The European Commission launched an antitrust investigation against Amazon last year and today it published the preliminary findings. Amazon has breached EU antitrust rules “by distorting competition in online retail markets”. These findings relate specifically to Amazon’s activities in Germany and France.
The core issue is Amazon’s dual nature – it’s a marketplace where other companies can sell their products, but it’s also a maker itself and has competing products. In its position as a marketplace, Amazon was able to collect statistics on how many items of a certain category were ordered, how much they cost, consumer ratings, the sellers’ past performance and so on.
It kept this data to itself and used it to strengthen its own offerings by focusing on the best-selling products in a category and making strategic decisions without the typical risks of retail. This private data gave Amazon an unfair advantage, says the EC.
Again, these are just the preliminary findings, the investigation may go on for years. If Amazon is found guilty in the end, it faces fines of up to 10% of its annual global revenues – based on current projections for its 2020 revenues, this could mean a fine as large as $37 billion.
The Commission also announced that is has launched another investigation, this one looking at how offers are selected for the highly visible “Buy Box” – are Amazon’s own products as well as those from sellers offering Prime deals and using Amazon logistics getting a preferential treatment? The product featured in the Buy Box gets the “vast majority of sales”, which puts pressure on sellers to use Amazon’s services.