LONDON (Reuters Breakingviews) - U.S. technology giants often paint Margrethe Vestager, Europe’s competition tsar, as a cartoon villain. The antitrust charges the European Commission executive vice-president unveiled against Amazon.com on Tuesday reveal a more nuanced picture. The Dane seems set on mitigating the effects of the company’s dominance, rather than ending it. Given widespread calls for a breakup of the e-commerce giant, that should cheer founder Jeff Bezos.
The European Commission accuses Bezos’s company of illegally abusing its position as the pre-eminent marketplace for third-party retailers in Germany and France. Amazon is so big in those countries that independent online sellers effectively have to use it as a forum to flog their wares. After studying a sample of 80 million transactions, Vestager’s team concluded that the Seattle-based company hoovers up data gleaned from processing other retailers’ orders, before automatically incorporating the information into its own retail business strategy. That would give Amazon an edge when launching new products, choosing which supplier to use, and setting the price.
The company, which said it disagreed with the Commission’s assertion, will no doubt balk at the possibility of fines and potential remedies. One option is to erect internal electric fences between the third-party marketplace business and Amazon’s own retail offering. The direct cost should be no bother for the $1.6 trillion group, though the move would hurt the company’s efforts to sell more high-margin own-brand goods.
Still, that’s a bearable sacrifice since private-label retail offerings only account for 2% to 3% of Amazon’s sales, according to Bernstein estimates. And compared with the prospect of a full breakup of the company, as floated by numerous U.S. and European politicians in recent years, it’s nothing to fear.
Vestager’s more surgical approach may soon be enshrined in law. Europe’s forthcoming Digital Markets Act will include a list of “dos and don’ts” to stop digital giants like Amazon from favouring their own services, Reuters reported. The prospect of tight behavioural controls and scrutiny may spook Bezos and the bosses of other U.S. tech giants. But at least Europe’s approach is premised on the current behemoths’ continued dominance. Maybe Big Tech and the Commission can get along after all.
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