EU's Amazon Probe Raises Questions About Data Practices as Basis for Antitrust Enforcement
The EU is examining whether Amazon's practices in connection with its third-party sales data could violate antitrust laws.
September 24, 2018 at 12:42 PM
3 minute read
The original version of this story was published on Corporate Counsel
America's tech giants have faced a litany of antitrust concerns at home—but mostly abroad—in recent months. And last week, the European Union added Seattle-based Amazon to that list.
The EU announced Sept. 20 it is in the earliest stages of examining whether Amazon's position as a platform with access to third-party sales data gives it an unfair competitive edge in the creation and sale of its own brand products.
It's a new look into how data use plays a role in antitrust law.
“Amazon is what conventional antitrust would think of as a dual distributor, in the sense that it's selling direct to end users but it's also allowing others to sell to end users on its platform. … The two of them could be competing for end users on particular products,” said Jay Himes, a partner at Labaton Sucharow and co-chair of the firm's antitrust and competition litigation practice.
If Amazon knows which products sell best, the reasoning goes, it can create its own versions of the product with inside information on what consumers prefer.
“In the brick-and-mortar world it's not terribly uncommon,” Himes continued. “But the uncommon part here is the idea that, in the digital world, Amazon is able by virtue of its arrangements [to access] rather considerable data.”
Alicia Downey, an antitrust partner and managing partner of Downey Law, said the sheer amount of data could separate this investigation from previous inquiries into dual distributors. The amount of power Amazon is determined to have in retailer-manufacturer negotiations could also play a role.
Many dual distribution retailers have negotiations with providing manufacturers that outline what data the retailer can collect on its third-party manufacturers and creators. This allows manufacturers to have more control over what competitive information they're offering up, and gives retailers a chance to explain why they'd like to collect this data.
“I think there may be the other issue in the disparity in bargaining power,” Downey said. “If you are a [manufacturer] on the Amazon platform, do you really have the power to go to Amazon and [make requests] about the data it collects?”
She also noted that an investigation, or new approach to antitrust and data use, in the EU doesn't mean those ideas will transfer across the pond. American antitrust tends to focus more heavily on consumer protection—if large companies' practices aren't leading to high prices or low quality for customers, the government likely won't intervene.
Europe, on the other hand, has proven to be more focused on the size and market share of a company. In July, the EU hit Mountain View, California-based Google with a $5 billion antitrust fine, the largest it has ever imposed in this type of case. So far, the U.S. has not taken any similar antitrust steps against Google or other major tech companies this year.
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