EU opens Amazon antitrust investigation
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I'd love to see how this applies to store brands and shelf placement in retail stores as well.
Literally every merchant large enough for store brands uses their own sales data to gain an advantage! They know they get a good deal of sales so they can reduce expenses by vertical intergrating commodities.
Amazon doesn't need to be a monopoly to be an antitrust concern. It just needs to have a dominant market position (a monopoly is just a per se example of such).
I don't really get why everyone is bashing Amazon here. They sell a lot of stuff, and they sell it well. By the very act of selling they get data on what is being sold - what kind of retail business could last more than 12 hours without knowing data about its own sales operations?
But apparently in the EU that's now illegal. Or more realistically, it's illegal if you're rich enough to pay huge fines directly into the pockets of the EU Commission, which is desperate for money and can directly levy fines without needing to win a court case in front of a neutral judiciary.
I'm not bashing on Amazon, I'm a regular customer. But I'm trying to explain how antitrust generally works. EU has more rigorous antitrust rules than the US. If Amazon has antitrust issues under US laws, then it has a serious antitrust problem under EU laws.
Of course, many of them belong to the same group, but even with that, we are nowhere near a monopoly.
I would argue that Amazon is also not near a monopoly. Google, Ali Express, eBay, NewEgg, Overstock, and so many direct to consumer brands and marketplaces also are healthy competition.
What may have started as a simple analysis to evaluate share of shelf, easily could turn to "what if we sold these"?
The main difference vs Amazon is the Reviews data (that's worth what's worth with all of the fake reviews), and you can't buy on Amazon without using your account so every sale is bound to an specific person. In that regard no retailer has this data.
Even those who have loyalty programs that end up being a tracking card, people can still buy without using cards.
Like I said, you're not obliged to be in a loyalty program, and you can buy in cash, debit card - at least in Europe that's pretty common.
Plus I didn't want to go through the whole type of sellers on amazon. You have:
Products sold by Amazon: these are all amazon brands + products from other brands (maybe this is the closest to the retailers)
Products Fulfilled by Amazon: Where amazon only deals with fulfilling and customer service (to some extent), and Shops pay referral fees and fulfillment fees;
And you have Fulfilled by Merchant: where people set shops and pay only referral fees (this is maybe the closest to set a quiosque in a mall);
So it's quite tricky, yet Amazon gathers data on everything.
In the US (not sure about EU countries), there is price discrimination based on loyalty program membership. Some retailers (Costco) require membership to even walk in the door.
For loyalty programs you give explicit consent to be in a marketing program. They can't simply use your banking data to profile someone, neither your tax number which you give (in some countries) in order to get a valid receipt.
I'm also not familiar with what you sign away with a credit or debit card but I would not be surprised if it included this tracking since that's a core part of the credit card business model.
I do admit to almost complete ignorance on this topic however so you could be right.
Wondering now if Amazon knows which reviews are fake, and leaves them up to obfuscate truly useful reviews to keep their dataset “public” but hard for competitors to utilize?
Reviews are mainly a selling factor, and second a way to gather insights imo.
Honestly I think they don't know how to deal with fake reviews, oddly enough because some are so obvious - namely from chinese sellers.
Amazon presents itself as a marketplace, and gets a few advantages from that (such as being able to shift responsabilities for some issues to the "real" seller), and as such they must act like one on other aspects too.
Other French exemples of marketplaces with such rules to follow would be cdiscount for exemple (2nd after amazon in volume).
This isn't as clear a distinction in practice as you are making it out to be.
Current law for electronics is, 2 year warranty minimum, your point of contact is the seller. Oftentimes after a few month they redirect you to the manufacturer for the warranty, but if you get in conflict with him, in terms of the law, the onus of the 2 year warranty is on the seller. So if I buy a Samsung phone in Carrefour, and my phone fails, usually after the first week they will redirect me to Samsung, but if Samsung refuses to deal with me for one reason or another, it's Carrefour that has the obligation to fix my issue.
The law was made that way with the benefit of the end user in sight, I used Samsung but I could have used "random brand with no presence here and very hard to contact", so since it's the store that sold it to you, they are the one responsible to fix the issue.
When going through a marketplace, the seller is not the marketplace. Now, Amazon is rather clean on that one, and they deal with it as if they were, but buy from Cdiscount's or Fnac.com's marketplace and quickly you realize that hiding behind "I'm a marketplace" covers their ass since you need to deal with the actual seller, even if it's some random chinese import company.
