E.U. Opens Antitrust Investigation Into Amazon's Practices

[engine]

The European Commission has opened an antitrust investigation into Amazon's possible anti-competitive approach to independent retailers selling on its marketplace.

Commissioner Margrethe Vestager, in charge of competition policy, said: "European consumers are increasingly shopping online. E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behaviour. I have therefore decided to take a very close look at Amazon's business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules.”

[ec.europa.eu...]

Earlier story
Amazon Could Be Facing E.U. Antitrust Investigation [webmasterworld.com]

[heisje]

Despite its tortoise pace, castrated institutions, bloated bureaucracy & what have you, it's the EU once more leading the way. In the land of the blind, the one-eyed man is king.

Looong overdue.
.

[azlinda]

Amazon is based in the United States. To heck with the EU. It's very simple. If anyone doesn't like the way Amazon operates, then shop elsewhere. Or doesn't freedom of choice exist in the EU countries?

[graeme_p]

I think regulators in general are waking up to issues with tech giants.

1. The French tax
2. The US investigation in FB privacy breaches
3. Current US president has been attacking FB's crypto currency plans, while a credible candidate has threatened to breck them up.
4. A German state has banned Office 360 from schools because of privacy issue (GDPR breaches, so we could see it elsewhere).

@azlinda, Amazon have freedom of choice. If they want to operate in the EU they have to follow EU law. If you think they should be exempt from EU law, then do you think foreign firms operating in the US should be able to ignore US law?

[Dimitri]

Amazon is based in the United States.

But Amazon Europe is based in Luxembourg, which is country in the European Union, in case you don't know.

If anyone doesn't like the way Amazon operates, then shop elsewhere

You speak about the buyers, whereas the investigation is about Amazon and its relation to third part sellers. So you suggest that if third part sellers are not happy they go "buy" elsewhere? It doesn't make sense.

[tangor]

While there is a number of moving parts to all these issues, the major driving force is governments are waking up to the fact that some tech companies are more powerful than they are. Bits and pieces, bits and pieces.

</followthemoney> </followthepower>

[glakes]

At least EU regulators have a spine. In the USA, regulators allow Amazon to steer product reviews to those items Amazon makes more money off of (FBA/Prime shipped from an Amazon warehouse): [webmasterworld.com...]

Meanwhile the FTC goes after low hanging fruit by nabbing a seller that bought fake reviews while other USA Government agencies contract with Amazon for their cloud services...

[tangor]

other USA Government agencies contract with Amazon

As has become increasingly obvious, and folks in high places are starting to take note. Time will tell which way the cookie crumbles.

[EditorialGuy]

I wonder how independent online retailers would fare if Amazon didn't have its Marketplace?

[mosxu]

Marketplace?

Full of Chinese manufacturers fulfilling their products direct on amazon warehouses and selling at a price that an American company will always loose money on.

[heisje]

What people don't realize is that Chinese manufacturers are directly subsidised by their state, rendering international competition a joke - by subsidised state electric power, subsidised state transport/shipping, zero social security payments (state fully covers health and pensions), laughable taxes if any (exemptions) and laughable state fixed wages. China DUMPS products, trade is unfair, and Amazon channels this unfair trade in a GRAND manner - crashing US and EU manufacturing in a sinister manner.

Seems only the current US administration is waking up to the horrid facts - much maligned for its questionable style but so true for substance.

.

[graeme_p]

@heisje No taxes and subsidies for everything? Where does the money come from?

I think you re partly right but there is a contradiction there.

There are other countries that are involved in the unfair competition: Luxembourg and Ireland, for example. If I buy something from Amazon UK and its shipped to me from an Amazon warehouse in the UK, but Amazon pays tax on its profits from that in Luxembourg.

[Dimitri]

but Amazon pays tax on its profits from that in Luxembourg.

But Amazon will pay the VAT to the UK

[graeme_p]

@Dimitry, good point, so they do not avoid UK tax altogether, but they avoid a lot. Then there are zero rated items like books and children's clothes.

[heisje]

@graeme_p

@heisje No taxes and subsidies for everything? Where does the money come from?

Said "laughable taxes if any (exemptions)" - meaning taxes to business. They are indeed laughable, and most new manufacturing plants in the provinces are totally tax exempt for 5, 10 even 20 years since establishment, as investment incentive. China taxes *distributed* business income as personal income, whenever distributed, has personal income tax for high earners and also consumption tax (similar to VAT). Distributed business profits while only a minimal fraction of total profits provide very substantial taxes due to huge exports. In effect foreigners pay indirectly these taxes.

