The European Union is investigating Amazon for anti-trust violations. If found guilty, the company could face hefty fines.
The governing body announced the launch of a formal investigation into the Seattle-based company today. The EU will make a determination on whether Amazon disadvantages independent retailers who sell on its marketplace by collecting their data to support its own sales. If found in violation, Amazon could face up to $23 billion in fines
In a statement today, the EU’s competition commissioner, Margrethe Vestager, who will lead the formal investigation, said the commission needs to ensure that large online platforms like Amazon don’t eliminate the benefits they offer to third-party sellers through “anticompetitive behavior.”
“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,” she noted.
Through its investigation, the commission will specifically examine whether Amazon’s analysis and use of third-party seller data negatively impacts competition, as well as how the e-tail giant chooses products for its “Buy Box” feature, a button allowing consumers to add items to cart.
If found in violation, the maximum fine Amazon could face is 10% of its annual revenue, which last year equaled $233 billion.
Stateside, the e-tailer faces similar inquiries into its practices.
In early June, the Federal Trade Commission (FTC) took on oversight of Amazon and Facebook in a probe of potential antitrust issues, dividing the task with the Department of Justice, which is examining similar issues at Apple and Google.
The Retail Industry Leaders Association, which represents big-box retailers like Target and Walmart, called out the way Amazon and other tech giants purportedly control search in a June 30 letter sent to the FTC. Retailers’ complaints mirrored those of the EU’s commission, with the primary concern being Amazon’s alleged practice of competing with its own third-party sellers by using the data it collects to support its own marketplace.
Yesterday, the House Judiciary Committee’s anti-trust subcommittee quizzed executives from Amazon, Google and Facebook about the size and scope of their dealings. Subcommittee chairman Rep. David Cicilline said that the internet has become “increasingly concentrated, less open, and growingly hostile to innovation and entrepreneurship.”
In response to the subcommittee’s inquiries, Amazon’s associate general counsel of competition Nate Sutton said that the company could not be considered a monopoly. He argued that Amazon’s marketplace benefits third-party merchants (whose sales totaled $160 billion on the site last year), and noted that the company’s relative market share is small — just 4% in the U.S. and less internationally.
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