The European Commission has brought ‘Antitrust’ charges against Amazon. The charge relates to Amazon breaking competition laws by unfairly using its size and access to data to damage smaller merchants that rely on the company to reach customers.
For many merchants this is not new news as throughout the eCommerce space it has been widely known that by playing in Amazon’s backyard you could face competition from the giant if your products start to do well.
The European Commission has now publicly accused Amazon of harvesting nonpublic data from sellers who use its marketplace to spot popular products, then copy and sell them, often at a lower price.
“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 act as a competitor to these sellers.” – Margrethe Vestager, Vice President For Digital Issues, European Commission
The Known Risks Of Selling on Amazon
Here at eSellerCafe we have the privilege of multiple decades worth of first hand experience in eCommerce and up until now it has just been an accepted risk of selling on Amazon as there was no alternative. Here I recall a first hand example relating to this antitrust practice.
“Over the years I have heard several first hand accounts of third party sellers being bullied by Amazon indirectly. One that sticks in my mind was a seller who was sourcing a product from Taiwan and sending them directly to FBA.”
“One day they go to place a resupply only to be told by their supplier that they can no longer sell to them as they had signed an incredible deal which included exclusivity. That deal came from Amazon direct. We suspect that because the package was shipped direct to an Amazon warehouse, the shipping notice inside provided Amazon with all of the supplier data they needed and with their buying power cut out the middle man (Third party seller)” – Dave Furness, Co-Founder, eSellerCafe
The announcement from today is just one of the beginning steps in this process, that could well drag on for years.
The Buy Box Under Antitrust Investigation Too
The European Commission has also said it has launched an investigation into the Amazon Buy Box. Specifically around whether Amazon has been giving preferential treatment for the Buy Box to its own products and those of other sellers that pay to use Amazon’s logistics services. Leading to further antitrust breaches in the eyes of the European Commission.
Unsurprisingly Amazon has denied any wrongdoing and said it supported thousands of businesses across Europe.
“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,”
“No company cares more about small businesses or has done more to support them over the past two decades than Amazon.” – Amazon Statement
The European Commission has not gone into this blind however, they have said that the charges they have brought against Amazonare supported by a review of data on more than 80 million transactions and 100 million products.
Ms. Vestager commented on how Amazon used the data from outside sellers to determine what computer accessories, kitchen tools or other products to introduce, as well as where to set their pricing levels and how to manage their inventory.
Cas Paton The Founder and CEO of competing marketplace OnBuy also commented on todays news:
“Any eCommerce platform that positions itself in direct competition with its sellers has a flawed business model. That’s why I started OnBuy.com – to create a fairer, more ethical sales platform and a level playing field for all.”
“Amazon cannot claim to be a company that cares about small businesses when it continues to act in a way that puts so many livelihoods at risk. Many OnBuy sellers have come to us when looking for an alternative to Amazon, fearing that without spreading risk across multiple platforms, their sales and revenue could be eaten up by Amazon’s approach.” – Cas Paton, Founder & CEO, OnBuy
With this looking likely to be drawn out for a number of months at least, there isn’t going to be a quick resolution for Amazon here regarding these antitrust charges, especially with what sounds like significant evidence from the European Commission.
What are your thoughts on this? Is this good news for sellers, or a distraction for Amazon that could jeopardise your business long term?