There is no single Chinese product not benefiting from direct and indirect subsidies. DUMPING on an grand scale. When first tested, it worked. Nobody complained. Then it expanded, becoming the foundation of global Chinese power. The mantra : DUMP and build your manufacturing base while decimating your foreign competitors. Has worked magnificently. The West sleep walking to destruction.

Hope this helps.
.

[glakes]

What people don't realize is that Chinese manufacturers are directly subsidised by their state, rendering international competition a joke - by subsidised state electric power, subsidised state transport/shipping, zero social security payments (state fully covers health and pensions), laughable taxes if any (exemptions) and laughable state fixed wages.

Amazon enjoys at least one of these subsidies in the USA.

Supporting the power requirements of astoundingly large data centers is no small feat. AWS is now responsible for nearly two percent of all electrical power consumption in the United States. Under secretive agreements between Amazon and energy providers, the true costs of running such massive data centers are well hidden from the public.

Amazon has been successful in negotiating special electric rates that are unavailable to other customers. While some may argue that it is just a bulk use discount, exemptions from select fees offered by utility companies combined with tax incentives offered by governments pass the costs along to regular everyday people.

Source: [techspot.com...]

Amazon's tax breaks, utility discounts, etc. most certainly creates an unfair market for competition. Yet politicians and regulators lie through their teeth everyday saying they are standing up for small businesses...

[heisje]

How very true!
In US and EU Amazon is subsidised in all sorts of sinister ways (huge tax breaks, warehousing & headquarter subsidies, land, energy) so it may substantially *promote Chinese manufactured products* through a monopolistic structure - rewarded with unprecedented profits for its efforts!

If this is not scandal and madness, what is?

The West has been sleep walking to destruction a long time now.
WAKE UP, WAKE UP!
.

[glakes]

In US and EU Amazon is subsidised in all sorts of sinister ways (huge tax breaks, warehousing & headquarter subsidies, land, energy)

Don't forget to add the NSA (Negotiated Service Agreement) Amazon has with the United States Postal Service to the list. Amazon's special pricing for USPS shipments places small businesses at a competitive disadvantage. From where I sit, as a manufacturer that sells/ships directly to the public, I see such NSAs from an independent Federal Government Agency as anti-competitive. IMO Government and agencies under their control should serve the population equally, and it's clear USPS does not.

While the discounts USPS gives to Amazon are unknown, UPS discounts are known to some degree since they are published for sellers to see. For example, Amazon pays no more than $6.52 to ship a 10 LB package to a consumer. Amazon pays no more than $45.51 to ship a whopping 150 LB package to a consumer. If the UPS negotiated pricing is to be an indicator of how steep Amazon's USPS discounts are, it's no wonder new/small businesses don't stand a chance to compete.

[Dimitri]

Had a friend who had a small e-comm site in Europe, what killed his business was that, people were finding it not normal, that he was charging shipping fees, whereas Amazon had free shipping (on order over 25€)...

[glakes]

Had a friend who had a small e-comm site in Europe, what killed his business was that, people were finding it not normal, that he was charging shipping fees, whereas Amazon had free shipping (on order over 25€)...

Amazon passes the cost of "free shipping" onto the sellers. When a typical product on Amazon is sold, Amazon takes a 15% commission fee off the top. If shipped by Amazon, there is a fulfillment fee on standard 10 ounce or less items of $2.41 USD. A 1 LB item will cost a seller $4.76 USD. Amazon also charges sellers a warehouse fee to store their products. When a customer returns an item to Amazon, the seller is billed the cost of the original fulfillment fee (minimum of $2.41 USD), which also helps to cover the cost of the return shipping.

For all intensive purposes, Amazon is nothing more than a trojan horse for Chinese goods. Many domestic sellers don't want Amazon warehousing/shipping their products because they are misfits. Amazon loses pallets of inventory sent in by sellers who have to wait months for a resolution. Amazon accepts returns of customer damaged items, or even different items, leaving sellers with substantial losses, etc. Those that send product in to Amazon, to be sold/shipped via Prime, are mostly Chinese based sellers that don't have any warehousing options available in the country they are selling in. On Amazon.com, it's estimated that at least 40% of the sellers are from China. China's reach is even higher in some regions of Europe.

In a year, sellers’ based in China market share increased from 28% to 34% on Amazon.co.uk in the UK, from 26% to 28% on Amazon.de in Germany, from 41% to 47% on Amazon.fr in France, from 41% to 45% on Amazon.it in Italy, and from 48% to 52% on Amazon.es in Spain.

Source: [marketplacepulse.com...]

[JS_Harris]

The elephant in the room....

The EU is turning lawsuits vs big corporations into a cash cow. Multi-billion dollar payments to themselves and they get to make the charges, rule on the charges and decide the penalty.

