EU backs small businesses as it investigates Amazon's competitive advantage

Amazon is suspected of using customer data it collects to out-perform smaller, third party sellers.

It’s been suggested that Amazon uses what it learns about customers’ buying habits to find out which products sell well and gain the competitive edge over third-party sellers on its site.

This makes it difficult for those smaller businesses to compete, and has prompted the EU’s Competition Commissioner Margrethe Vestager to launch a preliminary investigation into the way Amazon collects and uses that data.

The Telegraph has described the situation as, “the first major competition test for a company that many feel is becoming the ultimate monopoly”.

Why Amazon dominates

The majority of the items available to buy on Amazon come from third-party sellers. This is something many customers may not be aware of, but which has been very useful to Amazon in its rise to market dominance.

With so much choice on offer to customers, the online shopping site is many people’s go-to option for everything they need.

Amazon’s argument is that the small businesses that use its Marketplace to sell their goods benefit too, with access to far more customers than they might otherwise reach.

Consulting small business sellers

The European Commission is now consulting with sellers who use Amazon to find out what they think. At this stage, the company isn’t formally being accused of wrongdoing.

Third-party sellers have until 9 October to have their say, after which the European Comission will publish its findings.

Similarities with Google’s case

Google was under investigation for seven years before the European Commission handed the company a record competition fine.

According to The Telegraph, the internet search giant was made to pay £2.1bn for abusing its monopoly last year. That was on top of the £3.9bn for forcing Android developers to include Google products on their smartphones.

The company was found to have been promoting its online shopping comparison service over smaller rivals, so similarities can be drawn with the situation surrounding Amazon.

A drop in the ocean

While Google and Apple have both recently been forced to pay billions in fines handed out by the European Commission, their market positions don’t seem to have been affected much at all.

The Telegraph reported that Amazon saw a 1.5 per cent fall in its share price following the announcement of this latest investigation, but it’s doubtful that it’ll make much of a dent.

Even if the EU does follow up with a formal investigation and come down hard on Amazon, will it really do much to affect its booming business?

Are you a small business owner who sells via Amazon? Let us know your experience in the comments below.

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