European antitrust lawsuit accuses Amazon of undercutting small business

CNN reported this week that the European Union is filing antitrust charges against Amazon. The EU is accusing Amazon of abusing its online dominance in Germany and France. This is similar to what the Justice Department accused Google of doing last month, but there is a little twist here in that Amazon is in trouble for the way it treats the merchants who use it as a marketplace.

Geekwire co-founder Todd Bishop joined Seattle’s Morning News to discuss what’s at stake.

“This is really the escalation of antitrust scrutiny of Amazon around the world now. Amazon was a target of the U.S House Judiciary antitrust committee’s report recently, but this is escalating things in Europe,” he said. “The real question is will Amazon still have the freedom to operate as it is currently using data?”

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“And also basically treating products as it does currently on product pages, whether it’s biased against those who sell products on its platform or gives preferential treatment to its own business in this whole process,” Bishop added.

As Dave noted, local merchants or independent business people who want to sell stuff can become part of the Amazon platform, and you can put your product up so when you log on Amazon, your business will come up in the searches. The lawsuit is saying that Amazon is actually harvesting some of the private information of these small businesses with an eye toward making the same products — or at least competitive products — which eventually end up undercutting those businesses.

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“That’s exactly what the accusation is,” Bishop said. “This is not technically new. Amazon gives a very nuanced response to this. They say that they only use aggregated data to compete or develop their own products. But The Wall Street Journal had an investigation where they showed that that aggregated data can effectively be data on one other seller if that other seller is dominant in a certain product.”

“So Amazon has kind of basically tried to sort of talk its way through this in the U.S. before, and here you have the European Commission cracking down on the practice potentially,” he added.

In a sense, the implication is that if a company came up with a specific, effective product, Amazon could get an overseas supplier to make the product for much less.

“That’s right. Now, Amazon says it has a firewall between its third-party platform and its own retail business. But to your point, Dave, this could get into very mundane things,” Bishop said. “One of the products at issue in the U.S. has been a car trunk organizer, so this can really impact all sorts of different products.”

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