Question: Why are none of these funds going to the supposed victims?

[glakes]

Why are none of these funds going to the supposed victims?

I wish more people would ask this question. It seems like nothing more than a money grab by the government while the true victims are left to suffer. I look at the opioid epidemic. I know a worker hurt on the job and the state's workers comp system took 6 months to approve back surgery (two herniated discs). While awaiting surgery, opioids were used to treat the pain leaving him addicted. Four years later he finally kicked the pills, but not without the pain involved with being an addict along with permanent nerve damage because it took too long for surgery. People like this will never be compensated for their expenses (rehab, related medical bills) or pain and suffering through any class action settlements despite the state being complicit in the same way insurers are allowed to drag out the inevitable (surgery) to save a buck.

I did get a check once from a class action settlement with Google. The check was a measly $0.17. The stamp cost more than the settlement amount. Yes, I was a victim but the attorneys made out better than any actual victim.

[Dimitri]

Yes, I was a victim but the attorneys made out better than any actual victim.

May be I am wrong, but I think that in the EU, this is different, (the way attorneys are paid).

By the way, still the EU fines, in a way, profits to all EU citizens, because the money goes into the budget of individual countries, in case of national fine, or in the budget of the EU. So, technically, the money helps finance things, instead of using tax payers money. The way EU or EU countries use money is of-course another subject :) ... But things are not only black, for example, I live in country side, and we have optic fibers, because the State and the EU financed the deployment of the fiber, private ISP would have never bother installing it themselves. There is an old historical monument , in my town, which was falling apart, and the EU gave 2 millions € to rehab it, etc...

[Milchan]

i think one of the unfair practices that is being investigated is the pattern of Amazon copying and producing certain products that have proved to be popular then selling them under their own 'Amazon Basics' brand for a cheaper price and putting their own listings more prominently in searches, effectively taking the lions share of the market for that product.

[Dimitri]

"real life stores" are doing the same. They look at which products are popular in their shelves and, then they sell copies under their own brands.

[tangor]

"Unfair Practices" are when the big guys are so big they can prevent others from playing. Quite a different problem ... and one that the EU, and in recent days, the USA is investigating.

As for copying what others do, coming out with a competitive product, that's part and parcel of ordinary business (refinement of product offer). That's not the same as unfair ... just "I can do it better than you can..."

If Patententend however, the Patent Holder needs to SUE the pants off the infringer(s) and maintain their Patent.

[graeme_p]

@tangor, what is different about this is that Amazon has a lot of data a normal competitor would not have.

There is something of the same risk selling through other big retailers, but Amazon has a huge share of the online sales market and makes more of a practice of this. Unlike other big retailers it is both a market place and a retailer and as a retailer it uses commercially sensitive data (i.e. which ought to be confidential) that it has because of its role as a market place.

[Milchan]

As for copying what others do, coming out with a competitive product, that's part and parcel of ordinary business (refinement of product offer). That's not the same as unfair ... just "I can do it better than you can..."

Yes of course in a normal business environment , but when you also own the platform and then suppress the listings of the products you are competing against that is unfair practice. Whilst they may have risen to where they are in a legit and fair way by being innovative , the way Amazon (and the other big tech companies) are engaging in business is now clearly unfair when it results in competition demonstrably not having any chance of winning in the market. That is not good for any society, economy etc

[tangor]

Yes of course in a normal business environment

I think we can all agree this is not a normal business environment!

I am not an apologist for anyone, in fact quite the opposite, but I am along not an angst-ridden wailer who can't see the forest for the trees.

There are many moving parts to the process and EACH of those must be addressed with due process and rule of law ... and in THAT, I have much to say ... and will not since WW is not a political platform (nor should it be).

Suffice it to say, I am for any investigations into anti-competition, anti-trust (almost the same thing) and censorship (which is a growing problem). One can only hope that elected officials will do their job, follow the laws of their country, and inject COMMONSENSE into the process at the same time!

(I am not holding my breath on the last part. The current crop of legislators seem ham-strung and low-energy). Whew!

</soapbox off>

Until all the above are truly addressed, the average webmaster has a very difficult row to hoe!

[IanCP]

@Dimitri

But Amazon will pay the VAT to the UK

No they DO NOT!

You and I, the consumer buying from Amazon pay VAT/GST in addition to Amazon's sale price. Amazon is merely the tax collector on behalf of the government.

VAT, or GST in Australia payment remitted to government aren't out of Amazon's pockets - their own relatively minuscule consumption excepted.

The amount Amazon are out of pocket for their own consumption is literally peanuts in the big overall picture. The amount of genuine profit tax avoidance across nations is several orders of magnitude higher.