To judge from Brussels’ record when taking on the dominant internet platforms, Amazon does not have much to fear from the preliminary EU antitrust investigation that came to light this week.
A comparable study of Google, begun in 2010, took seven years to reach a conclusion. The upshot: a €2.4bn fine (equivalent to 8 per cent of Google’s free cash flow last year).
The competition Brussels was trying to protect in that case — the market for so-called comparison shopping services — was ancient history by the time it was over. If it ever was a distinct market worth saving, the trustbusters acted way too late.
By opening a review of Amazon, however, Brussels has sent notice that this time it wants to get ahead of the curve. A notable aspect of this probe is that it was not prompted by complaints from technology group’s rivals, the usual trigger for an EU competition review.
There are two ways to view this. It could pre-empt the usual complaints from the US that the EU bows to special interests, and that its regulators are more concerned with protecting European competitors than they are with protecting European competition. For once, this does not look like the result of a behind-the-scenes feud between rival corporate lobbyists.
On the other hand, it could simply show that none of the merchants that sell on Amazon’s ecommerce platform have felt strongly enough about the issue before to file an official complaint (though it is also possible that anyone who does feel that way has decided it is not worth risking Amazon’s ire).
Whatever the truth, it is at least a good sign that the regulators have decided to proactively scratch the surface of the company’s platform dominance. Amazon is guaranteed to highlight how small a player it is in terms of overall retail sales. But it is a much bigger presence in the market that matters in this case: the one for full-service ecommerce fulfilment platforms.
Brussels has started with a very narrow question. Pulling on one strand, though, is almost certain to lead to others, given the complex relationship between Amazon and the retailers that rely on some or all of its services to make sales and fulfil customer orders.
The immediate question is whether Amazon uses information from third-party sellers on its platform to unfairly boost its own sales. Certainly, much of the data about the pricing and products are there for all to see. But to the extent Amazon has access to information about which third-party products are selling most — and to whom — it has at least a theoretical advantage.
As EU competition chief Margrethe Vestager put it, Amazon might end up with the best view of “what is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things”.
This inevitably opens the door to other questions about how Amazon treats retailers that rely on its services, and whether it unfairly uses its role as platform provider to favour its own in-house, or “vertical”, services.
The parallels with Google are obvious. Amazon is powered by a giant search engine, surfacing products in response to user queries and ranking them on some measure of relevance. It also presents both first-party and third-party products, much as Google combines links to third-party sites with its own “vertical” services like comparison shopping.
How Amazon’s algorithms work when dealing with these third-party and in-house results, and the way the information is presented to users, are the kinds of question that have a big impact on how competition works on its platform. They are directly comparable to the questions that European regulators have asked about Google.
It is the nature of European antitrust reviews that what begins as a narrow case can often evolve into a series of investigations into a dominant player that stretch far beyond the initial concern. That certainly describes Microsoft’s years of misery in Brussels. And while the Google shopping case turned out to be a damp squib, it has been followed this year by another, bigger fine over Google’s Android smartphone software.
The EU will want to show that it can get to the bottom of its Amazon questions in far less than the seven years it took to deal with the Google case. The real significance of this week’s news, however, may well take far longer to become apparent.
Get alerts on Amazon.com when a new story is published