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Amazon Faces EU Antitrust Accusation Over Marketplace Data

European Union regulators have filed antitrust charges against Amazon alleging that use of non-public data gave it an unfair advantage over sellers on its platform.

The regulators have also opened a separate, second formal probe into the possible preferential treatment of Amazon’s own retail goods to those of its third-party sellers.

“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. The conditions of competition on the Amazon platform must also be fair,” Margrethe Vestager, executive vice president and European commissioner who has oversight of competition policy, said Tuesday.

“Its rules should not artificially favor Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services,” she added. “With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”

Dual-role platforms provide a marketplace for independent sellers, while also allowing the platform owner like Amazon to sells products in direct competition with its merchants.

The EU allegations accuse Amazon of “systematically relying on non-public business data of independent sellers who sell on its marketplace, to the benefit of Amazon’s own retail business, which directly competes with those third-party sellers.”

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The European Commission specified in a statement Tuesday that large quantities of non-public seller data flow directly into automated systems, allowing Amazon to aggregate data for use in calibrating its own retail offers and strategic business decisions to the detriment of rival marketplace sellers. That, in turn, allows Amazon to focus on best-selling products across categories.

The Commission’s preliminary view is that the “use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany—the biggest markets for Amazon in the EU. If confirmed, this would infringe Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.”

The charge is the result of a probe that began over a year ago in connection with whether Amazon used data to unfairly compete against third-party merchants. Amazon settled a German antitrust probe ahead of the start of the EU investigation.

Separately, the new second investigation scrutinizes Amaozn’s “Buy Box” and Prime label. The “Buy Box” allows customers to add items from a specific retailer directly into their shopping carts, which the Commission said generates the “vast majority of all sales.” The probe also will focus on the Prime designation, which allows marketplace sellers to reach Prime members, a growing pool of customers who tend to generate more sales than shoppers who don’t pay a membership fee.

“In particular, the Commission will investigate whether the criteria that Amazon sets to select the winner of the “Buy Box” and to enable sellers to offer products to Prime users, under Amazon’s Prime loyalty program, lead to preferential treatment of Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services,” the Commission said Tuesday. If proven, the practice may be in violation of Article 102 of the Treaty on the Functioning of the European Union (TFEU) that prohibits the abuse of a dominant market position.

In both matters, the Commission said Amazon is essentially innocent until proven guilty. The Commission’s Statement of Obligations is a formal step in Commission investigations informing parties of the charges in writing. It gives the parties the ability to review, reply and request an oral hearings on the matter before representatives of the Commission and national competition authorities. In addition, the start of the second probe will cover the European Economic Area, with the exception of Italy. The Italian Competition Authority launched its own investigation over similar concerns last year, focusing on the Italian market, the Commission said Tuesday, adding that it will continue the “close cooperation with the Italian Competition Authority throughout the investigation.”

Amazon, for its part, voiced its disagreement with the antitrust charges.

“We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts,” an Amazon spokesperson said Tuesday. “Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate. No company cares more about small businesses or has done more to support them over the past two decades than Amazon.

“There are more than 150,000 European businesses selling through our stores that generate tens of billions of Euros in revenues annually and have created hundreds of thousands of jobs,” the spokesperson added.

Amazon and other tech titans have came under fire in the U.S. as well for antitrust concerns as governments stateside and abroad question how so much power is concentrated among such a small cadre of competitors.