EU Investigates If Amazon Hurts Competition By Using Sellers' Data

Jul 17, 2019
Originally published on July 19, 2019 4:27 pm

Updated at 3:07 p.m. ET

Does Amazon hurt competition by exploiting data from other sellers in its marketplace? The European Union has opened a formal antitrust investigation into the giant online retailer to answer that question.

This is the latest push in the expanded focus by European and U.S. authorities on how tech giants — Google, Facebook, Apple and Amazon — use the data of people and businesses that rely on their platforms. The EU last year led the charge with a new sweeping privacy law.

The European Commission, the EU's executive arm, said it will specifically focus on how Amazon uses data collected from third-party sellers that use its marketplace. The commission will look at how that data might be used to Amazon's own advantage or in other anti-competitive ways.

"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," Commissioner Margrethe Vestager, the EU's antitrust chief, said in a statement.

Amazon, in its own statement, said: "We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow."

The commission has been collecting information from sellers and manufacturers in recent months. Based on those preliminary facts, it said, "Amazon appears to use competitively sensitive information — about marketplace sellers, their products and transactions on the marketplace."

(Amazon is one of NPR's financial supporters.)

If the EU finds that Amazon violated competition rules, the company could face tens of billions in fines and requirements to change how it operates. The probe could also be dropped.

On Wednesday, German antitrust regulators announced an agreement with Amazon to settle their own investigation into the company's marketplace. Amazon will make changes to the business terms it offers sellers, not just in Germany but worldwide.

In March, the European Commission hit Google with a $1.7 billion fine for "abusive practices" in online advertising. The commission said Google abused its market dominance by keeping its rivals from working with firms that had deals with Google.

In 2016, European Union regulators ordered Apple to pay a tax bill of $14.5 billion on its European profits earned in Ireland. EU regulators said the tax arrangement between Apple and the Irish government was illegal and gave the company an unfair advantage. And in 2017, the EU ordered Amazon to pay $295 million in back taxes to Luxembourg.

In the U.S., the Federal Trade Commission has reportedly approved a $5 billion settlement with Facebook to end an investigation into the tech giant's privacy missteps.

Big Tech and other large corporations also have been criticized by Democratic presidential candidates.

Copyright 2019 NPR. To see more, visit https://www.npr.org.

MARY LOUISE KELLY, HOST:

The European Union opened an antitrust investigation today into Amazon. The EU regulators' central question is this. Does the Internet giant stifle competition by exploiting data it collects from other companies for its own benefit? NPR's Alina Selyukh reports the EU is focusing on Amazon's dual role as a seller and a platform for other sellers.

ALINA SELYUKH, BYLINE: Amazon likes to present itself as a cultivator and supporter of small- and medium-sized businesses. It likes to highlight that most of its sales are products from other companies. These other merchants pay Amazon fees to sell on its platform. They also share a lot of their data with Amazon.

(SOUNDBITE OF PRESS CONFERENCE)

MARGRETHE VESTAGER: And the question here is about the data.

SELYUKH: That's EU Competition Commissioner Margrethe Vestager speaking about Amazon at a press conference in September. That's when her team at the European Commission started surveying the merchants who contract with Amazon. This research would later show that Amazon appears to use, quote, "competitively sensitive information" about the sellers, their products and transactions.

(SOUNDBITE OF PRESS CONFERENCE)

VESTAGER: Do you then also use these data to do your own calculations, as, what is the new big thing? What is it that people want? What makes them buy things?

SELYUKH: As in, does Amazon use the data it collects to its own advantage or in other anti-competitive ways? Now the European Commission is officially investigating that. This adds to a push by authorities on both sides of the Atlantic to regulate how tech giants use the data of people and organizations on their platforms. The EU has led the charge with a sweeping privacy law and several fines against Google. And just today, German antitrust regulators announced a deal with Amazon to settle their own investigation into the marketplace. As a result, Amazon will make changes to the business terms it offers sellers and not just in Germany but worldwide. Amazon's use of data from sellers also came up this week at an antitrust hearing in Congress.

(SOUNDBITE OF ARCHIVED RECORDING)

NATE SUTTON: And we don't use individual seller data to directly compete with them.

SELYUKH: That's Amazon lawyer Nate Sutton carefully wording his answer.

(SOUNDBITE OF ARCHIVED RECORDING)

SUTTON: The algorithms are optimized to predict what customers want to buy, regardless of the seller.

SELYUKH: A note - Amazon is one of NPR's financial supporters.

In a statement, the company says it will cooperate fully with the EU regulators. If the EU finds Amazon in violation of Europe's competition rules, the retailer could face fines of up to 10% of a year's worth of global revenue. For Amazon, that could be tens of billions of dollars.

Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.