And in the end, whether the distinction are large or not doesn't matter, they're two different things with different rights and obligations, and you're one, you can't benefit of being the other.
This is simply not true in many cases and you should stop saying it so directly. It is not a fact that every item you see in a retail space has been purchased by the retailer for resell, period.
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.
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.
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.
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.
In Frito's case, everything described is a marketing activity--which is precisely the differentiator between normal brands and retail brands. Frito is just a lot more involved in on-the-ground marketing activities than most product brands. (In the past, Frito was one of the companies that threatened to pull its products when a grocery chain--I think Albertsons--tried to push store brands over national brands.)
Another deeply-involved brand: Budweiser, for example, can also make significant demands on convenience and liquor stores with respect to marketing placements, shelf placement, etc., as a condition of the store being allowed to sell Budweiser products. Budweiser will even demand that stores report hourly sales of alcohol during big event windows so that Budweiser delivery crews can keep high-volume stores properly stocked.
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.
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.
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
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
>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).
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.
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?
Not necessary. And often you have clauses saying suppliers will buy back unsold inventory.
Why is this difference salient? This process of selling, reselling and markup recurs for years. Economically the outcome is the same as the store charging a fee like Amazon, just with the payments split up and time shifted. If you doubt that the same power imbalances exist in brick-and-mortar, read about how Walmart squeezes suppliers.
Retail stores are not in the business of offering a marketplace for companies to buy shelf placement. When I go to a retail store and buy something, the seller is always the store. In terms of the laws, insurance, etc ... It changes a lot.
Marketplaces have protections, but those protection come from their independance from one vendor or another. Same principle that made us force all of our national ISP to separate their fiber/network business from their actual ISP business, or why the national train companies were cut and separated from the rail lines companies ...
It is known as a "slotting fee" and manufacturers pay it for limited shelf space in grocery stores for example. It is particularly important for the distribution of new products as stores would prefer not to take risks on an item that may or may not sell very well.
Further reading:
https://en.wikipedia.org/wiki/Slotting_fee
https://www.vox.com/2016/11/22/13707022/grocery-store-slotti...
What you said is mostly correct in EU, so I am not sure why you are getting downvoted. They do sell shelf placement ( in different stature ), however the marketplace and Retails protection is still in place.
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.
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.
So, EU fighting back doesn't suprise me !
https://en.wikipedia.org/wiki/Alstom#Acquisition_by_General_...
A good source but in french: https://www.youtube.com/watch?v=dejeVuL9-7c
Most importantly--the details of the article cited in relation to the GE deal (i.e., the claims that the CEO pushed through the GE deal due to US pressure) ignore the fact that the French government was the one that ultimately blocked the competing EU bids, even though the company itself favored the Siemens bid.
GM now admits they severely overpaid for the French company and in hindsight should have let Siemens buy it because the French assets they acquired were a serious drag on the performance of the post-acquisition GM Power subsidiary.
The FCPA just bans bribes and other crimes that are also illegal in the US. Most foreign companies do not get hit with FCPA violations. Just the ones that use bribes as a part of doing business.
Alstrom's not a great example, since they were also charged by the UK over their corrupt business practices.
The FPCA violations weren't levied on Alstrom to push through a US acquisition; the FCPA investigation began years before. And ultimately, GE only acquired a part of Alstrom, after competing bids from EU companies were blocked by the French government.
You know, if those US companies would pay the tax they should, similarly to the small companies, these may not be necessary.
Unless Google wants to become a charitable non-profit, the idea that they pay their taxes just by doing regular business is preposterous.
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.
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.
EU commission press release [PDF]: https://ec.europa.eu/commission/presscorner/api/files/docume...
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.
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.
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.
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.
Recall:
- Trump was not an experienced campaigner, had no real campaign database and spent half as much as Clinton.
- Leaving the EU was represented by two different campaigns which hated each other, none of which had any meaningful amounts of data, and were up against a vastly well funded and organised campaign by the government, literally, the organisation that has the most data on everyone.
Trump won because Clinton was a terrible candidate who had a policy of starting a war with Russia (her no-fly zone over Syria) and Leave won because Remain ran a terrible campaign that boiled down to "we can't leave because the EU will punish us severely if we do and we are weak". You don't have to be a campaigning genius to understand that people don't like these things - vague allusions to 'data' aren't necessary.
