
EU opens Amazon antitrust investigation - Tomte
https://www.theverge.com/2019/7/17/20696214/amazon-european-union-antitrust-investigation-third-party-seller-marketplace
======
jklinger410
>using sales data to gain an unfair advantage over smaller sellers on the
Marketplace platform

I'd love to see how this applies to store brands and shelf placement in retail
stores as well.

~~~
gamblor956
_I 'd love to see how this applies to store brands and shelf placement in
retail stores as well. _

I've noticed this comment constantly pop up on Amazon antitrust discussions.
It's not the same thing.

Retail stores _buy_ the products they put on their shelves, at wholesale
prices. They then _mark up_ the prices to a retail price charged to the end
buyer when they _resell_ the products to the end buyer.

For store brands, the store still pays for the goods up front, but they're
usually just buying white-label products from suppliers that don't need to
make up for marketing expenses, and so the wholesale prices are cheaper.

There is no competitive concerns here because the product maker has already
been paid for their goods.

Amazon isn't being investigated for the products it buys from its suppliers.
It pays for those and so it can do whatever it wants. It's being investigated
for the products it _doesn 't_, i.e., the "Marketplace" of third-party sellers
where Amazon is using its internal data gathered from the third-party sellers
to compete with them. There is a competitive concern here because Amazon
controls the marketplace and is using its market position to compete against
these third party sellers.

There is no comparable analog to the physical/retail world because such an
arrangement doesn't exist in the retail world.

Contrast to ebay or etsy, which are all third-party sellers. No competitive
concerns there, because they aren't trying to compete with their own sellers.

~~~
jklinger410
1\. Many retail agreements are much closer to Amazon Fulfillment than you
might realize. I know Best Buy, for instance, starts new relationships with a
"pay as you go" scheme. Meaning we would ship them a pallet, they would
literally charge us a warehouse fee, and then pay us as the product sold, and
refund us the warehouse fee upon a complete sellout within a certain time
frame. We had to sell our way into a classic wholesale to retail relationship.

2\. I am aware of how store brands work, thanks. Amazon does this with Amazon
Basics brand, which is a point of contention in the monopoly. It is identical
to a store brand.

If a retailer buys whole-sale white labeled products to compete against yours
at a competitive rate, that is competition. Please try again at hand-waving
that away.

3\. Walmart, Kroger, Trader Joe's, Whole foods, all use data they have
gathered from selling products to determine which white label brands it wants
to create and compete with other products. There is a competitive concern here
because these retailers control shelf space and promotional material and uses
their physical retail space and sales data to compete against brands. Walmart
more-so than all the others.

I think I am building a pretty good comparison here.

~~~
gamblor956
1\. That arrangement isn't similar to Amazon Fulfillment at all from a legal
perspective. Best Buy is just using the warehouse fee as a gatekeeper to
filter out low-value/low-scale products. They have limited shelf space and
relatively low turnover. Best Buy is in the business of selling products in
its stores, but not in the business of marketing them unless they're the type
of products that bring people into the stores (i.e., doorbusters). They rely
on the product makers to do the bulk of the marketing, especially for new
products where demand is not known. Key factoid: they refund the warehouse fee
if the product actually sells.

2\. Yes, but it's not comparable. Amazon isn't being investigated for
competing against the likes of Champion or Under Armour. They're being
investigated for competing against _third party sellers_ (which might or might
not be their own brands) by promoting their own products against their
competition.

Again, you don't seem to understand this basic point: the product maker's
income comes from _Amazon_ buying the product, not the end customer. If Amazon
launches a white label brand, that's not an antitrust violation on its own.
It's also fine to use data from selling Product X to sell the white label
brand. Antitrust law rewards competition. It's even fine for Amazon to promote
their own products over competing brands, since those brands have other sales
channels they can use and they've already been paid for their product or are
contractually obligated to get paid for their product.

The problem is when Amazon promotes their own brand _over_ other products in
unfairly competitive ways, such as in search results for those competing
brands' products. (Example: if searching for Lululemon brought up Amazon's
peak velocity as the first few results). This is still a weak example of
antitrust because Lululemon's already been paid by Amazon. But if you replaced
Lululemon with Cococyle, an upcoming brand that sells through Amazon's
marketplace, you'd have a clear antitrust violation.

3\. _There is a competitive concern here because these retailers control shelf
space and promotional material and uses their physical retail space and sales
data to compete against brands. Walmart more-so than all the others._

No, false. There is competition here, but it's not _unfair_ competition
because the brands _have already been paid_ for their products. Also, the
brands have a very strong defense: they can simply pull their products from
the store. (This strategy has actually been used many times to fight off store
brands and it's the reason store brands and generics are given lower-shelf
placements.) Most people go to grocery store for the branded products, not the
white label products. TJ's is pretty much the only store on your list where
they opposite might be true.

Again, for emphasis: competition is fine. What matters for antitrust is
_unfair_ competition, and none of the stuff you've cited is _unfair._

