Amazon became the target of an antitrust investigation by the European Union on Wednesday over its use of merchants’ data, underlining regulators’ increasing focus on how tech companies exploit customer information.
U.S. tech giants Amazon, Google, and Facebook have been in the regulatory spotlight as antitrust enforcers examine how they use data to boost their market power. Some U.S. politicians and even one of Facebook’s co-founders have called for them to be broken up.
The European Commission has been seeking feedback from retailers and manufacturers since September into Amazon’s dual role as a marketplace for merchants and acting as a competitor following complaints from traders about Amazon’s practices.
The Commission said its investigation would focus on Amazon’s standard agreements with marketplace sellers and its use of data in choosing winners of the “buy box”, which allows consumers to add items from a specific retailer directly to their shopping carts.
European Competition Commissioner Margrethe Vestager, who can fine companies up to 10% of their global turnover, said the issue was crucial as more and more Europeans shop online.
“E-commerce 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 behavior,” she said.
Amazon said it would cooperate fully with the EU investigation. The company reached a deal with Germany’s antitrust authority on Wednesday to overhaul its terms of service for third-party merchants.
Under Amazon’s terms of service for Europe here set out on its website, merchants grant Amazon “royalty-free” rights to use in a range of ways their materials, such as technology, trademarks, content and product information.
The EU probe has some parallels with the Commission’s investigation of Google for giving illegal advantage in search results to its own comparison shopping service, Ian Giles, a partner at Norton Rose Fulbright, said.
In Amazon’s case, he said the Commission needed to show “the standard agreements with retailers were anti-competitive in somehow allowing Amazon to use the data to manipulate market outcomes, or that Amazon had in some way abused its dominance.”
Politico reported last week the EU would start a probe.