back Back

EU’s antitrust charges against Amazon could break ‘flywheel’

By Sunniva Kolostyak

November 13, 2020

Share

The European Commission’s antitrust charges against Amazon’s use of data is an important step towards breaking its ever-growing powers, according to data privacy specialist The @ Company.

This week, the EU Commission opened a formal antitrust investigation into Amazon and its use of data to offer preferential treatment to its own retail offers and those marketplace sellers using Amazon’s logistics and delivery services.

The commission stated that its preliminary view is that Amazon has breached EU antitrust rules by distorting competition in online retail markets and systematically rely on non-public business data of independent sellers “to the benefit of Amazon’s own retail business, which directly competes with those third-party sellers”.

Colin Constable, CTO of data privacy and new internet protocol, The @ Company, applauds the EU’s move as it could help avoid long-term consequences for smaller businesses.

Amazon“Amazon works as a flywheel, getting more and more powerful by offering independents access to its enormous network. An unfortunate outcome of this and other companies like them that enable access to their network of services is that they start tracking these businesses,” Constable said.

“The implication is that while initially, these services enable small businesses, these companies pay a data tax for being too successful. It’s a data fiefdom of sorts. We applaud the European Union for taking a first step toward breaking the flywheel and freeing small businesses from this damaging long-term outcome.”

Kevin Nickels, CPO at The @ Company, added: “We expect these large platforms to continue to be under pressure on a number of fronts as a result of the negative aspects of their business models and data practices. This is healthy and a good thing and a number of responses will emerge. The @ Company is meanwhile busy trying to provide fundamental technology solutions that will be instrumental to address this in addition to regulatory actions.”

When announcing the investigation, the European Commission stated that Amazon has a dual role as a platform, as both a marketplace provider for independent sellers and a retailer in direct competition with those sellers.

However, Amazon has access to non-public business data of the third-party sellers – such as the number of ordered and shipped units of products, the sellers’ revenues on the marketplace, the number of visits to sellers’ offers, data relating to shipping, to sellers’ past performance, and other consumer claims on products, including the activated guarantees.

Large quantities of this seller data has been found to be available to employees of Amazon’s retail business and flow directly into the automated systems of that business, which aggregate these data and use them to calibrate Amazon’s retail offers and strategic business decisions to the ‘detriment’ of the other marketplace sellers.

In its statement, Margrethe Vestager, Executive Vice-President in charge of competition policy at the European Commission, said: “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 acts as a competitor to these sellers. The conditions of competition on the Amazon platform must also be fair. Its rules should not artificially favour Amazon’s own retail offers or advantage the offers of retailers using Amazon’s logistics and delivery services. With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”

 

Previous Article

November 13, 2020

FinecoBank’s UK growth proof of changing customer behaviour

Read More
Next Article

November 13, 2020

Innovation in Retail Banking – banks disappoint themselves!

Read More






IBSi FinTech Journal

  • Most trusted FinTech journal since 1991
  • Digital monthly issue
  • 60+ pages of research, analysis, interviews, opinions, and rankings
  • Global coverage
Subscribe Now

Other Related News

October 29, 2024

Afin Bank and Thought Machine launch digital bank for Africans in the UK

Read More

October 22, 2024

Tuum partners with Google Cloud to deliver core banking in EMEA

Read More

October 17, 2024

Stress and Mortgages: Are UK Banks Failing Homebuyers?

Read More

Related Reports

Sales League Table Report 2024
Know More
Global Digital Banking Vendor & Landscape Report Q3 2024
Know More
NextGen WealthTech: The Trends To Shape The Future Q4 2023
Know More
IBSi Spectrum Report: Supply Chain Finance Platforms Q4 2023
Know More
Treasury & Capital Markets Systems Report Q1 2024
Know More