Amazon Faces E.U. Inquiry Over Data From Independent Sellers


LONDON — Amazon faces a widening inquiry in Europe over whether it unfairly uses data collected from third-party sellers who rely on its platform, the latest move by regulators around the world to curb the growing power of big technology companies.

The European Union’s top antitrust regulator said on Wednesday that it had opened a formal antitrust investigation into whether Amazon was using the third-party data to promote its own products at the expense of other retailers. A day earlier, representatives of Amazon, Apple, Facebook and Google were sharply criticized by lawmakers in Washington over the companies’ market dominance.

The announcement, by the European Commission, the bloc’s executive branch, is an incremental step in an inquiry into Amazon’s business practices that was described as “preliminary” in September. There is no hard deadline for the investigation to be completed, and it could last for years.

Regulators said they were examining whether Amazon was hurting competition by abusing its dual role as a retailer that sells its own goods and a marketplace where other merchants sell products.

“E-commerce has boosted retail competition and brought more choice and better prices,” said Margrethe Vestager, Europe’s competition commissioner. “We need to ensure that large online platforms don’t eliminate these benefits through anticompetitive behavior.”

In a statement, Amazon said, We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”

The investigation highlights the growing importance of data in measuring the power of tech platforms. Regulators in Washington and Europe are looking more closely at whether the methods that companies like Amazon, Facebook and Google use to collect and hoard data give them an unfair advantage over rivals without comparable access to the same kind of data.

Europe has been at the forefront of regulating the tech industry on issues like antitrust, tax evasion, privacy protection, and the spread of hate speech and other harmful content. Google has been fined three times in the past two years for anticompetitive business practices, resulting in penalties totaling more than $9 billion. In 2016, Apple was ordered to repay about $14.6 billion for unfair tax benefits it has received in Ireland.

The investigation announced on Wednesday could lead to fines for Amazon or demands that it change its business practices. A settlement could also be reached, or the case could be dropped.

European investigators are also in the early stages of an antitrust investigation involving Facebook, according to a person familiar with the inquiry.

The inquiry into Amazon’s practices shows how European authorities have sharpened their focus on companies that provide platforms that other businesses depend on to reach customers. Amazon’s website is the main storefront for many third-party merchants, with a substantial number paying a fee to store goods in the company’s warehouses and using its delivery network to ship products.

Yet third-party sellers have long suspected that if Amazon notices that a particular product is selling well, it comes up with its own version — and offers it at a lower price.

“If powerful platforms such as Amazon are found to use data they amass to get an edge over their competitors, both consumers and the market bear the cost,” said Johannes Kleis, a spokesman for the European Consumer Organization, a consumer-rights group in Brussels.

Apple is facing complaints in Europe from Spotify and other companies over the terms that it demands from those that sell through its App Store.

Although Europe has been the world’s most aggressive regulator of the tech industry, critics say its investigations take too long to complete and have not resulted in meaningful changes to the companies’ practices. An antitrust inquiry into complaints that Google was favoring its own services in search engine results took nearly seven years to complete. The company’s market share grew exponentially in that time.

European investigators said on Wednesday that their investigation of Amazon would include examining the company’s agreements with merchants and how it was then able to analyze and use third-party sellers’ data. Another focus of the inquiry will be how Amazon selects the goods placed in its “Buy Box” section, a prized space on the company’s website where customers click to add items to their purchase cart.

Amazon has been the subject of European Union investigations in the past. In 2017, it was ordered to repay 250 million euros over illegal tax advantages it received from Luxembourg, where the company has its European headquarters. The same year, Amazon agreed to change terms of its e-book contracts with publishers to settle another antitrust investigation.

Regulators elsewhere have also been investigating Amazon. On Wednesday, Germany announced a settlement with the company over its treatment of third-party sellers. As a result, Amazon will face new rules over how it terminates or blocks outside sellers from its site, and it will have to cover more of the costs related to returns and reimbursements. The settlement also forces Amazon to accept more legal liability in its contracts with sellers. The changes will apply globally, according to German officials.

At the congressional hearings on Tuesday, Amazon, Apple, Facebook and Google faced sharp criticism that underscored lawmakers’ widening range of concerns with Silicon Valley’s biggest companies. Representatives of the tech giants were repeatedly asked how their companies had altered innovation and entrepreneurial activity.

The Justice Department and the Federal Trade Commission recently decided to divide responsibility for potential antitrust investigations of the tech giants. The Justice Department is scrutinizing Google and Apple, and the trade commission is focused on Facebook and Amazon. Last week, the trade commission voted to fine Facebook about $5 billion for mishandling users’ personal information, by far the agency’s largest fine ever against a tech company.

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