The European Commission has Amazon in its sights once again. Over a year after opening an antitrust case against the ecommerce giant, the executive branch of the EU has announced that it is opening a second investigation. This will focus on Amazon’s “buy box” feature, which the European Commission believes could be giving “preferential treatment [to] Amazon’s retail business or of the sellers that use Amazon’s logistics and delivery services.” As well as this investigation, it has also issued a ‘statement of objections’ in relation to the way in which Amazon uses the data of third party sellers on its platform.
What is Amazon’s buy box and what are the European Commission’s concerns?
The Amazon buy box is an important part of the Amazon platform. You might not have realised, but if you’ve ever used Amazon to buy something, you’ve almost certainly seen it. It’s simply the white box that appears on the right hand side of the page for a given product.
When there are multiple third party sellers selling the same thing, the white box makes it easy for the customer to buy the product without having to search through every vendor. The significance of this is that the buy box is immensely valuable real estate for vendors. If you land in that spot, you’ll beat the competition. Research suggests that 80% of purchases made on desktop devices are done via the buy box.
The European Commission believes that Amazon is using the buy box mechanism to direct more sales towards vendors with which it has a closer relationship. In practice this means those vendors that use the Amazon’s wide range of infrastructure and logistics services.
Related to this, the EC is also investigating whether something similar is happening in relation to how vendors are able to reach Prime users. The question here is whether Amazon is promoting third party resellers that rely more heavily on the company to Prime members.
The Statement of Objections to Amazon’s use of reseller data
Alongside the investigation into Amazon’s buy box, the press release from the European Commission also details a ‘Statement of Objections’ against the way in which the platform uses reseller data to inform and determine strategic and operational decisions (such as pricing). “The use of non-public marketplace seller data” the press release explains, “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.”
What is a Statement of Objections?
A Statement of Objections is a formal legal step used by the European Commission to initiate further investigations into antitrust issues. This post on the European Commissions site gives more detail. In terms of the process, Amazon will receive the formal notification and then be given the opportunity to respond before further action is taken.
What did the European Commission say?
Margrethe Vestager, Executive Vice-President of the European Commission said “we must ensure that dual role platforms with market power, such as Amazon, do not distort competition.”
This is just another step in a continuing story of antitrust investigations against Amazon. We’ll be watching this closely to see how Amazon responds, and whether the EU has the teeth to really tackle the company’s power.