The European Commission has initiated a set of antitrust allegations against Amazon, centering on the company’s combined function as a marketplace for third-party vendors and a retailer operating directly on its platform—and its comprehensive utilization of data from these vendors to inform Amazon’s own retail strategies.

Competition Commissioner Margrethe Vestager stated that the preliminary finding is that the ecommerce leader has misused its position in the key EU markets of France and Germany through the application of extensive data to “improperly distort” competition within online retail sectors.

“Our focus isn’t on Amazon’s accomplishments or its scale. We are addressing specific business practices that appear to undermine fair competition,” she explained during a press conference announcing the formal accusations.

This action follows a 2015 sector inquiry into ecommerce conducted by the bloc’s competition division. The Commission subsequently announced a formal investigation into Amazon’s use of seller data in July of the previous year, although scrutiny regarding potential data disadvantages for third-party sellers began as early as 2018.

As part of the investigation, EU regulators acquired a substantial dataset from Amazon—encompassing over 80 million transactions and more than 100 million product listings across its European marketplaces—to analyze how the company leverages merchant data.

“Amazon operates on data. It’s a highly automated organization—where business choices are determined by algorithmic tools,” Vestager noted. “Our investigation demonstrates that detailed, real-time business data pertaining to third-party sellers’ listings and transactions on the Amazon platform consistently feeds into the algorithms of Amazon’s retail operations. These algorithms are the basis for Amazon’s decisions regarding new product launches, individual offer pricing, inventory management, and supplier selection.”

The competition chief indicated the preliminary concern is that third-party sellers are unable to compete effectively due to the significant data advantage Amazon obtains from accessing their data.

“For instance, Amazon has access to data on the number of ordered and shipped units of sellers’ products, marketplace revenues, the number of visits to sellers’ offers, shipping information—including the seller’s past performance, and consumer claims on sellers’ products, including activated guarantees. Amazon receives this data from every seller, every listed product, and every purchase on its platform,” she said. “Our concern isn’t about Amazon retail—about the insights Amazon retail gains into the sensitive business data of a single seller. Rather, it’s about the insights Amazon retail has regarding the accumulated business data of over 800,000 active sellers in the European Union, covering more than 1 billion products.”

“In essence, this is a matter of big data.”

Vestager stated the investigation revealed Amazon’s ability to aggregate and combine individual seller data in real time and to draw what she described as “precise and targeted” conclusions from it.

This capability provides a substantial advantage over individual sellers on its platform who lack access to the same level of big data to support their business decisions, according to the contention.

“Many retailers must invest significantly to identify products of interest and present them to consumers—taking risks when investing in new products or selecting a specific price point. Our concern is that Amazon can mitigate some of those risks by utilizing the data it has access to,” Vestager added.

In response to the charges, an Amazon spokesperson provided the following statement:

Amazon will now have the opportunity to respond to the charges, after which the Commission will evaluate the evidence and determine whether EU competition law has been violated. If a violation is found, the Commission has the authority to halt the infringing conduct and impose a fine of up to 10% of a company’s annual worldwide turnover.

In the two markets where EU regulators determined Amazon to be dominant, over 70% of consumers in France and more than 80% in Germany who made online purchases bought something from Amazon in the past 12 months.

Vestager clarified that the Commission is defining the market as “platforms providing marketplace services” rather than broader retail.

Also today, the commissioner announced a second competition investigation into Amazon—this one focusing on the Buy Box and Prime loyalty program. Vestager explained that regulators decided to separate the Amazon cases to prevent the ongoing investigation into the Buy Box and Prime from hindering progress on the big data inquiry.

Detailing concerns surrounding Buy Box and Prime, she said: “Our examination of Amazon’s data use revealed that Amazon may have established certain rules on its platform that artificially favor both its own retail offers and the offers of sellers that utilize Amazon’s logistics and delivery services. For this reason, we have decided to launch a second investigation into these business practices.”

The Buy Box appears on Amazon product listing pages—allowing Amazon users to click to add a product directly to their shopping cart. Therefore, the selection of the seller whose product appears in the box is a critical detail.

“The Buy Box is essential,” Vestager said. “It prominently displays offers from a single seller of a chosen product, with the option for the consumer to purchase it directly. Consequently, winning the Buy Box is crucial for marketplace sellers, as over 80% of all transactions on Amazon are channeled through it.”

She also stated that it is “of the essence” for retailers to be able to sell their products under Amazon’s Prime label, adding: “Amazon’s Prime customers are very important to sellers—not only because their numbers are constantly increasing but also because Prime customers spend significantly more on Amazon than other customers.”

