The charges comes as French brick-and-mortar retailers, forced to close after a second lockdown came into effect on Oct. 30, called for the online giant to cancel its Black Friday promotion.
In a preliminary finding, the executive branch of the European Union said it took issue with Amazon for “systematically” using data from independent sellers who trade on its marketplace to unfairly compete with sellers in France and Germany. The commission opened the probe into Amazon’s use of seller data in July 2019.
The commission also launched a second formal antitrust investigation into the possible preferential treatment of Amazon’s own retail offers and those of third-party sellers that use its logistics and delivery services. It will focus on the criteria used to select the winner of Amazon’s “Buy Box” feature and to enable sellers to offer products to users of its Prime loyalty program.
“We must ensure that dual-role platforms with market power, such as Amazon, do not distort competition,” said European commissioner Margrethe Vestager. “With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”
The commission said Amazon had access to extensive nonpublic business data of independent sellers including the number of items ordered and shipped, and how much they make on the platform. Those figures were then used to help Amazon calibrate its offers “to the detriment of the other marketplace sellers,” it alleged.
“The commission’s preliminary view, outlined in its Statement of Objections, is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany — the biggest markets for Amazon in the EU,” it said.
Once the investigation is completed, Amazon potentially faces massive fines. The retailer disputed the commission’s report.
“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. Amazon represents less than 1 percent of the global retail market, and there are larger retailers in every country in which we operate,” Amazon said.
“No company cares more about small businesses or has done more to support them over the past two decades than Amazon. There are more than 150,000 European businesses selling through our stores that generate tens of billions of euros in revenues annually and have created hundreds of thousands of jobs,” it added.
Amazon said it spent more than 2.2 billion euros in Europe last year on logistics, tools, services, programs and people to fuel the success of selling partners, nearly all of whom are small and medium-sized firms.
Four French retail federations published a letter on Sunday saying the government measures to curb the spread of COVID-19 had increased the “pre-existing scandalous inequality of treatment” between physical and online retailers. They called for stores selling nonessential goods to be allowed to reopen on Nov. 12.
French government officials have indicated this is unlikely to happen. Finance Minister Bruno Le Maire, who had sharply criticized Amazon during the first lockdown in spring, stepped in to defend the retailer.
“Making Amazon a scapegoat is not the solution,” he told the weekly Le Journal du Dimanche, adding that the platform accounts for “only” 20 percent of online sales in France.
Large tech companies often put up a fight over alleged infractions, then shrug if things don’t go their way, as their giant coffers can usually absorb the costs rather easily. But that’s not always the case.
Last year alone, Facebook and Google stared down charges worth billions in the EU and the U.S. The social media company, accused of improperly handling user data by the U.S. Federal Trade Commission, incurred a hefty $5 billion fine. And Vestager fined Google for abusing its market position in search to thwart competition for the sake of its Adsense business, bringing its tally of penalties over the $9 billion mark.
Vestager is driving the EU’s latest charges against Amazon, and this time, there’s even more at stake. If the charges stick, the company may face a whopping penalty of more than $28 billion, an amount equal to some 10 percent of Amazon’s annual global revenue. It could also set off similar antitrust charges in more places, including the U.S., where regulators have already been scrutinizing the business.