By Sam Schechner
Amazon.com Inc. will face a formal European Union antitrust
investigation into its dealings with third-party merchants,
expanding a multipronged regulatory push that has ensnared other
big Silicon Valley giants like Facebook Inc. and Alphabet Inc.'s
Google.
The European Commission, the EU's top antitrust enforcer, said
Wednesday that its investigation will look into whether Amazon is
abusing its dual role as both the provider of a marketplace where
independent sellers can offer products and a retailer of products
in its own right.
In particular, the probe will investigate whether Amazon is
using nonpublic data from independent merchants to compete against
them. Investigators will also examine what data Amazon uses to pick
a seller as the default option for a given product when a user
clicks the "buy" button -- and whether Amazon gets an unfair leg up
to be that default.
The probe could eventually lead to formal charges, fines and
orders to change business practices, but it could also be
dropped.
"We will cooperate fully with the European Commission and
continue working hard to support businesses of all sizes and help
them grow," an Amazon spokesman said.
The case opens a new -- and potentially more complex -- chapter
for competition enforcers on both sides of the Atlantic. The EU has
led the antitrust charge against Google for more than a decade,
issuing EUR8.25 billion ($9.25 billion) in fines. Now antitrust
scrutiny of technology titans is rising in the U.S., as well, with
the U.S. Federal Trade Commission and U.S. Justice Department
dividing up oversight of four of the largest U.S. tech firms,
including Amazon, Google, Facebook and Apple Inc.
Margrethe Vestager, the EU's antitrust chief, has emerged as one
of the world's major technology regulators. In addition to the
Google cases, she also has issued a fine to Facebook for misleading
regulators during a review of its acquisition of the WhatsApp chat
service and ordered tech giants including Amazon and Apple to pay
back taxes under what she alleged to be sweetheart deals with tax
authorities. The companies are appealing the tax cases.
Meanwhile, Ms. Vestager was this month nominated to a senior
position in the Commission for the next five years, meaning she may
keep some sway over competition policy.
More broadly, the EU has also taken a lead in reining in the
alleged excesses of technology giants in other domains, with a
sweeping privacy law that went into effect last year, and new
copyright legislation aimed at making tech giants pay more to news
media and music companies.
The EU's Amazon case could now help lay groundwork for growing
interest among other competition regulators in investigating parts
of a company that has a presence in many sectors, from logistics
and e-commerce to cloud computing and now advertising.
In addition to the U.S., authorities in Austria, Italy and other
countries are investigating Amazon on various topics including the
treatment of third-party sellers. Germany's antitrust regulator,
earlier Wednesday, said Amazon has agreed to change its terms of
service on its marketplace platform for third-party sellers,
following its own investigation into the e-commerce giant's sales
practices. The changes mark the conclusion of a separate
eight-month probe by the German Federal Cartel Office.
As part of the settlement, Amazon will amend certain terms for
its marketplace platform around the world. The changes involve some
technical issues like requiring Amazon to offer third-party sellers
a 30-days notice before suspending accounts and reducing Amazon's
requirements about the confidentiality terms with sellers, the
German authority said.
A European Commission spokeswoman described the German case, and
the others in Europe, as not conflicting with the EU's case, which
focuses on data. "These investigations are complementary but not
overlapping," she said.
Making a case against Amazon could prove to be complicated, some
antitrust experts say, because the company -- while large -- is in
many different businesses and often faces intense competition. The
EU's case takes a new approach, focusing on the proprietary data to
which the company has access, given its role as the platform for
processing transactions and shipping goods on behalf of third
party-sellers.
"It's an innovative case because it's trying to use data
collected by Amazon," said Nicholas Economides, an economics
professor who looks at competition issues at New York University
Stern School of Business. He said the EU will have its work cut out
for it, however, to show that collecting the data is
anticompetitive: "Information alone is not going to make the
case."
The EU's investigation of Amazon's marketplace, first opened
informally last September, follows on concerns raised by retailers
in the course of an EU inquiry into so-called dual-role platforms
within the e-commerce sector.
Amazon's marketplace business, in which it offers services to
retailers to sell goods on Amazon's platform, is an increasingly
important part of its business. The marketplace accounts for more
than half of the retailer's global sales, according to chief
executive Jeff Bezos's letter to shareholders in April. According
to Mr. Bezos, the traditional retail business reached $117 billion
in sales last year, dwarfed by $160 billion for sales on its
marketplace.
"Third-party sellers are kicking our first party butt," he
wrote.
Sara Germano and Laurence Norman contributed to this
article.
Write to Sam Schechner at sam.schechner@wsj.com
(END) Dow Jones Newswires
July 17, 2019 08:05 ET (12:05 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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