“Our concern is that Amazon may artificially encourage retailers to use its own related services,” she said—referring to its logistics and delivery divisions—which “may potentially lock them more deeply into Amazon’s own ecosystem.”

EU regulators will therefore be examining “the potential effects” of the rules set by Amazon for the Buy Box and for Prime, according to Vestager.

“We want to ensure that sellers who do not use Amazon’s logistics and delivery program also have a chance to compete on the merits on Amazon’s platform. We also want to ensure that retailers can transition to competing marketplaces without being locked into the Amazon ecosystem,” she added.

While European regulators proceed with antitrust action related to Amazon’s marketplace practices, the ecommerce giant is also facing antitrust scrutiny from US lawmakers.

Last month, it was among a number of tech giants highlighted in an antitrust report by the U.S. House Judiciary Committee. The report argues that Amazon wields monopoly power over SMEs through its dominance of online retail—which in turn enables it to “self-preference and disadvantage competitors in ways that undermine free and fair competition.”

Amazon’s response to the US committee’s scrutiny was a strong rebuttal—asserting that it accounts for only a small fraction of global retail and is not even the largest US retailer by revenues. It also maintained that its interests align with the third-party sellers on its platform, denying any conflict of interests.

The ecommerce giant has similarly disputed the Commission’s charges in its response statement today—arguing that its business accounts for only 1% of the global retail market, despite how EU regulators are defining the market.

Professor Tommaso Valletti, a former colleague of Vestager who—as chief competition economist in her department initiated the work on the Amazon case that has led to the formal charges being laid out today—suggested another argument that will likely be used to defend against the big data complaint is ‘how is what Amazon’s doing with merchant data any different to what European supermarket chains with their own private labels do?’

He argued that this is a flawed comparison because European supermarkets do not have the same level of marketplace dominance over consumers in a given area (i.e., as Amazon does over marketplace services), and are also constrained by physical shelf space, unlike Amazon in what it displays to consumers.

“Amazon has the ability to display countless products (and learn) in ways that are simply not comparable to anything among brick-and-mortar stores,” he told TechCrunch.

Adding some further general comments on the Commission case, he said: “There’s a lot of data that Amazon has and that is obtained from third-party sellers. This data is not public: The sophisticated computational machine of Amazon can use this information to do many things, e.g., identify products it might profitably enter on its own, etc., in ways that then harm competitors. Competitors might not have known the extent to which such data would be utilized or extracted, which is also a possible manifestation of the abuse.”

He also pointed to Amazon having to correct prior evidence to a U.S. Congressional committee—when Nate Sutton had claimed it did not use “individual seller data directly to compete” with such businesses. “Amazon soon had to acknowledge that it uses “aggregated data” from independent sellers, but still without explaining how “aggregated” such data might be. So that’s a grey area they will fight over,” Valletti added.

During today’s press conference, Vestager addressed several questions about how the competition action against certain Amazon business practices aligns with the Commission’s ongoing work to draft updated legislation for digital services and giants, and whether Amazon itself would be classified as a gatekeeper under the forthcoming Digital Markets Act (DMA)—meaning it would be subject to a set of ex ante rules and obligations.

Vestager refrained from offering much detail on the forthcoming legislation—nor confirming whether Amazon would meet the criteria—as she stated the text has not yet been finalized, but she confirmed some provisions in the DMA will be related to data sharing.

“One of the main differences is obvious here… we have to prove dominance and then we look at the business behavior,” Vestager said. “The purpose of the [DMA] regulation is to state that businesses that meet a number of quantitative and qualitative criteria are within the scope of the regulation—and they must fulfill a number of obligations, which we call the ‘dos and the don’ts’. Some of them do indeed concern data and data sharing.” 

Discussing the timing of the Amazon case versus any broader political context, she said it has not been promoted nor delayed in relation to events in the US such as the recent presidential election.

“There’s now a much more global conversation about how to address the fact that some of the platforms appear to be either gatekeepers or de facto monopolists in a number of markets that are very important for the development of our economies. And in that global conversation, of course, Europe and the European Commission want to participate. On the cases themselves, they will always rest on the evidence, the merits of the case, and the case law. On that, of course, we never waiver.”

In previous cases the Commission brought against Amazon—such as those related to eBooks—Vestager said the tech giant had been very cooperative in resolving the issues at stake, noting too that while the settlement secured for eBooks initially covered English and German language ebooks, it ended up covering “almost every ebook with few exceptions.”

“Some of the national competition authorities have had the same experience,” she continued. “Finding issues where they had concerns—preliminary conclusions—where also Amazon has engaged in finding solutions.”

“Obviously, we believe that something is wrong. What will happen now remains to be seen because, as always, we will take into account Amazon’s response to our preliminary conclusions,” she added.