COVID-19 has decimated the economy, and for some businesses things look pretty bleak. For a few very lucky companies, however, the money keeps rolling in, and one of the biggest companies, Amazon, has actually seen their profits increase as more and more people visit ecommerce websites.
However, it's not all good news for Amazon, because the EU will soon be formally charging them for violating antitrust laws – in other words, using their significant size and position to tilt the playing field in their favour.
What is Amazon doing?
The charges focus on Amazon's treatment of third party sellers. Amazon is the marketplace and so they have complete control of all the data that relates to third party products. This wouldn't be a problem except Amazon itself is also a vendor that sells their own goods. Amazon's website design enables them to see what is selling well and replicate the product. Their humongous size means they can easily undercut the competition and force them out.
Indeed, it was actually reported that Amazon was using sales data from independent marketplace sellers to help with their own branded products.
There's also the matter of 'similar products' – the recommended items that Amazon shows to users when they buy a product. If it looks like Amazon has been burying rival products from other ecommerce websites and highlights their own branded items, the EU won't be very impressed.
Is Amazon in the wrong?
Amazon says they're in the same position as the big supermarkets, who sell products next to their own branded items, and that if anything more products increases choice. However, it would be a stretch to say Tesco and Amazon operate in a similar way. Third party sellers are so dependent on the Amazon marketplace that the control of data stacks things massively in Amazon's favour.
What happens next?
The investigation is still ongoing, and it will take time before any fine is imposed. However, Google was issued with a £2 billion fine back in 2017 for hiding competitors on searches, so it is clear that the EU is not afraid to lay down the law.
What will happen if a fine is imposed? Will it lead to changes in the way Amazon operates? It will be interesting to see if Amazon has broken the rules.
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