Amazon is an undeniably dominant force in retail, especially in the age of COVID-19. But the online giant’s legal woes are just heating up.
Following two years of antitrust probes in both the U.S. and European markets, E.U. officials are finally on their way to bringing charges against the company for attempting to squash e-commerce rivals by using abusive tactics, the New York Times reported Friday. Formal accusations against the company could materialize within weeks.
Sources close to the case said regulators have seized upon Amazon’s practice of using data collected from its third-party sellers—responsible for more than half of the marketplace’s revenue—to bolster its own private-label product offerings.
U.S. and E.U. officials have been cracking down on massive tech conglomerates in recent years, as these players have amassed a disproportionate amount of control over the online economy. European Commissioner Margrethe Vestager, who leads antitrust enforcement and digital policy, is also looking into Apple and Facebook’s practices, the Times reported.
The U.S. Justice Department, Federal Trade Commission and Congress have been investigating Amazon, Apple, Facebook and Google since July.
In September, former Amazon coders confirmed the existence of an algorithm that boosted the company’s private-label products to the top of the marketplace’s search results while obscuring competitors. One month later, the House Judiciary Committee released a previously unseen document from the company revealing its use of “aggregated data” from third-party sellers to inform the strategy of its overall business.
Amazon denied the claim in a memo shortly thereafter, insisting that it does not use individual seller data to influence the launch, sourcing or pricing of private-label products.
Last month, however, Amazon CEO Jeff Bezos was called by the House Judiciary Committee to clarify those denials. In May, Democratic legislators said they suspected the company of lying to Congress about its strategy to launch brands and products that compete with those being sold by others on its site. Bezos was threatened with a subpoena if he fails to comply.
The Amazon big boss has rankled U.S. lawmakers in recent months, refusing to answer calls from senators asking him to take responsibility for the company’s treatment of its employees in the wake of the coronavirus outbreak.
In March, after the first Amazon warehouse worker was diagnosed with COVID-19 at a Staten Island distribution center dubbed JFK8, Senators Cory Booker (D-N.J.), Bob Menendez (D-N.J.), Bernie Sanders (I-Vt.), and Sherrod Brown (D-Ohio) penned an open letter to Bezos demanding he address reports that staff were continuing to hold stand-up meetings that violated social distancing protocols, along with allegations that cleaning supplies were lacking at many of the company’s facilities.
Shortly after the worker’s positive diagnosis, Amazon workers at JFK8 staged a walkout protesting the company’s lack of responsive action to keep them safe on the job. Protest organizer and management assistant Chris Smalls was fired swiftly and denigrated in a now-notorious recording of an Amazon internal strategy meeting.
The move angered both local and national lawmakers, who criticized Amazon for its retaliation against the whistleblower. New York City Mayor Bill De Blasio called for an inquiry into the company’s actions, and state attorney general Letitia James weighed in on the “disgraceful” firing as well.