An anonymous online merchant’s complaint to US authorities on Amazon’s logistics practices has caught the attention of the European Union, Bloomberg reports. The outlet cites a document revealing that the European Commission has asked a US congressional committee to share a plea suggesting that the tech giant is abusing its power as a marketplace owner to push its logistics services, for instance, delivery, packaging, or providing storage.
The 62-page complaint that Brussels asked for was lodged by one of the e-commerce behemoth’s long-time clients. It provided an analysis of thousands of transactions, claiming that it proves that Jeff Bezos’ company has “tied” the marketplace to using Amazon’s services.
Amazon disputed the allegations brought by the complaint. Confronted by Representative Jared Golden at a House Committee on Small Business hearing, Amazon’s Vice President Dharmesh Mehta dismissed allegations that the giant was creating algorithms “to favour sellers or products based on who’s selling them or the fulfilment channel. We design them to prioritise what we think customers want most”.
EU Probe Into Amazon
The EU is already looking into Amazon’s practices amid an antitrust probe that was opened in July and is supposed to find out whether the company, functioning as a store itself, is exploiting data from its marketplace branch, which rival retailers also use, in order to gain an advantage. The regulator is concerned that Amazon could use this information to manipulate the “buy box”, which influences what store a buyer will purchases a particular product from.
An algorithm is said to choose the buy box winner, but if one understands how to manipulate it, then retailers could enhance their transactions for a particular item. The bloc is now busy building a “statement of objections”, which could result in fines and confirmation that the company has broken antitrust rules.
While both the European Commission and the House Judiciary Committee’s antitrust panel remain tight-lipped on the matter, an Amazon spokesman told Bloomberg that it “will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow”.
Berlin’s Call
The news about fresh suspicions against Amazon came in the wake of a Financial Times report that Germany had called on the EU to pursue a tougher line on the Big Four tech companies, including Amazon, Google, Microsoft, and Facebook, also known as Big Tech, to strengthen Europe’s “digital sovereignty”.
In a letter to the EU’s competition chief Margrethe Vestager seen by the newspaper, German Economic Affairs Minister Peter Altmaier stressed that “in light of current developments in the global data and digital economy, we require tougher oversight of abusive practices in order to maintain competition”.
“Specific rules of behaviour need to be imposed on market-dominating online platforms”, Altmaier said, referring to Amazon, Microsoft, Google, and Facebook.
Digital Tax Battles
Earlier, the European Commission called for imposing an additional tax aimed at Big Tech’s digital sales in order to curb the practice of paying global levies in countries with lower tax rates.
After months of negotiations, the European Union in March abandoned plans for a digital tax on corporations following objections from some countries, including Ireland, Malta, and the three Baltic States, which offer attractive low-tax regimes to tech businesses. However, despite the failure of plans to broker an EU-wide agreement, France has gone ahead with a three percent levy on annual revenues of major online platforms operating in the country. Legislation introducing the GAFA tax, named after IT giants Google, Amazon, Facebook, and Apple, was adopted by French lawmakers on 11 July.
The measure met with backlash on the part of the IT giants, who called it discriminatory. Moreover, since most of the large technology companies are US-based, Washington called the new tax "ill-conceived" and threatened to fight it at the World Trade Organisation.