EU set to probe Amazon's use of merchants' data on its website

Amazon's business model is coming under fresh scrutiny. Photo / Bloomberg

Amazon's business model is coming under fresh scrutiny, with the EU set to launch a formal investigation into how the retail giant uses data from other merchants that sell goods on its websites, according to two people familiar with the move.

The step marks the latest probe into a US tech giant by EU competition commissioner Margrethe Vestager and comes weeks after US president Donald Trump accused her of hating America.

Brussels has been conducting a preliminary investigation into Amazon's business practices since last year, exploring the company's dual role as both a retailer and a host of rival third-party merchants — sellers that use Amazon as a platform to market their goods.

More than half of all items sold via Amazon in 2017 came from third-party merchants.
The commission sent out questionnaires to sellers as part of the preliminary information-gathering process, and has now decided to follow up with a formal investigation, said the people familiar with the probe. Brussels may announce the step as soon as Wednesday.

"The question here is about the data," Vestager said last year. She said that Brussels wanted to look at the extent to which Amazon used information from smaller merchants to try to identify "what is the new big thing".

A formal probe will allow regulators to flesh out their main concerns. It could ultimately lead to fines or to force Amazon to change its business practices.

Amazon declined to comment but in the past the company has highlighted how it operates in vast markets with multiple competitors and that online sales are a small fraction of the overall retail market.

The European Commission also declined to comment.

The move against Amazon comes close to the end of Vestager's five-year tenure as competition commissioner, a period in which she has built an international reputation by launching antitrust and state-aid probes against titans of the digital economy.

"It is an important move and a statement against the big tech giants," said Andrea Collart, competition partner at Avisa Partners. "The feeling is that Amazon is so present in so many markets that it is too big to regulate."

"Competition enforcement can be the sling used by David to defeat Goliath," he added.

The formal probe into Amazon follows a string of EU competition cases against US tech giants, including a €4.3 billion ($7.1b) fine on Google in July for alleged abuse of its dominant position in mobile operating systems, and a decision forcing Apple to pay €13b in back taxes to the Irish government.