The European Union has filed for formal antitrust charges against US online retailer Amazon for abusing its position to distort online retail markets and opened a second investigation into its business practices.
Photo: Xabier Cid
Concerns have been raised for years over Amazon potentially monopolising the online retailer sphere, and antitrust measures are in place to prevent this happening.
Accusations have also been railed against them for ignoring a new range of digital taxes in favour of having other online retailers, who may rely on their platform, having to pay dividends to make up for it.
This comes as part of a greater move by the EU to target US-based Big Tech companies, supposedly to allow for greater competition within markets and encourage European rivals to these tech giants.
Under the new proposed EU laws, companies such as Google or Facebook will have to adhere to laws that smaller companies will not be privy to, including having to share data with partners and being more transparent in how they collect information.
The European Commission said in a statement: “The Commission takes issue with Amazon systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third-party sellers."
Margrethe Vestager, the EU's top antitrust official, accused Amazon of illegally abusing its dominant position within the market's of France and Germany, two of its largest European platforms.
In July of last year, the EU opened a formal investigation into the business practices of Amazon, looking into agreements between independent retailers and the tech giant and whether data from sellers is being unfairly used by the company to leverage a market advantage.
Vestager said: "The investigation found that Amazon feeds on non-public sellers data, such as the number of products ordered and the sellers' revenues, into its own retail algorithms to help it decide which new products to launch and the price of each new offer.
"This allows Amazon to marginalise third-party sellers and cap their ability to grow."
The accusations from the EU extend to accusing Amazon of using information they should not have access to undercut competition.
Many retailers have to default to Amazon as an online retailer to sell a stock, which gives the company access to information they could and reportedly have, used to stifle company growth by offering the potential for them to stock the same products at a lower value.
Amazon has denied these allegations.
In a statement, the retailer said: "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 EU report revealed that at least 70% of online shoppers in France and 80% in Germany bought something on Amazon over the last 12 months.
This situation has only been exacerbated by the ongoing coronavirus pandemic, with many brick-and-mortar retailers being forced to close owing to lockdowns and reducing the spread of the virus.
This has given e-commerce platforms such as Amazon free reign over the online sales market and increased demand owing to large swathes of the population being stuck at home.
A report back in August as lockdown restrictions were being lifted in many countries found that Amazon stock had risen by 86% through the pandemic, and founder Jeff Bezos' net worth had soared above $202 billion.
The Commission has come to the assertion that Amazon has violated antitrust laws. The investigation could last years but will seek to impose fines worth 10% of their annual sales, totalling roughly £37 billion (€31.3 billion).
A further investigation into whether or not Amazon's online platform favours its own retail offers or those of marketplace sellers.
Vestager said this is to probe whether Amazon is pushing online retailers to use their systems, cementing themselves as a dominant force in online markets.
China has similarly gone after big tech companies by drafting a set of rules to stop monopolies forming within its markets.
The rules will speculate as to whether or not a transaction made on an online platform favours customers in different ways based on big data, payment ability, consumption preferences and habits.
This comes after China's Financial Sustainability and Development Committee last month which flagged the importance of fair competition and calling for the strengthening of anti-monopoly enforcement.
The draft is awaiting public feedback until November 30.
Back to Homepage
Back to Politics & Economics