The online retailer Amazon has now been charged by the European Commission with abusing its market position, following years of campaigning from independent traders.
Amazon is the market leader in the online retail industry. In the last quarter, its revenue increased by 37.4$ to a record $96.15 billion. The company’s sales have been boosted enormously by the COVID-19 pandemic, as more consumers have turned to online shopping.
The EU has been investigating Amazon since 2018, and has now ruled that the firm is taking advantage of its dominant position to gain an unfair advantage over its competitors.
It says that Amazon has been using data on third-party sellers to boost sales of its own products. In addition, the Commission has launched a new investigation into accusations of preferential treatment being given to sellers that use Amazon’s own logistics companies.
Why has Amazon come under scrutiny?
Amazon Marketplace, which was launched in 2000, allows third-parties to sell products. This benefits both Amazon and retailers, which can gain access to Amazon’s large audience.
Independent sellers make up approximately 30% of sales. But, amazon has been accused of using “sensitive data” about activity that could be exploited. In 2018, it faced an investigation into antitrust violations as sellers believed it was using data for its own gains.
According to the competition commissioner, Margrethe Vestager, the EU has had major concerns over how Amazon is using data from third-party sellers, which may have been used to help the firm make predictions and increase its own advantage.
The company accesses data from small and medium-sized companies on the platform, including sales figures, page visits, and shipping information. Then, it uses this information to boost sales of its own-label product ranges and in picking suppliers.
How has Amazon responded?
Amazon continues to reject charges. The company says it cares about small businesses and provides an environment that encourages competition, as well as more choice for customers. It also noted that there are over 150,000 businesses currently selling on its platform.
In a statement, a spokesperson said, “Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate,” it said. No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”
What happens next?
Now that Amazon has been charged, if found guilty of breaching EU competition laws, it could be facing a fine of up to 10% of its global revenue – this is around $19 billion.
In a statement, the EU’s Competition Commissioner Margrethe Vestager said it’s essential that platforms with “market power” didn’t “distort competition”.
In a press conference, she added, “Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers.”
“With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers. We do not take issue with the success of Amazon or its size.”
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