation results in much more robust regulation of online platforms, and signals an appetite for a curbing of the relentless power of the online giants.”
Hours after the EC investigation was announced, the American Booksellers Association published a 21-page letter urging the US Federal Trade Commission Bureau of Competition Technology Task Force to investigate Amazon’s "anticompetitive conduct and rapidly growing dominance in the technology sector."