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A series of commitments offered by Amazon in the EU, where regulators are investigating competition concerns linked to its use of third party data, has been dubbed “weak, vague and full of loopholes” in a critical submission signed by a dozen civil society and digital rights groups, non-governmental organizations and trade unions.
The submission, which was made public today, goes on to urge the bloc’s regulators to reject Amazon’s proposals and press on with a full antitrust investigation of the two-sided marketplace. “We urge the European Commission to reject Amazon’s commitments outright and in full, and instead continue vigorously to pursue its antitrust cases against Amazon, imposing remedies and penalties (on the Commission’s own terms) as necessary,” the 12 signatories write.
The full list of signatories are as follows: Austrian Federal Chamber of Labour (AK Europa); Balanced Economy Project; Digitale Gesellschaft e.V.; European Public Services Union (EPSU); Foxglove; Goliathwatch; FairVote UK; LobbyControl; Simply Secure; Centre for Research on Multinational Corporations (SOMO); UNI Europa; and WEED (Weltwirtschaft, Ökologie & Entwicklung e.V.).
Their submission argues that much of what Amazon has proposed to try to settle the EU’s investigation into its handling of merchant data will be required under an incoming pan-EU law anyway — called the Digital Markets Act (DMA) — that’s expected to start applying from spring 2023, bringing in major penalties for non-compliance.
The incoming regulation reforms the bloc’s approach to competition enforcement around Big Tech — introducing up-front requirements for so-called “gatekeepers”, whose core platform services fall in-scope, in oft-complained-about areas like self-preferencing and data use.
But the signatories warn there’s a risk of a confusing “dual-track” of regulatory requirements opening up around the ecommerce giant if the Commission decides to accept Amazon’s commitments as it could soon be subject to the DMA. They also point out that “most” of what Amazon is offering will be required under the DMA anyway (such as a ban on self-preferencing; or restrictions on not using non-public data generated by business users) — asserting that Amazon is offering less extensive obligations, hence there’s a risk of one undermining the other.
“[T]he DMA’s obligations are more extensive than those offered by Amazon, and will be enforced by the Commission rather than by the company itself. From the point of view of both efficacy and rule of law, it is not appropriate for a private company to make voluntary commitments parallel to those that will imminently be imposed on it by European law,” the signatories argue, implying that, if accepted as is, the commitments could become a vehicle for Amazon to evade the full force of beefed up EU antitrust law (and the full sweep of associated obligations on its business).
“It should be made very clear that any commitments by Amazon cannot be used to prevent enforcement by the Commission based on the DMA,” they warn the Commission. “Moreover, accepting both Amazon’s commitments while simultaneously imposing obligations on it via the DMA would create a dual-track regulatory regime that would be confusing, inefficient and vulnerable to manipulation by Amazon.”
The signatories are also critical that Amazon is offering to apply the suggested commitments for only five years, arguing that such a short time — or, indeed, “any time horizon” on limits to its market power — is “unjustifiable”.
Their submission also calls for EU regulators to enforce “structural” remedies that put hard limits on Amazon’s market power — such as by legally separating its marketplace business from its retail and logistics operations — and to limit its ability to continue to build out market power through acquisitions of smaller entities.
Additionally, the submission flags what it describes as “Amazon’s systematic labour rights violations” — arguing that the company’s”unfair business practices” extend to issues linked to compliance with working time laws, statutory and collectively agreed minimum wages and employee data protection throughout Europe. “We therefore call on the Commission to also examine this aspect of competition law, which has so far often been at the expense of local businesses and workers,” they add.
Amazon was contacted for a response to the critical submission but a spokesperson just reiterated an earlier statement in which the company took the opportunity to take a pot-shot at the DMA — writing:
“While we have serious concerns about the Digital Markets Act unfairly targeting Amazon and a few other U.S. companies, and disagree with several conclusions the European Commission made, we have engaged constructively with the Commission to address their concerns and preserve our ability to serve European customers and the more than 185,000 European small and medium-sized businesses selling through our stores. No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”
In additional background remarks the tech giant flagged what it claimed has been a heavy investment by its business in Europe over the past two decades+, including directing an unspecified amount of money to the 900,000+ European independent sellers, authors, content creators, delivery providers, developers and IT solution providers it said work with across the region.
