It’s official: EU opens investigation into Amazon for ‘possible anti-competitive conduct’

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Amazon continues work on new buildings at its headquarters in Seattle. (GeekWire Photo / Kurt Schlosser)

The European Commission is launching a formal investigation into whether Amazon uses its position to hurt competition in its marketplace after months of hinting at a possible inquiry.

Europe’s competition chief Margrethe Vestager notified Amazon and announced the investigation Tuesday, stressing the importance of a competitive e-commerce space.

“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,” she said in a statement.

The Commission will look closely at the contracts between Amazon and third-party sellers in its marketplace to figure out how the data Amazon aggregates impacts competition.

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

Amazon general counsel Nate Sutton testifies before the House Judiciary Committee. (Youtube Screenshot)

The Seattle tech giant’s treatment of other sellers on is the subject of scrutiny in Europe and the U.S. Shortly before the EU announced its investigation, Amazon general counsel Nate Sutton testified before the U.S. House Judiciary Committee on antitrust issues.

Though representatives from Facebook, Google, and Apple were also summoned to the hearing, lawmakers zeroed in on Amazon with a particular focus on third-party sellers.

“You have this massive trove of data, people that are buying products on your platform,” said Rep. Pramilla Jayapal, who represents Amazon’s hometown, Seattle. “You’re able to see which are the ones that are doing really, really well.”

Sutton acknowledged that Amazon uses “data to serve our customers.” But several times during the hearing he insisted, “We don’t use individual seller data directly to compete with them.”

“Individual,” is the operative word there; Sutton did not say whether Amazon uses aggregated data to gain a competitive edge for the products it sells, which appears to be the focus of the EU investigation.

“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 investigation announcement says.

In the U.S., experts are skeptical that an antitrust case will actually get off the ground, despite calls to break up or regulate Big Tech from presidential candidates like Sen. Elizabeth Warren.

“There is no evidence that their practices have resulted in demonstrable harm to consumers in the form of price increases, which is essential for a successful prosecution,” said Larry Downes, director of Georgetown University’s Center for Business and Public Policy.

Dan Ives, managing director of equity research firm Wedbush Securities, agreed that the conversation was “grandstanding and more noise, at least in the near-term,” in an interview with CNBC. But he added, “most at risk would be Amazon.”

In Europe, regulators take a broader approach to competition law which could spell trouble for Amazon. Last year, Vestager announced her office was looking into whether Amazon uses its position to gain an edge over third-party sellers in its marketplace. On Tuesday, the Commission said that preliminary probe showed “Amazon appears to use competitively sensitive information – about marketplace sellers, their products and transactions on the marketplace.”

In addition to contracts between the company and sellers, The European Commission will also look closely at the “Buy Box,” a valuable piece of real estate on where shoppers can add items from other retailers to their carts.

Under Vestager, the EU has repeatedly gone after American tech companies, slapping Google with fines that amount to $9.3 billion over the past few years. Facebook, Apple, and Qualcomm have also found themselves in the EU’s crosshairs over competition issues. In 2015, the EU opened an investigation into whether Amazon’s e-book dominance was hurting competition and looked into a tax deal the company made with Luxembourg.

The goal of the European probe is to find out whether Amazon is in breach of EU competition rules on anti-competitive agreements between companies. There are no rules governing how long this type of investigation can go on and a deadline has not been set.

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