Amazon Marketplace was launched in 2000 and the service allows third-party retailers to sell their products on the platform. This benefits Amazon, as it’s able to offer a wider range of products, and it also benefits retailers, who benefit from Amazon’s brand and large audience.
It’s estimated that now, nearly 20 years after its launch, Marketplace sales from independent retailers account for around 30% of Amazon’s total annual sales.
However, the European Commission has launched an investigation into Amazon’s use of “sensitive data”. EU regulators say that Amazon collects data about activity on its platform, and that it could be being misused.
The Commission said in a statement that “Amazon appears to use competitively sensitive information – about marketplace sellers, their products and transactions on the marketplace,”
According to Commissioner Margrethe Vestager, head of competition policy, “European consumers are increasingly shopping 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 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.”
In light of this, the Commission will be looking at the standard contracts between Amazon and its marketplace sellers, and in particular, how Amazon uses data and how this could affect competition.
It will also be investigating how data is used to select winners in the “Buy Box” scheme, which is used to allocate prominent selling positions on the site. The majority of transactions are through Buy Box, and is crucial for sellers.
Margrethe Vestager noted that Amazon could be breaching EU competition laws, and the Commission will be assessing how the company complies with the rules, in relation to both the roles it plays – retailer and marketplace.
In response, an Amazon spokesperson said: “We will co-operate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”
The verdict of the investigations is due to be announced later this year, in October.
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