In 2020, Amazon also said that European SMEs selling on its marketplace recorded over €12.5BN in export sales.
Conflicts of interest
The EU’s probe of Amazon’s use of third party data has been public since 2019. The Commission published a first set of antitrust charges back in November 2020 — saying at the time that its preliminary conclusion was the ecommerce behemoth had abused its market position in France and Germany, its biggest markets in the EU, via its use of big data to “illegally distort” competition into online retail markets.
Last fall, news reports suggested Amazon was seeking to settle the EU investigation by offering concessions on how it operates. Then, earlier this summer, details of Amazon’s proposal were confirmed by the EU which published a summary — saying the company was offering concessions attached to how it uses third party seller data; around its programming of the influential Buy Box; and for Prime, its membership program (which links to Amazon’s own logistics business such as via preferential delivery options).
Specifically, on marketplace seller data, Amazon offered to refrain from using non-public data relating to, or derived from, the activities of independent sellers on its marketplace, for its retail business that competes with those sellers. Re: the Buy Box, it proposed applying equal treatment to all sellers when ranking offers to make the selection for the Buy Box, as well as offering to display a second competing option to the winner in certain circumstances.
While, on Prime — which emerged as a second strand of the EU’s probe — Amazon offered to set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime; to let Prime sellers freely choose any carrier for logistics and delivery services (and negotiate terms directly); as well as offering not to use any information obtained through Prime about the terms and performance of third-party carriers, for its own (competing) logistics services.
However the 12 groups critical of Amazon’s proposals in the aforementioned submission argue that what it’s offered both does “not materially improve” the position of third-party sellers vis-à-vis the ecommerce giant and risks muddying the water around the application of the DMA.
“The commitments do not address the root causes of Amazon’s abuse of its dominant position, which are i) its sheer size, ii) its power over sellers and consumers iii) its control of a whole ecosystem of interrelated services generating fundamental conflicts of interest,” they argue.
“Commitments not to abuse market power generated by these conflicts are a pale shadow of what is needed: Elimination of those conflicts. In our view, the only way ultimately to eliminate these conflicts is structural legal remedies, such as legally separating Amazon’s marketplace from its retail and logistics operations.”
We reached out to the Commission with questions on the general concern raised by the signatories that there could be a risk of parallel requirements being introduced — given the incoming DMA — but at press time it had not responded to questions.
As regards structural remedies, the EU’s competition chief, Margrethe Vestager, has frequently signalled a reluctance to go so far in her big tech-related interventions — expressing a preference for alternatives such as putting controls around data use — so calls to break up Big Tech are likely to fall on deaf ears. However the EU’s digital strategy EVP and competition chief will certainly be keen for the DMA to arrive as both the shiniest and sharpest possible instrument in the bloc’s updated toolbox so warnings about muddying the legal waters may get more attention.
Nonetheless, it remains to be seen which way the Commission will jump on the Amazon probe — which was opened prior to the draft DMA being presented.
The EU was soliciting and accepting feedback on Amazon’s suggested commitments up until last Friday. Its decision-making process continues — but now it will be assessing submissions and, ultimately, making a judgement call on whether Amazon’s offer is good enough to close out the investigation — or whether to ask for (or enforce) more substantial remedies on the ecommerce giant.
Asked for a view on whether the Commission will be minded to accept Amazon’s commitments, a policy advisor who has been working with the NGOs for this submission flagged the public consultation process as a sign that EU lawmakers are looking at what Amazon has suggested seriously. Although he also argued they will likely be applying a sceptical eye — not least given some of the issues being raised in submissions such as this one but also as he suggested the Commission will be wary about preempting Amazon’s obligations under the DMA (which he said “touch on similar practices but are more comprehensive and now have a foundation in EU law”).
“If I had to make an educated guess, I think the Commission will eventually accept a set of commitments from Amazon but only after significant revisions based on DG COMP’s feedback,” Global Counsel’s Max von Thun added. “I would also expect them to make it explicit that Amazon — if designated as a gatekeeper [under the DMA] — will still have to demonstrate separately how they are complying with the DMA’s obligations, and perhaps even specify that the commitments will be superseded by the DMA obligations once they take effect in early 2024.”