The European Commission on Tuesday announced that it’s filing formal antitrust charges against Amazon over the way the tech giant uses third-party sellers’ data.
The case could cost Amazon more than $28 billion in fines.
“The European Commission has informed Amazon of its preliminary view that it has breached EU antitrust rules by distorting competition in online retail markets,” the Commission said in a published statement. The preliminary complaint was based on Amazon’s conduct in France and Germany.
Amazon must now respond to the charges.
The Commission took issue with Amazon using data from third-party sellers to inform its own retail strategies, acting as both marketplace operator and a competitor within that marketplace.
“We must ensure that dual role platforms with market power, such as Amazon, do not distort competition. Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” Competition Commissioner Margrethe Vestager said in a statement.
The Commission simultaneously announced it’s launching a second investigation into “possible preferential treatment of Amazon’s own retail offers and those of marketplace sellers that use Amazon’s logistics and delivery services.”
If successful, the EU’s case could mean Amazon has to pay a maximum fine equal to 10% of its annual global revenue.
Amazon’s net sales at the end of 2019 totalled $280.5 billion, meaning a 10% fine would be about $28.1 billion.
The EU started looking into Amazon in 2018, and launched its formal antitrust investigation in July 2019, examining the e-commerce giant’s “dual role” as both marketplace operator and a competitor within that marketplace.
Commissioner Margrethe Vestager has a reputation for slapping Big Tech companies with record-breaking fines. In 2018 she handed Google a fine of $5 billion, which the company is still in the process of appealing.
Christy Hoffman, General Secretary of the international worker’s union UNI Global Union, welcomed the announcement in a statement sent to Business Insider.
“The European Commission’s Executive Vice President and Commissioner for Competition Margrethe Vestager, should be commended for bringing antitrust charges against Amazon over what has become obvious to everyone: Amazon is abusing its dominant market position, squeezing small and medium-sized businesses, engaging in social dumping and dragging down labour conditions — all while failing to pay its fair share in taxes,” she said.
“The time to end Amazon’s stranglehold on our markets and communities is now. We are pleased that the European Commission is leading the way,” Hoffman added.