Europe is now formally investigating Amazon’s use of merchant data

European regulators have announced a formal antitrust investigation of Amazon’s use of data from third parties selling on its ecommerce platform.

Commenting in a statement, competition commissioner, Margrethe Vestager said: “European consumers are increasingly shopping online. Ecommerce 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. 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.”

The move is not a surprise as Amazon was already on the radar of Vestager’s department.

Last fall it emerged the regulator was making preliminary enquiries about Amazon’s use of third party sellers’ data — to try to determine whether or not merchants selling on its platform are being placed at a competitive disadvantage vs the products Amazon also sells as a consequence of its access to their data.

Dual sided platforms — that both host sellers on a marketplace and sell stuff themselves — raise competition-related questions about what is done with third parties’ data, she said then.

Based on its preliminary fact-finding the Commission said today that Amazon “appears to use competitively sensitive information — about marketplace sellers, their products and transactions on the marketplace”. Although it’s worth emphasizing that this is a preliminary finding and does not prejudice the outcome of the formal probe.

The Commission said its in-depth investigation of Amazon’s practices will focus on:

• the standard agreements between Amazon and marketplace sellers which allow its retail business to analyse and use third party seller data — saying that, in particular, it 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 Commission notes that the ‘Buy Box’ is “displayed prominently” on Amazon and “seems key for marketplace sellers as a vast majority of transactions are done through it”

The Buy Box — an example of which can be seen in the below screengrab — refers to a coveted section of the Amazon website where consumers who are viewing a product can click to add it to their shopping cart.

Seller/s who win placement in the box likely gain an advantage over competing sellers of the product.

Responding to the Commission’s announcement of a formal probe, an Amazon spokesperson sent us this statement: “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”

Yesterday the ecommerce behemoth was among a number of tech giants being questioned by US lawmakers about antitrust concerns.

On both sides of the Atlantic regulators are fast dialling up their scrutiny of the tech sector. Although Europe has led the charge — with Vestager spearheading a number of investigations into tech giants during her tenure as competition chief, including probes of Google and Apple, as well as Amazon.

Earlier this year EU institutions also reached agreement over new regulations designed to boost transparency around online platform businesses and curb unfair practices to support traders and other businesses that rely on digital intermediaries for discovery and sales.

The new fairness and transparency rules online platforms are likely to come into force in the EU next year.