~~~
hbosch
> No, false. There is competition here, but it's not unfair competition
> because the brands have already been paid for their products.

I thought that brands e.g. Frito Lay will stock the shelves in your store with
product “on credit”, and you are committed to selling $N per
week/month/year/whatever to pay back to Frito Lay. I’ve seen some Frito Lay
CMA’s that also make retailers sign specific agreements for placement,
“interrupters”, end caps, promo displays, etc. AND Frito Lay employees come in
to the stores to stock/track merchandise as well (rather than Frito Lay
products being stocked by store employees). Maybe I’m wrong.

~~~
ABCLAW
Generally the term for these arrangements is 'consignment'. A lot of people
are discussing this arrangement by allusion.

Where retailers also own brands and compete against other vendors in these
areas, they are subject to competition bureau scrutiny. Typical competition
bureau orders in the event of market dominance often involve non-
discrimination agreements specifically aimed at stopping intentional measures
taken to squeeze competitor dealflow by having power in another vertical.

Relevant terms here include abuse of market dominance, abuse of dominance,
etc.

Sidenote: There's a LOT of absolutely misled, full of shit statements in this
comments section regarding competition law. Tread with caution.

~~~
gamblor956
Dominance isn't required for antitrust to apply. A cursory review of US
antitrust law reveals numerous instances of relatively minor players losing
antitrust players over anti-competitive behavior.

Market dominance makes it easier to establish an anti-trust violation,
especially where market power in one vertical (i.e., operating systems) is
used to establish market position in another vertical (i.e., browsers) in a
manner that is anti-competitive (see IE vs Netscape). But compare Apple
Maps/Google Maps vs Apple Music vs Spotify. With the former, Apple's push is
not anti-competitive; with the latter the antitrust issues are so obvious that
Apple risks serious EU sanctions.

Another over-looked fact is that anti-trust regulations generally don't act
until they've received a complaint about anti-competitive behavior from a
market participant such as a customer or competitor. Until then, regulators
generally assume that behavior is competitive.

~~~
ABCLAW
>Dominance isn't required for antitrust to apply.

Abuse of dominance is literally the title for the entire relevant subheading
of law in the relevant jurisdiction:
[http://ec.europa.eu/competition/consumers/what_en.html](http://ec.europa.eu/competition/consumers/what_en.html)

Abuse of dominance isn't the entirety of competition law, but it sure as balls
is the catch-all theory under which this is being pursued. See:

[http://europa.eu/rapid/press-
release_IP-19-4291_en.htm](http://europa.eu/rapid/press-
release_IP-19-4291_en.htm)

>If proven, the practices under investigation may breach EU competition rules
on anticompetitive agreements between companies (Article 101 of the Treaty on
the Functioning of the European Union (TFEU)) and/or on the abuse of a
dominant position (Articles 102 TFEU).

~~~
gamblor956
You need to re-read the announcement. It literally says they are looking into
whether Amazon acted in an anti competitive manner _and abused its market
position_. Half of the announcement is them listing actions that are not abuse
of dominance.

