As Amazon Faces Grilling in Congress, EU Launches Antitrust Probe of Online Behemoth

A day after Amazon faced grilling at a U.S. House hearing, the European Commission announced Wednesday it’s launching an antitrust probe into the online behemoth.

Commissioner Margrethe Vestager said in a statement that she will “take a very close look at Amazon’s business practices and its dual role as marketplace and retailer, to assess its compliance with E.U. competition rules.”

“Based on the Commission’s preliminary fact-finding,” the body said in its statement announcing the formal investigation, “Amazon appears to use competitively sensitive information—about marketplace sellers, their products, and transactions on the marketplace.”

The probe’s two focal points, per the statement, are:

• the standard agreements between Amazon and marketplace sellers, which allow Amazon’s retail business to analyze and use third party seller data. In particular, the Commission will focus on whether and how the use of accumulated marketplace seller data by Amazon as a retailer affects competition.
• the role of data in the selection of the winners of the “Buy Box” and the impact of Amazon’s potential use of competitively sensitive marketplace seller information on that selection. The “Buy Box” is displayed prominently on Amazon and allows customers to add items from a specific retailer directly into their shopping carts. Winning the “Buy Box” seems key for marketplace sellers as a vast majority of transactions are done through it.

Sen. Elizabeth Warren (D-Mass.), who released a plan for breaking up big tech as part of her presidential campaign, outlined similar problems with Amazon earlier this year, a point noted Wednesday by Tommaso Valletti, the European Commission’s chief competition economist, when he shared news of the probe on social media.

Minnesota Attorney General Keith Ellison, a Democrat, has also suggested there’s good reason for the EU to take on the investigation. “If you believe in competitive markets,” told the BBC recently, “you cannot ignore the problem Amazon presents.”

Laying out the problem in detail, Stacy Mitchell, co-director of the U.S.-based Institute for Local Self-Reliance (ILSR)—which has authored a report on the company’s “stranglehold”—explained how Amazon is picking “winners and losers.”

Speaking to the BBC‘s “World Business Report,” Mitchell said: “Most shoppers in the U.S. and increasingly around the world when they want to buy something online, they are starting right at Amazon.” 

That means that “any other company out there that produces anything or retails any product, if they want to reach the market, increasingly [has] to be on Amazon’s platform,” she said. “And that means that Amazon essentially control[s] the underlying infrastructure.”

Amazon, she continued, is able to “decide who can be there, which companies show up well in the search results, and they can use the information that they glean from the companies that are riding on their platform in order to undermine them as competitors.”