European Union regulators filed antitrust charges Tuesday against Amazon, accusing the e-commerce giant of using its access to data to gain an unfair advantage over merchants using its platform.

The EU’s executive Commission, the bloc’s top antitrust enforcer, issued the charges after it started looking into the company two years ago. Adding to Amazon’s regulatory headaches, EU officials also opened a second investigation into whether the company favors product offers and merchants that use its own logistics and delivery system.

It’s the latest effort by Executive Vice President Margrethe Vestager, the EU commissioner in charge of competition issues, to curb the power of big technology companies. She has slapped Google with antitrust fines totaling nearly $10 billion and opened twin antitrust investigations this summer into Apple. The U.S. has started taking a tougher line as well, suing Google this year for abusing its dominance in online search and advertising.

It’s not a problem that Amazon is big and successful, said Executive Vice President Margrethe Vestager, the EU commissioner in charge of competition. But “our concern is very specific business conduct which appears to distort genuine competition.”

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EU officials focused on the company’s dual role as a marketplace and retailer. In addition to selling its own products, the U.S. company allows third-party retailers to sell their own goods through its site.

The commission took issue with Amazon’s systematic use of business data that it has exclusive access to to avoid the normal risks of competition and leverage its dominance for e-commerce services in France and Germany, the company’s two biggest markets in the EU.

Amazon faces a possible fine of up to 10% of its annual worldwide revenue, which could amount to as much as $28 billion based on its 2019 earnings. The company rejected the accusations.

“We disagree with the preliminary assertions of the European Commission and will continue to make every effort to ensure it has an accurate understanding of the facts,” the company said in a statement. Under EU rules, it can reply to the charges in writing and present its case in an oral hearing.

Investigators analyzed data covering 80 million transactions and 100 million products listed on Amazon’s site. Vestager said they found that “very granular, real time business data” on third party product listings and transactions was fed into algorithms for Amazon’s retail business that decide which new products to launch, their price and supplier.

“In other words, this is a case about big data,” Vestager told a press briefing.

Ordinary retailers take risks when they invest heavily to find new products, bring them to market and decide how much to sell them for, Vestager said. “Our concern is that Amazon can avoid some of those risks by using the data it has access to.”

The stakes have risen for retailers as many European countries have shut nonessential shops temporarily to try to contain the coronavirus pandemic, pushing more shopping online, where Amazon is a major presence.

The EU’s second investigation will look at the criteria Amazon uses to decide which seller’s product gets chosen for the “buy box” and for its Prime membership service, and whether that means they get preferential treatment by the company’s logistics and delivery services.

The buy box, found on the right side of Amazon’s site, lets shoppers add items directly to their shopping baskets. The box features a single seller’s product even though multiple merchants might offer it.

The reviewed rules, agreed by Parliament and Council negotiators, govern the export of so-called dual use goods, software and technology – for example, high-performance computers, drones and certain chemicals – with civilian applications that might be repurposed to be used in ways which violate human rights.

The current update, made necessary by technological developments and growing security risks, includes new criteria to grant or reject export licenses for certain items.

Human rights and cyber-surveillance

Parliament negotiators, mandated by a 2018 report, have succeeded in substantially strengthening human rights considerations among those new criteria to avoid that certain surveillance and intrusion technologies exported from the EU contribute to human rights abuses.

Parliament negotiators

• got agreement on setting up an EU-wide regime to control cyber-surveillance items that are not listed as dual-use items in international regimes, in the interest of protecting human rights and political freedoms;
• strengthened member states’ public reporting obligations on export controls, so far patchy, to make the cyber-surveillance sector in particular more transparent;
• increased the importance of human rights as licensing criterion; and
• agreed on rules to swiftly include emerging technologies in the regulation.

Bernd Lange (S&D, DE), the head of the negotiating delegation

“Parliament’s perseverance and assertiveness against a blockade by some member states has paid off: respect for human rights will become an export standard. The revised regulation updates European export controls and adapts to technological progress, new security risks and information on human rights violations. It is an EU milestone, as export rules for surveillance technologies have been agreed for the first time. Economic interests must not take precedence over human rights.

“This new regulation, in addition to the one on conflict minerals and a future supply chain law, shows that we can shape globalisation according to a clear set of values and binding rules to protect human and labour rights and the environment. This must be the blueprint for future rule-based trade policy”, the leader of the Parliamentary delegation said.

Markéta Gregorová (Greens/EFA, CZ), rapporteur

“Today is a win for global human rights. We have set an important example for other democracies to follow. We will now have EU-wide transparency on the export of cyber surveillance and will control the export of biometric surveillance. Authoritarian regimes will no longer be able to secretly get their hands on European cyber-surveillance. We still do not have a level-playing field among EU countries but several new provisions allow for autonomous controls, better enforcement and coordination. I expect that member states’ obligation to uphold human rights and their own security will be the foundation of further work ahead”, said the rapporteur, who has led the negotiating team since July 2020.

Next steps

The informal political agreement now needs to be formally endorsed by the International Trade Committee and Parliament as a whole, as well as the Council, before it can enter into effect.

Background

The Commission tabled the original proposal to review the export controls regime in 2016, with the goal of updating the rules under which member states license companies to sell dual use goods, software and technology to third countries. The Commission also included cyber-surveillance technologies among dual use products. Parliament adopted its negotiating mandate in January 2018, and was waiting for the Council’s position to start talks until October 2019.