You also need to reread the section on EU antitrust you posted, since abuse of
dominance is just one of many potential antitrust concerns they can
investigate.

~~~
ABCLAW
I think you need to re-read your posts.

Read your admission that half of the stated areas of competition law they're
investigating are related to abuse of market position and contrast it with my
original point:

>It literally says they are looking into whether Amazon acted in an anti
competitive manner and abused its market position.

>Relevant terms here include abuse of market dominance, abuse of dominance,
etc.

So uh, thanks for agreeing with me?

------
newsreview1
In 2017, Lina M. Khan published an article in the Yale Law Review entitled
“Amazon’s Antitrust Paradox” (January 2017, Volume 126, Number 3, pp. 710-805)
where she points out that the US.'s current antitrust law is inadequate to
address Amazon's threat to competition. Definitely a good read for anyone who
feels that online platform pose unique challenges for antitrust ethics.

------
kryogen1c
With the recent history of increasing EU fines, this has to be worrying.

Also, i realize the article is not legally informed but the opening question
seems like a slam dunk against AMZN

>to investigate whether the company is using sales data to gain an unfair
advantage over smaller sellers on the Marketplace platform

I suppose the question is not whether they have an advantage, but whether its
unfair or not.

~~~
simion314
>With the recent history of increasing EU fines, this has to be worrying.

The article mentions that Amazon just made some changes because of a similar
accusation from Germany, so there is no huge fine first and then you fix your
stuff, from what I seen so far the big scare that EU is trying to milk US
companies with huge fines for small issues without warring is just FUD.

~~~
pmlnr
> EU is trying to milk US companies

You know, if those US companies would pay the tax they should, similarly to
the small companies, these may not be necessary.

~~~
Nasrudith
The way that is fixed is changing the tax laws so they "pay what they should"
\- not vaguely pretextual shakedowns to try to score political points. It
isn't neccessary.

Legally US companies are doing exactly what they should even if it involves
bullshit loopholes like Double Dutch Irish or large licensing fees. If they
weren't then there would many within facing charges of tax evasion. The actual
solution would involve closing loopholes with things like excluding license
fees and business from profit reductions for tax purposes.

~~~
mattmanser
Not really, the US conveniently has had several offshore earnings "amnesties",
to allow US companies to bring money back home from profits in foreign
countries without having to pay tax on it.

That's a MASSIVE subsidy the US keeps giving to its companies. Trillions of
dollars not being taxed.

So everyone's playing silly games, the US haven't got clean hands in this at
all, effectively allowing their companies to run 0% corp tax on foreign
trading.

~~~
pkaye
They pay 0% taxes because they move all their profits to Ireland.

------
tareqak
EU commission press release:
[https://ec.europa.eu/commission/presscorner/detail/en/ip_19_...](https://ec.europa.eu/commission/presscorner/detail/en/ip_19_4291)

EU commission press release [PDF]:
[https://ec.europa.eu/commission/presscorner/api/files/docume...](https://ec.europa.eu/commission/presscorner/api/files/document/print/en/ip_19_4291/IP_19_4291_EN.pdf)

------
dalbasal
The fact that the the thing allegedly being monopolized, and the
monopolization mechanism are "data" makes this interesting, and potentially
informative.

On another thread about Google's search monopoly, the consensus (or whatever
the nearest HN-equivalent is) opinion that data (past searches and user
behaviour) is a major moat for Google.

In a lot of senses, data is a new type of capital, a new type of IP. It's
ownership is still in debate. Some recent legislation attempts to give us a
certain level of theoretical "ownership" of "our personal data," but
ultimately... data isn't really data unless it's aggregated. What it is, and
how useful it is depends on having lots of it.

Being "intellectual" property essentially means that it's ethereal property.
It isn't exclusive by nature, only by law. If a court finds that Amazon using
its extensive market data to monopolistic advantage... What's the fix? Could
it be make data public? That's an interesting discussion to start having in
the context of a competition investigation.

Say we put privacy questions aside for a start... what's the public downside
to making such data public by default... over a certain magnitude.

~~~
CodiePetersen
Well I imagine the immediate downside is having companies that you dont care
for trying to influence you with data you never gave them possibly quite on
purpose.

In the end that's just a privacy concern again. I think the problem is always
the scale. Knowing one persons data isn't to harmful to society. But knowing
so many and having real incentive to use and abuse it has always been the
problem. That type of data lead to Trumps election and Brexit both from the
same person. So data can definitely move nations. I think the best option is
to break the big tech companies up. On smaller scales they are less harmful.

