Last December. Amazon agreed to comply with the European Commission – by putting up a 2nd Buy Box. The e-commerce giant also swore not to use data from partner sellers for its own products. Third, it agreed to give equal opportunity to sellers that don’t use FBA for its fulfillment. According to Ecommerce News Europe, by doing this, Amazon avoids a hefty fine of 10% of its global turnover – in 2021, Amazon made $496.822bn in revenue. The investigation came to light last July, when EU antitrust regulators suspected that Amazon was using its size, power, and data to “push its own products and gain an unfair advantage over rival merchants that also use its platform,” according to this report from Reuters. Will the second Amazon Buy Box make up for these sanctions, which Amazon denies?
Will the Second Amazon Buy Box Appease Margrethe Vestager?
Europe’s antitrust tsar, Margrethe Vestager, wonders if Big Tech can brush off the changes that her office has implemented as part of the recently-introduced Digital Markets Act. Reuters reports, “Vestager’s data restrictions should stop (Amazon) using information on small merchants’ sales to undercut them with its own-brand products.” But will that really make an impact? Jeff Bezos told Congress in 2020 that private label sales were 1% of its total.
Just ask Jason Boyce’s clients. The seller of natural supplements outbid competitors for the best spot by promising Amazon $6 every time someone clicked on the product. A few months after decent performance, the seller noticed that his brand had been demoted to a lower row, and Amazon’s own brand, Solimo, had taken the prime spot. Boyce searched for “ground coffee” – and discovered that AmazonFresh Colombia ground coffee was in the top spot, pushing down another of his clients. (Read more here.) It looks like the phenomenon isn’t just happening in Europe, either.
Nevertheless, Europe is quite vocal about its plea for transparency and fairness.
Santa Clara Principles: Amazon Scores Low on Transparency and Accountability
Why is transparency so important that the Santa Clara principles were developed? (read more here)
- Tech companies like TikTok, Snapchat, Spotify, Reddit, Amazon, and Google play a massive role in our lives, so it’s important that they do so responsibly and ethically
- Transparency provides better information for politicians, who decide how to regulate these platforms
- The public also feels more confident in what Big Tech companies do, allowing ordinary people to exert pressure if they feel Big Tech is crossing a boundary
Amazon and Apple scored dismally on the scale. Amazon supposedly moderates some of the books its sells online, taking down books it deems inappropriate of its own accord. Last 2021, the platform took down a book questioning the transgender movement because it didn’t align with the company’s liberal political views – a move that was indicative of censorship.
The tech giant has been questioned all over Europe.
French Watchdog Fines Amazon $3.5mn in Penalties
France’s DGCCRF consumer fraud watchdog ordered Amazon to make changes to correct imbalances in contractual terms between Amazon and 3rd party sellers by March 22, 2022. Amazon complied a month later, on April 28. The investigation was placed with the authority of France’s finance ministry, and concluded that Amazon didn’t abide by the “platform-to-business” rules adopted by the European Union in 2019. Reuters reports that Amazon disagrees with the DGCCRF on its findings, decisions, and related penalty.
Germany’s Federal Cartel Office Intervenes
The FCO has been assessing whether Amazon meets the threshold for special abuse controls, according to TechCrunch+. Amazon faces more antitrust intervention in Germany, which hopes to “prohibit potential anticompetitive practices of Amazon more effectively,” and engage in “parallel traditional oversight over abuse of dominance.” Amazon also disagrees with the findings, stating, “We invested 36.5bn euros from 2010 to 2020, we work closely with the local research community, we now employ over 30,000 people, and we will create another 6,000 jobs this year. Customers, partners, and the tens of thousands of businesses in Germany that sell on our store trust in and benefit from our ability to innovate.”
Italian Market Authority AGCM Fines Amazon 1.13bn Euros
In Italy meanwhile, FBA is accused of abusing market dominance, and disadvantaging competitors. Competitors are being harmed by Amazon’s preference for Fulfillment by Amazon, and AGCM vows to impose corrections to combat the wrongdoing, and to monitor Amazon closely. Amazon said in a statement that it “strongly disagrees,” and will appeal the decision. Its written statement says that “small and medium-sized businesses have multiple channels to sell their products both online and offline: Amazon is just one of those options.” The fine is the largest that Amazon has had to answer for in all of Europe.
Double Whammy in the United Kingdom
The Guardian reports that the Competition and Markets Authority of the United Kingdom has launched an investigation into “whether Amazon has been giving its own brands and those using its logistics services unfair advantage over third-party rivals on its online marketplace.” Andrew Goodacre, the CEO of the British Independent Retailers Association, was quoted as saying, “We have felt for a long time that Amazon has too much power and whilst independents welcome the sales, the actual profit margins achieved are minimal once Amazon has had its share.” Characteristically, Amazon has denied the allegations, professing that it will work with CMA to resolve the investigation.
Also in Britain, Amazon faces a lawsuit for damages of up to 900 mn pounds over allegations that Amazon abused its dominant position by favoring its own products – harkening back to Boyce’s story above. Just last October, the law firm Hausfeld stated that Amazon breached competition law by using a “secretive and self-favoring algorithm to promote its own products through the Buy Box feature.” Amazon denies the allegations. The Competition Appeal Tribunal also authorized a 920 mn pound damages claim against Google in July, and a case against Apple for 1.7 bn pounds in May. Meta Platforms also faces a claim of 2.2 bn pounds, also for alleged anti-competitive behavior.
#teamamazon or #teamEU?
It appears that Europe watchdogs were quite active in 2021-2022 – perhaps as a response to the growth in e-Commerce as a result of the pandemic. Amazon’s European marketplaces deny the allegations, although they have agreed to amend their platform to improve fairness and transparency for all. Is this enough to make up for the alleged anti-competitive behavior? Do you believe Amazon is guilty of all of these allegations, or do you think these agencies are targeting Big Tech?
Regardless of where you may lean, perhaps the second Amazon Buy Box will benefit smaller sellers, indeed. Happy selling!