European Commission opens Amazon antitrust investigation

Companies like Amazon and Facebook have grown powerful and difficult to hold accountable, in large part due to their ruthless acquisitions and immense data collection and processing activities. A record-breaking $5bn fine issued by the US Federal Trade Commission (FTC) against Facebook for its failure to prevent data analytics company Cambridge Analytica from harvesting data from 87 million users to build psychologically targeted political advertising tools was widely seen as a soft punishment, which did not do enough to deter further wrongdoing. Facebook’s share price leapt when the news was announced.

The European Commission has been seeking information from retailers and manufacturers since September 2018 on Amazon’s role as a marketplace for merchants and as a competitor in that marketplace. Retailers on Amazon have complained that the company has wielded its power inappropriately. Under Amazon’s terms of service for European sellers, Amazon is granted royalty-free rights to use their materials, such as product information and trademarks.

The Commission will now begin to investigate Amazon’s data agreements with retailers on its platform, including how Amazon uses that data to decide upon which retailer is selected to provide a product to buyers. Amazon has said that it will fully cooperate with the investigation.

“I think the Commission will want to give a strong message because it’s one of the first cases to bring this issue,” Ioannis Lianos, professor of global competition law and public policy at University College London, told Reuters. “My feeling is that the Commission’s interest is not to settle but to take an infringement decision to lay down the law clearly and set a precedent.”

Margrethe Vestager, the European Commissioner for Competition, said that it is crucial to resolve these issues as increasing numbers of European citizens shop online.

“E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate those benefits through anti-competitive behaviour,” Vestager said.

Vestager has earned a reputation as a tough but fair regulatory force, particularly with regards to large US tech companies. Her position affords her the power to fine companies up to 10 per cent of their global turnover and to force them to change their business practices. In August 2016, she ruled that Apple had been receiving illegal tax breaks from Ireland, and ordered the company to pay a €13bn fine plus interest; in October 2017 she ordered Amazon to pay back €250m in back taxes; and has also levied fines of €4.3bn and €1.5bn against Google parent company Alphabet over illegally tying together their service and other mobile apps on the Android phones and abusive practices in digital advertising respectively.

Lawmakers around the world, including many Democratic presidential contenders, are debating how these companies could be held to account through new regulations, including new antitrust law. Democratic frontrunner Senator Elizabeth Warren has laid out a detailed plan which disallows companies from both owning a platform and competing on the platform, potentially breaking up some of the largest tech companies, while former Facebook co-founder and president Chris Hughes has openly called for Facebook to be broken up to limit its ‘unprecedented’ power.

In the UK, the government has published a white paper laying out ‘world-first’ laws to regulate internet companies, including by creating an independent regulator to ensure that internet platforms uphold their duty of care to their young users.