~~~
dalbasal
I think maybe we're speaking past eachother.

When we say "break up" in the context of Google... what do we mean?
Geographically? By "vertical" like Gmail & stuff, YouTube and search,
advertising & making money, waymo and other loss making operations..?

I'm not sure what the solutions to all the issues are. But, apart from the
issues around privacy (and I'm not sure the conventions we're aiming for are
great on privacy anyway), we just can't "physically" own our data
individually. That's not how data works. The data from lots of cars driving
around can become a self driving car program. The data from you driving around
cannot (never say never though). It's data's qualities _at scale_ that are
being discussed here.

Amazon knows what and how and how much who buys, at scale. If an
allegation/indictment is made, it will/may allege that at Amazon scale, this
is monopolistic.

~~~
CodiePetersen
I'm suggesting that the bad effects are usually from scale. So the only real
effective way imo is to reduce the scale by breaking the companies both
horizontally and vertically. Maybe each vertical has two or more companies
created from it idk. But if there are more actors smaller populations can have
a larger effect on policy because now the companies don't have many revenue
streams to hold out until people forget. They would be subject to immediate
public demands and people would have competitors they could flock to.
Additionally many actors competing with data at smaller scales I think reduces
the harmful effects of singular bad influence pointing society in the wrong
direction.

But I agree I don't think there is much we can do about data ownership. The
most we can do is make laws saying you have to inform them when you collect
their data and that's already being done. Users just need to be conscious
about their activity and sites they go to. But there needs to be real
competitive alternatives to switch to if that is going to be effective.

------
SolaceQuantum
This is a lot along the lines of questioning to large tech firm
representatives yesterday in the senate- if these large tech companies are
monopolizing due to having all these separate products and bolstering each
product over other equivalent products.

But when criticized, each company defended itself by trying to say that each
of their individual components had hot competition, even though they also
defended the tight integration of their own product suites(arguably over other
individual products) as for the client. Google's representative even claimed
that google can be entirely avoided if a customer desired.

~~~
roblabla
Hah, that's rich. Good luck avoiding google ads, recaptcha, or google
analytics. Those aren't products we're direct users of, but they definitely
aggregate our data. I guess you can avoid them by simply not going on any
website.

recaptcha in particular is extremely vicious: you can't avoid it without
giving up access to the website - even though that website isn't Google's
property. With cloudflare forcing recaptcha if they don't like you, this
effectively blocks an extremely large portion of the internet out.

------
tyfon
I'm not sure antitrust is the correct rule to apply here, there are many
retailers still in the market.

I'd be much more happy if they were investigated for predatory pricing. That's
the real issue with Amazon imoh.

~~~
Tomte
That's basically a key difference between America and Europe, how both
understand "monopoly" or "anti-trust".

You might find [https://www.newyorker.com/business/adam-davidson/teddy-
roose...](https://www.newyorker.com/business/adam-davidson/teddy-roosevelt-
wouldnt-understand-the-eus-antitrust-fine-against-google) interesting.

~~~
riffraff
Additionally, this is an investigation into "anti-competitive practices" by
the "competition commissioner".

Not into "monopoly" by the "antitrust", the title is misleading.

------
ancorevard
“It is in the character of very few men to honor without envy a friend who has
prospered.” ― Aeschylus

~~~
moate
Great quote. Do you have a salient point or should we all just assume that
you're doing the highbrow version of "these EU bitches just jelly, look at all
my fat Amazon stacks!!!!"?

Some people have legitimate problems with Amazon, the way it treats its
workforce, the effect is has on the global marketplace. This isn't just
because Bezos is extremely wealthy and Amazon valued so highly.

------
LoSboccacc
they should investigate on the fake sales where they increase the base price
to get a big discount number on the page without changing the final sale
price, most the item I monitor had the price doubled and a 50% discount on the
last prime days

~~~
riffraff
I think many of those are third party sellers selling through Amazon. At least
I noticed that during prime day.

Still, something that is normally illegal for real shops, AFAIR, and should be
investigated.

