In mid-November, European Commissioner Margrethe Vestager announced she would launch an investigation into the e-commerce practices of online shopping giant Amazon. The European Commission is not happy about the fact that Amazon is simultaneously a provider of a marketplace, and also a seller on that marketplace, and suspects abuse of that position.
The Commission sent Amazon a so-called Statement of Objections. In it, Amazon is accused of using the data it obtains from its role as an e-commerce platform provider to offer its own products. The Commission said:
"The Commission's preliminary view, outlined in its Statement of Objections, is that the use of non-public marketplace seller data allows Amazon to avoid the normal risks of retail competition and to leverage its dominance in the market for the provision of marketplace services in France and Germany - the biggest markets for Amazon in the EU."
The Commission believes that Amazon's conduct qualifies as an abuse of market power. This is prohibited under Article 102 of the Treaty on the Functioning of the European Union. The Statement of Objections is a first step in a competition investigation. Amazon, of course, can and will defend itself extensively against the Commission's contentions. In an initial response, Amazon has already said that it disagrees with the Commission's contentions and will do everything it can to ensure that the Commission "makes a correct representation."
If, after thorough investigation, the Commission concludes that Amazon did indeed abuse its dominant position, a hefty fine is likely to follow.
Even if the Commission concludes that there was no abuse of market power in this case, Amazon is not yet out of the European crosshairs. In December, the European Commission unveiled its proposal for the Digital Markets Act: a new regulation aimed at curbing the enormous market power of tech giants such as Amazon, as well as Google, Facebook and Apple.
These types of tech giants have had more or less free rein in Europe for 20 years. Regular action under competition or privacy laws resulted in billions in fines. Despite those fines, the tech giants have grown so large that actual competition is almost non-existent. The tech giants have become gatekeepers and that is undesirable.
So time to curb the power of gatekeepers. Among other things, the Digital Markets Act will prohibit gatekeepers from using data collected as part of their services to compete with their business users. So, left or right, Amazon will have to end the practices described earlier.
Furthermore, the Digital Markets Act will create many more far-reaching powers for the European Commission. Namely, it will have enforcement powers, including the power to undertake "structural remedies. Think, for example, of splitting WhatsApp, Instagram and Facebook.
It is clear: the European Commission is finally showing its teeth to Silicon Valley. At bottom, then, it is indeed true: innovation may begin in the US, but regulation begins in the EU.
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