The EU should not give in to Amazon’s weak commitments, civil society organisations say

Opinion

12 September 2022

Since 2019, Amazon has been under close scutiny from the European Union. The company is subject to two investigations, all on the abuse of its market power and monopolistic position in online selling. To stop these investigations by the EU, Amazon has now made some half-hearted commitments to improving the position of smaller sellers using its marketplace, but these commitments actually stand in the way of better and stronger regulation as proposed in the Digital Markets Act (DMA). Together with eleven NGOs and trade unions, SOMO asks the EU to reject Amazon’s proposals and continue its own investigations.

Dominant e-commerce

Amazon, once a small online bookshop, has grown to become one of the world’s biggest companies. Along the way it came to dominate e-commerce (alongside other markets). In July 2022 it recorded(opens in new window) 5.3 billion visits worldwide, 2.3 billion more than its closest competitior. The US company is now so dominant it is nearly synonymous with online shopping.

But the company doesn’t simply act as a marketplace that connects sellers with products. Amazon also provides product delivery services and is a seller itself. In effect the company has conflictual roles, holding considerable control over those wishing to sell their products online, while also competing with them.

The American behemoth can stack the deck in its own favour in multiple ways: snooping on users and sellers on its marketplace, then using the data it extracts to tweak its rules or algorithms to favour its own products. In effect, Amazon can punish or favour sellers, often in invisible ways. This behaviour attracted the scrutiny of competition authorities across Europe. In Italy, for example, Amazon was fined €1.13 billion(opens in new window) for abusing its dominance at the expense of independent sellers; and Germany(opens in new window) and the UK(opens in new window) started separate investigations in July 2022.

The EU’s Amazon investigations

Amazon has been under scrutiny by the EU competition authority since 2019, first for the way it used non-public data from the independent sellers that use its services to compete against them. One year later, the EU Commission issued a preliminary assessment(opens in new window) that Amazon had breached EU antitrust rules, using its power to distort the retail market. On the very same day, it launched a separate investigation(opens in new window) into potential discrimination in the criteria and conditions used to select featured offers and participation in the Prime programme.

In July 2022, Amazon offered a set of commitments(opens in new window) to the EU Commission to make these investigations go away. At first glance Amazon’s promises seem to address to address the problems identified. Yet, the commitments are weak, vague and full of loopholes. In effect, many overlap with obligations that the company will likely be bound to once the Digital Markets Act comes into effect, just more limited.

This Wednesday (07 September 2022), SOMO joined 11 NGOs and trade unions to jointly ask the EU’s competition authority to reject Amazon’s proposals to end ongoing investigations. The civil society organisations raised the alarm bells as Amazon’s commitment are too weak, vague and full of loopholes. If the EU acepts Amazon’s terms, the e-commerce giant would be left with too much space for evasion and abuse.

You can download the full submission here(opens in new window) . For this submission, we worked closely together with the Balanced Economy Project(opens in new window) , an organisation dedicated to tackling monopolies and excessive concentrations of economic and financial power.