What to look for in the European Union charges against Amazon

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What to look for in the  European Union charges against Amazon

Vestager has emphasized that her research focuses on Amazon’s data usage and hybrid role as a store and platform for other sellers. The key point is whether Amazon misuses its dominance in online trading to collect useful data from competitors, and then uses that data to drive sales of its own goods.

According to a person working for a retailer, the commission has clarified the planned fees for reasons of confidentiality with complainants in the past few weeks.

There are three important points to note in the expected “declaration of objection” against Amazon.

According to the Commission, a “large majority” of the products are on Amazon sold A pop-up window will appear above the purchase box where customers will view additional products as they proceed to purchase. The most important commercial question for many third-party providers on Amazon is how the algorithm works so that it is clearly visible in the buy box.

EU cartel officials focus on this selection process and in particular the role of data. What competitive data such as price or volume does Amazon go through its algorithm? And – here it gets difficult – does it use this data to improve the ranking of its own products?

Have third party providers said Amazon asked for more data than was absolutely necessary for the operation of its market. But has the Commission found evidence that Amazon has transferred this data to its own retail store and used it to prefer its own products?

“Competition professionals have been waiting for a big data investigation for years. Amazon’s insight into consumption patterns is very valuable commercially, ”said Bas Braeken, competition lawyer at the Dutch law firm Brandeis.

The Commission’s Amazon case is probably the best known of the ongoing antitrust cases. However, competition officials are currently also addressing several other issues related to Google, Apple, and Facebook. The Amazon case model, in which a platform uses its enormous wealth of data to give its own business activities an (unfair) advantage, could serve as a precedent for some of these cases, especially for the Commission’s preliminary investigation into the Facebook market.

With the Statement of Objections, the Commission will inform Amazon of its concerns, but will not yet detail what fines or remedies it would impose on the company. Even after the fee sheet has been published, the parties are still able to reach an agreement. Still, much of the political attention will focus on how Vestager will try to fix the problem in the market.

The head of competition was widely criticized for the effectiveness of her antitrust decisions, for example against Google’s shopping service, which many believed could not restore competition in the market, also because the measures taken by the regulatory authority came too late.

“The concern I have is that the EU won’t solve the underlying problem, which is structural,” said Stacy Mitchell, co-founder of the Institute for Local Self-Reliance, a major Amazon critic in the United States, The recent testimony to the House Justice Committee, which is also investigating Amazon, said: “The EU’s process is lengthy and can only result in a fine and not Amazon restructuring,” Mitchell said.

One option that Vestager currently has is to impose so-called interim measures. The commission used This quick move in October, for the first time since 2001, to prevent a company – Broadcom – from adopting practices that the regulator believes could cause serious and irreparable harm. Broadcom finally offered commitments that could encourage the Commission to try this quick process again.

The Commission has two options for combating anti-competitive behavior and has kept both options open at the start of its Amazon investigation.

The easiest way would be to pursue antitrust violations in contracts. Brussels has analyzed the legality of the Business Solution Agreements that Amazon can use to collect and analyze third-party data. With these contracts, Amazon can share aggregated data (not specific to a retailer) with its own retail branch. The Commission has examined the competitive advantage of the internet giant.

Many observers expect Brussels to take the alternative route to prove that Amazon has misused its dominant position. However, this requires the heavy burden of establishing the company’s dominance in a particular market.

The Commission could tend to narrow the market to prove its dominance, for example, by focusing on a submarket like books while Amazon will try to expand it, arguing that it is only a small player in the global retail landscape . “We represent a low single-digit percentage of the retail market,” said founder Jeff Bezos wrote to shareholders last year.

But officials could also take a newer approach to Amazon dominance, taking into account not so much the market power they have over customers – who are relatively easy to turn to competing platforms – but also against sellers who do may be deemed necessary on Amazon.

Leah Nylen contributed to the reporting

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