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Amazon's use of third-party seller data to be investigated by CMA

The investigation follows an almost identical one currently being carried out by the European Commission after the company was previously charged over similar practices by the European authority in 2020

The UK’s Competition and Markets Authority (CMA) has opened a new investigation into Amazon for allegedly misusing seller data to unfairly advantage its business, as well as other potentially anti-competitive practices.

There are three main focuses for the CMA’s investigation, the first of which will examine how the company collects and uses third-party data for sellers on the Amazon e-commerce platform, “including whether this gives Amazon an unfair advantage in relation to business decisions made by its retail arm”.

The CMA will also be scrutinising how the company chooses which product is added to the ‘Buy Box’ - a more convenient listing for sellers that offers one-click purchasing, and how it sets the eligibility criteria for selling under its Prime brand. 

Amazon is facing allegations of anti-competitive behaviour that “could result in a worse deal for consumers”, the CMA said. 

The case follows a separate active investigation into the company for similar reasons by the European Commission (EC) but will focus entirely on the UK side of Amazon’s business. The EC’s investigation will not look at practices in the UK now the nation has left the European Union (EU).

The EC formally charged Amazon for the misuse of third-party seller data in 2020 after it was found to have used that data to make informed strategic decisions to compete against them.

Amazon was also accused in 2020 of misleading Congress about using third-party seller data after a similar probe was launched in the US.

Amazon’s e-commerce platform is populated by third-party sellers that benefit from the wide pool of consumers that use daily, as well as additional benefits such as matching sellers with consumers and the potential to have orders ‘fulfilled by Amazon’ where storage and shipping are handled by Amazon.

Amazon also has its own retail business that it runs off its e-commerce platform and the CMA will be scrutinising whether the platform is affording special treatment to Amazon’s retail business, giving it an unfairly advantageous position over third-party sellers.

“Millions of people across the UK rely on Amazon’s services for fast delivery of all types of products at the click of a button,” said Sarah Cardell, general counsel at the CMA. 

“This is an important area so it’s right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services – both of which could weaken competition.”

The CMA said “thousands” of British businesses use Amazon to sell their products and consumers could end up paying more for lower-quality items if Amazon is unfairly abusing its position as the platform’s controller to benefit its own business.

Amazon and Google are also under CMA investigation for failing to tackle rampant fake reviews on their websites, though it is still ongoing with no conclusions drawn yet.

The investigation is launched a day after the EU's landmark vote in favour of passing the Digital Markets Act (DMA) which aims to prevent big tech companies like Amazon from abusing their 'gatekeeper' positions.

Approved by an overwhelming majority, the DMA will compel large companies to give greater data rights to third parties and in Amazon's case, the sellers on its platform.

Third parties will now be allowed to access the data they generate to help them promote their own products and make better business decisions. 

The EU hopes the new legislation will help prevent big tech companies from engaging in anti-competitive practices, but implementation will take time.

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