The European Commission has laid out a first set of antitrust charges against Amazon. The company is focused on its dual role as a platform for other sellers but also as a retailer itself on its own platform. More so, is its cumulative use of third-party merchant data to underpin Amazon’s own retail decisions.
Competition chief Margrethe Vestager said its preliminary conclusion is that the ecommerce giant has abused its market position in France and Germany- these are its two biggest markets in the EU. How? Via its use of big data to “illegally distort” competition into online retail markets.
“Amazon is data driven. It’s a highly automated company — where business decisions are based on algorithmic tools,” said Vestager. “Our investigation shows that very granular, real-time business data relating to third party sellers’ listings and transactions on the Amazon platform systematically feed into the algorithm of Amazon’s retail business. It is based on these algorithms that Amazon decides what new products to launch, the price of each individual offer, the management of inventories, and the choice of the best supplier for a product.”
The competition chief said its preliminary concern is that third party sellers are unable to compete on the merits as a result of the big data advantage Amazon gleans from its access to third party sellers’ data.
“Amazon has, for example, access to data on the number of ordered and shipped units of sellers’ products, revenues on the marketplace, the number of visits to sellers’ offers, information relating to shipping — including the past performance of the seller, the consumers’ claims on the sellers’ products including the activated guarantees. And Amazon gets this data from every seller, every listed product, every purchase on its platform.”
Amazon may have set certain rules on its platform that artificially favours both its own retail offers as well as the offers of sellers that use Amazon’s logistics and delivery services.
Under current US law, monopolies are legal. But what is not allowed is the corporate malfeasance designed to preserve monopoly power, at the expense of competition. Like Amazon, other tech giants have also maintained their monopoly position by using the vast amounts of data they have gathered on both sellers and consumers. They use the data to muscle out rivals, gain an advantage in new product markets and reduce innovation by others. That conduct, according to the House antitrust report, is anti-competitive.
In line with the move of US and EU in curbing the power of internet giants, China too has proposed new regulations to define anti-competitive behaviour for the tech sector. This could affect China’s tech giants like Alibaba, Ant Group, Tencent as well as Meituan.
What about Malaysia? We are so simple and trusting in surrendering our data to huge telcos, banks, government agencies, e-wallet payment systems and many others. Its possibly fine if they are only using it for marketing purposes. But what happens if you have great scammers who use the data to fleece you? Police reports are futile. We need a more transparent data reporting and data monitoring system that provides confidence to the consumer. The likes of Amazon will procure, sell and profit from data that leads them not only to be a monopoly but destroy any competition.
1. Natasha Lomas, Europe lays out antitrust case against Amazon’s use of big data https://techcrunch.com/
2. 'Near-perfect market intelligence': Why a House report says Big Tech monopolies are uniquely powerful, 10 Oct 2020, CNN