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E.U. opens antitrust investigation into Amazon over third-party selling

The probe comes as Amazon faces growing challenges abroad. (Johannes Eisele/AFP/Getty Images)
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The European Union will launch an antitrust investigation into whether Amazon is misusing its dual role as both a marketplace for independent sellers and a retailer of its own products.

The E.U. said regulators will examine the agreements between the U.S. company and its sellers, which allow Amazon’s retail business to analyze and use third-party seller data. The inquiry also will examine how the retail giant uses its data to pick which sellers appear in the “buy box” — a crucial piece of digital real estate on product pages that customers use to add items to their shopping carts. The buy box is often a boon for sellers, given how many orders are placed directly through it.

On Wednesday, Margrethe Vestager, the E.U.’s top competition enforcer, said that as consumers are increasingly shopping online, e-commerce has boosted competition and brought more choice and better prices.

“We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behavior,” Vestager said.

In a statement, Amazon said it would cooperate fully with the E.U. “and continue working hard to support businesses of all sizes and help them grow."

(Amazon CEO Jeff Bezos owns The Washington Post.)

International pushback disrupts Amazon’s momentum to expand its empire worldwide

European regulators have been particularly aggressive in targeting Amazon’s tactics with third-party sellers. On Wednesday, the Bundeskartellamt, the German competition agency, said Amazon agreed to implement changes in the way it deals with those sellers as it wound down its eight-month investigation into the company.

The settlement requires Amazon to offer third-party sellers 30 days notice before suspending their accounts. The agency said the deal also “significantly reduced” restrictions sellers faced with regard to making public statements about their business relations with Amazon, something that had required Amazon’s prior written approval. Those changes will take effect globally in 30 days.

“The amendments address the numerous complaints about Amazon that the Bundeskartellamt received from sellers,” agency president Andreas Mundt said in a statement.

European regulators have zeroed in on Amazon’s relationship with retailers who sell their own goods though its website. Shoppers often don’t recognize whether they are buying products from Amazon directly or third-party sellers.

But those sellers account for an increasing share of Amazon’s overall sales. Last year, third-party sales came to $160 billion, or 58 percent, of Amazon’s total revenue from selling physical, rather than digital, retail goods, Amazon Associate General Counsel Nate Sutton said Tuesday in written testimony before the U.S. House subcommittee on antitrust, commercial and administrative law.

While Amazon’s platform has created opportunities for millions of small and midsize retailers globally, it has also given the company a window into which products sell well on the site and at what price. Many sellers privately complain about Amazon’s power to undercut them on price and to introduce a similar product based on the copious amount of data it collects.

Amazon’s size has given it massive clout in the industry because third-party sellers can’t reach the same size audience on rival platforms such as eBay and Etsy.

U.S. lawmakers pressed Amazon on Tuesday about competing with sellers that do business on its website. Rep. David N. Cicilline (D-R.I.), the subcommittee chairman, criticized the Federal Trade Commission and Justice Department for not scrutinizing the tech sector’s power enough, warning that the absence of regulatory action has created “de facto immunity” for online platforms.

Last month, an agreement between the two U.S. antitrust regulators put Amazon under closer watch by the FTC.

In 2017, an essay published in the Yale Law Journal by then-law student Lina M. Khan argued that U.S. antitrust law is no longer fit to take on Amazon. Calls to break up the tech giant or more heavily regulate its empire now extend to the presidential campaign trail. Those calls have largely come from Sen. Elizabeth Warren (D-Mass.), who has said she would break up Amazon, Facebook and Google if she won the 2020 election.

The E.U. probe could prompt formal charges or orders for Amazon to change its business model, or it could be dropped altogether.

In September, Vestager launched a preliminary investigation into whether Amazon’s “dual role” as both retailer and marketplace gives it too much power. Vestager said her concern is that Amazon could use data from its rivals — namely merchants that sell on its platform — to edge out competition.

“The question here is about the data,” Vestager said at the time. “If you as Amazon get the data from the smaller merchants that you host — which of course can be completely legitimate because you can improve your service to these smaller merchants — do you then also use this data to do your own calculations on what is the new big thing? What is it that people want?”

Vestager has pressed hard against Big Tech. In March, the E.U. fined Google about $1.7 billion for advertising practices that the bloc said violated antitrust laws. In 2018, Vestager levied a $5 billion antitrust fine against Google and required the company to changes its practices around search and Web browser functions in Android phones. That fine followed a $2.7 billion penalty on Google for how it steered users toward its comparison shopping site.