By Sam Schechner
Amazon.com Inc. faces a European Union antitrust investigation
into its treatment of merchants that sell goods on its site, the
latest push by the bloc against a U.S. tech giant and the biggest
regulatory threat thus far to the online retailer's growing market
The European Commission, the EU's top antitrust enforcer, said
Wednesday that its investigation will examine whether Amazon is
abusing its dual role as a seller of its own products and a
By ensnaring Amazon and focusing on how it uses other merchants'
data, the case opens a new -- and potentially more complex --
chapter for competition enforcers.
The EU has led the antitrust charge for years, most notably
against Alphabet Inc.'s Google, issuing $9.25 billion in fines
against the search giant. Now antitrust scrutiny of technology
titans is ratcheting up in the U.S., as well, with the Federal
Trade Commission and Justice Department dividing up oversight of
Amazon, Google, Facebook Inc. and Apple Inc.
U.S. politicians also have gotten more vocal. Sen. Elizabeth
Warren (D., Mass.), a presidential candidate, has proposed breaking
up Amazon and unwinding its acquisition of grocer Whole Foods.
President Trump, a Republican, has said Amazon should pay more in
taxes and has criticized the company's effect on competitors.
In particular, the EU probe will study whether Amazon is using
nonpublic data from independent merchants to compete unfairly
against them. Investigators will also examine what data Amazon uses
to pick a seller as the default option for a given product when a
user clicks the "buy" button -- and whether Amazon has an unfair
advantage to be designated the default for products it sells.
The investigation could eventually lead to formal charges, fines
and orders for the company to change business practices, but it
could also be dropped.
"We will cooperate fully with the European Commission and
continue working hard to support businesses of all sizes and help
them grow," an Amazon spokesman said.
Margrethe Vestager, the EU's antitrust chief, has emerged as a
major technology regulator. She guided the cases against Google,
which found it abused the dominance of its search engine and
Android operating system for mobile phones to favor its own
businesses. She also issued a fine to Facebook for misleading
regulators during a review of its acquisition of the WhatsApp chat
service and ordered Amazon, Apple and other global tech players to
pay back taxes under what she alleged to be sweetheart deals with
tax authorities. Google is appealing the decisions against it, and
Amazon and Apple are appealing the tax cases.
The EU has also taken a lead in reining in the alleged excesses
of technology giants in other domains, with a sweeping privacy law
that went into effect last year, and new copyright legislation
aimed at making tech giants pay more to news media and music
The Amazon case could lay the groundwork for other competition
regulators increasingly taking a hard look at a company that has a
presence in many sectors, from logistics and e-commerce to cloud
computing and more recently advertising.
Authorities in Italy and other countries are investigating
Amazon on various topics including its treatment of merchants on
its site, so-called third-party sellers. Germany's antitrust
regulator, which has been looking into the e-commerce giant's sales
practices, said Wednesday that Amazon agreed to change its terms of
service on its platform for third-party sellers. The changes
include requiring Amazon to give those sellers 30-day notice before
suspending accounts and reducing confidentiality stipulations for
sellers, the German authority said.
The agreement marks the conclusion of an eight-month probe by
the German Federal Cartel Office. A spokeswoman for the European
Commission described the German case, and the others in Europe, as
not conflicting with the EU's case, which focuses on data. "These
investigations are complementary but not overlapping," she
The EU investigation, which opened informally in September, will
zero in on Amazon's contracts with independent merchants. In
addition, investigators will look at whether Amazon has such a
large market share that it qualifies as holding a dominant position
in any EU markets. That would subject it to special obligations
under EU law; for instance, it wouldn't be permitted to impose
onerous terms on smaller companies that use its services.
On Tuesday, at a hearing before the U.S. House of
Representatives about digital platforms' market power, Amazon tried
to play down its dominance in the retail sector. An Amazon
representative said the company doesn't use any single seller's
data to compete with its own products. An Amazon spokesman declined
on Wednesday to comment, however, when asked whether the company
uses aggregated data from multiple sellers.
Amazon collects about 38% of all U.S. retail dollars spent
online, according to research firm eMarketer.
The EU's case against Amazon could prove to be complicated, some
antitrust experts said, because of its focus on the contractual use
of a business customer's data. "It's an innovative case," said
Nicholas Economides, an economics professor who looks at
competition issues at New York University Stern School of Business.
He thinks the EU has a real challenge if it attempts to show that
Amazon's use of the data is anticompetitive. "Information alone is
not going to make the case," Mr. Economides said.
Recent court decisions in the EU suggest that the commission
would have to come up with strong evidence that Amazon's use of the
data has had anticompetitive effects on merchants, said Nicolas
Petit, a competition-law professor at the University of Liege.
Amazon's marketplace for third-party sellers has grown in
importance for the company, accounting for more than half of its
global sales, Chief Executive Jeff Bezos wrote in a letter to
shareholders in April. According to Mr. Bezos, the company's
traditional retail business tallied $117 billion in sales last
year, compared with $160 billion for its marketplace.
"Third-party sellers are kicking our first party butt," he
Sara Germano, Laurence Norman and Dana Mattioli contributed to
Write to Sam Schechner at email@example.com
(END) Dow Jones Newswires
July 17, 2019 19:28 ET (23:28 GMT)
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