Report: EU Launches Amazon Antitrust Investigation

Posted on July 16, 2019 by Paul Thurrott in Amazon, Cloud with 10 Comments

Citing multiple sources, Bloomberg is reporting that the EU will launch a “full-blown” antitrust investigation of Amazon this week.

“Amazon.com Inc. faces a full-blown European Union antitrust probe as the bloc’s competition chief Margrethe Vestager prepares for a summer finale to her five-year crackdown on U.S. technology giants,” the report notes, perhaps a bit too breathlessly. “[Vestager] is poised to open a formal investigation into Amazon within days, according to two people familiar with the case, who asked not to be named because the process isn’t public.”

An antitrust investigation into Amazon is no surprise: Vestager has been hinting for months that the online retailing giant is a target.

“[Amazon] host a lot of little guys, and at the same time, they’re a big guy in the same market,” Vestager has said. “So how do they treat the data that they get from the little guy? Does that give them an advantage that cannot be matched?”

Vestager has also aggressively targeted—and fined and sanctioned—other U.S. tech giants, like Google and Apple, that trample on the EU’s antitrust and privacy laws. And it plans similar investigations into Facebook, Qualcomm, and other companies.

But this investigation is a bit different from previous EU antitrust action. It’s also different from previous Amazon cases, as the firm has run into trouble for evading taxes and stifling the market for ebooks. This time, it’s about Amazon’s retail business model. And if the EU does act—and let’s face it, of course it will—then it could lead to dramatic changes in how Amazon operates.

Join the discussion!

BECOME A THURROTT MEMBER:

Don't have a login but want to join the conversation? Become a Thurrott Premium or Basic User to participate

Register
Comments (10)

10 responses to “Report: EU Launches Amazon Antitrust Investigation”

  1. Avatar

    karlinhigh

    Ben Thompson, stratechery.com, is not convinced Amazon has a monopoly. Near as I can tell, he sees it like this: Amazon absolutely collects data on products they sell. It is unreasonable to expect otherwise from a large retailer. This data allows them to launch competing "store brand" products where they see good market opportunities. How is this different that what other large retailers like Walmart and Aldi are doing?


    "

    There really is no plausible argument that Amazon has a monopoly. Yes, the company has around 37% of e-commerce sales, but (1) that is obviously less than 50% and (2) the competition is only a click away! Moreover, it’s not clear why “e-commerce” is the relevant market, and in terms of retail Amazon has low single-digits market share.

    [...]

    Make no mistake, Amazon drives a very hard bargain with its suppliers. Those suppliers, though, have a whole host of alternatives through which to sell their product. Meanwhile, those hard bargains accrue to consumers’ benefit.

    Similarly, it is very hard to see why Amazon can’t offer its own branded goods; this practice is widespread in retail, and for good reason: consumers get a better price, not only on the store-branded goods, but also on 3rd-party goods that can be priced more competitively since the retailer is making its margin on its own goods.

    In short, more than any company on this list, the arguments against Amazon fall apart on the first point: Amazon simply isn’t a monopoly.

    "

    stratechery.com/2019/tech-and-antitrust/

    • Avatar

      sandy

      In reply to karlinhigh:

      That analysis ignores what's happened when the smaller competitors are pushed out of business, and the large player subsequently raises prices - consumers end up paying more.

      Anti-competitive behaviour might still be illegal even without a monopoly (EU competition law differs from US anti-trust law, the USA looking at immediate benefit/loss for consumers' while the EU focuses on competition, which should provide longer-term benefit for not only consumers but a healthy business environment).

      • Avatar

        red.radar

        In reply to Sandy:

        How is that any different to what your local grocery store does? They see a novel product from a upstart company and offer a generic alternative. Even larger more established competitors will see the novel product and sell competitive offerings. People act like the data that Amazon has access too isn't public. There are companies that crawl amazon looking for the hot items to warehouse and as such that same data also provides insight to not only amazon but also competitors.



    • Avatar

      wright_is

      In reply to karlinhigh:

      It is anti-trust, not monopoly investigation.

      • Avatar

        karlinhigh

        In reply to wright_is:

        You're in Germany, right? I'd like to see a compare-and-contrast of how Amazon looks versus Aldi or Lidl from there.

        • Avatar

          wright_is

          In reply to karlinhigh:

          Aldi and Lidl are discounters, they sell mainly their own brand products - especially Aldi, they only started selling Coca Cola and a few sweets and chips brands about 18 months ago, until then everything was own brand. Lidl have always had a few major brands on sale, but over 90% was own brand (Alesto, Nelson etc.). They don't have any pop-up stores etc. for smaller retailers within their stores.

          Amazon, on the other hand, whilst having dozens of own-brands, also has stores for external retailers, where the retailer can offer products for sale. Amazon often (seems to) start buying up products that are selling well and offers them at more of a discount than their "guest" retailers. Once the guest retailers stop selling the products, because they can no longer afford to sell them, Amazon seems to then ramp the price back up again.

          Lidl and Aldi are two retail chains from dozens in Germany (we also have Penny, Netto, Combi/Famila (Bünting Gruppe), Edeka, Rewe, Kaufhof and a few others. Amazon is "the" tat-bazaar, there are smaller shops specialising in specific areas and many retailers also have an online presence, but only Amazon offers such a vast range of product categories "under one roof".

          I think, if Amazon was just Amazon and didn't have any third parties selling through it, it wouldn't be facing these problems, but, because it is trying to be a retailer and a platform for other retailers, it is running into problems, because it often seems to let those retailers in, let them take the risk selling new products, then, if the product does well, they order in bulk and undercut the retailer that took the risk. It is the same problem Google suffers from, they are both platform and supplier; which leads to a conflict of interest, which in turn leads to these investigations.

          Add in things like Echo and you have some real problem zones that other retailers don't suffer from, because they aren't just a retailer, they are also the platform for other retailers.

  2. Avatar

    lvthunder

    Yeah right. There is no way this is a summer finale to her five-year crackdown on U.S. technology giants. The EU likes to hurt successful companies. Especially US based ones. That's not going to stop.

    • Avatar

      wright_is

      In reply to lvthunder:

      So, encouraging small businesses to sell through you, then taking their products and offering them for less, then, once the small supplier has gone bust putting up the prices, isn't abusing their position as the major tat bazaar?

  3. Avatar

    m_p_w_84

    These stateless global companies put local and international economies at great risk.


    Careful regulation is important

    • Avatar

      MikeGalos

      In reply to m_p_w_84:

      I'm pretty sure Amazon isn't "stateless". Last I'd checked Amazon was headquartered in Seattle in the state of Washington which is a part of the nation state of the United States of America.


      Now they are a company that operates in multiple nations but that's true of just about every company larger than a Mom & Pop store these days.


      Does that mean the local company that's been making their money off of "we're the only ones in town so you'll take whatever service we offer and pay whatever price we like" are having to compete for perhaps the first time in their lives? Yes, it does.


      Does Amazon have to play by the laws of both its home nation and wherever it sells products? Why, yes. Yes, it does. And it has to offer better service, value and convenience to compete. And, apparently, it does.


      Which of those do you think consumers should have to give up to subsidize local companies that provide worse service for higher prices?

Leave a Reply