You actually don't know that. In fact nobody, including those making the claims, can prove it made any difference. Both AggregateIQ and Cambridge Analytica could well have had no impact whatsoever: this stuff is pure faith based spending. It's like spending on campaign advertising. Some people take it as an article of faith that whoever spends more wins, but that has been repeatedly proven false in the real world. Apparently political ad spending isn't such a big deal after all.
And again, you must remember that in both those cases their opponents spent far more, on all kinds of things including data based voter targeting. If generic "data" were so valuable they'd surely have achieved massive victories, but they lost
Targeted advertising can and does work. Google has shown this with an experiment called the redirect method in which they used ads to target and deradicalized potential isis members. Another individual used the same method to target suicidal individuals and was able to run a campaign to get them to call a hotline. He had I believe a 38% conversion rate where as a standard ad conversion rate is around 2% to 4%. Again this is in the public domain.
Data, targeted or otherwise, is like any other tool. It is not going to be some magical device that gives victory. In the end you have to use it wisely and correctly infer a pattern that can be exploited. Any relevant information is better than having no information. And based on the many papers and efforts to use data to influence the population there is more than enough evidence to suggest such data gives you an edge. It may no be a large margin but it could be enough to make a difference.
If we consider amazon for example, they don't need 40% conversion rate. If they can just gain even a 1% extra conversion rate, that represents 100s of millions of extra revenue. Especially at scale, data is indeed useful.
To be clear, I'm not arguing that voter databases are useless: they're useful to get your own base out to vote and not to waste time canvassing hard-core supporters of the opposing party. This isn't the sort of data people are hyperventilating about when they talk about Trump, Brexit or Cambridge Analytica, is it?
But even if data was useful in this way, why would that be bad? If data is used to most effectively focus effort on convincing people, they're still convinced by the arguments at the end of the day, and feel they made the correct decision. What's wrong with that?
Google has shown this with an experiment called the redirect method in which they used ads to target and deradicalized potential isis members.
I recall this claim. It's implausible on its face.
The problem is they have no idea if the people who saw the ads were actually potential ISIS members. This isn't a precisely defined term and they can't test that theory against reality - it's not like normal AdWords where you can measure against sales to figure out if the ad viewer was really interested in making the purchase. The assumption that they targeted "potential ISIS members" was based on using (some admittedly clever) keyword choices and then assuming the only people who search for those things are people who want to become a jihadi - a massive and untested leap of logic.
They say over 320,000 people clicked the ads in only 8 weeks. That's a staggering number of supposedly potential terrorists. In 2014, when ISIS was growing in strength, they had only about 14,000 fighters according to US intelligence. So they're claiming they "redirected" a population 20x the size of all of ISIS in only eight weeks. If there were really so many people trying to join ISIS at that time their army would have been vastly bigger.
Much more likely, the vast majority of people who clicked the ads had no intention of ever becoming a jihadi and their campaign achieved nothing.
The suicide ad is much more believable - it's well known that many people who attempt suicide don't really want to die, they just want help.
I believe we have run up to scenario where we must again reevaluate our laws to protect society from bad/harmful trends from large singular actors. They may not intend it to be harmful, but the fact is, it could be.
"[..] a massive and untested leap of logic." Google advertising is that massive and very well tested leap in logic. As for potential ISIS members, if you recall it, then you know that they were not only targeting just fighters they were also targeting ISIS brides and sympathizers. Any counter intelligence expert, or you can just read the manual on counter intelligence readily available to the public [https://publicintelligence.net/us-army-counterintelligence/], will tell you that terrorist or guerrilla support networks are just as important and damaging as the actual fighters, hearts and minds they say. They provide intel, monetary support, propaganda support, non combatant support like supply runs, etc. So you can be a member without being a fighter and still be vital.
Also when you talk about conversion rate, you're not talking about who clicked the ad. You are talking about who "bought" or "interacted" with a product after clicking. So you are gauging real activity from people who are clicking and looking at your stuff. 500k minutes of video watched. On average about 2 minutes I believe. That's a huge amount of interaction. You can barely get an invested mobile game player to watch 15 seconds for rewarded things they can actually use.
You claim untested and unproven with no evidence a lot, but the results are right here: [https://redirectmethod.org/pilot/#results]. They showed remarkably different results. Twice as good actually, in the targeted approach. So I don't know what to tell you. There is evidence, there are experiments, and there are real tangible results and effects on the public. The only question in my mind is at what scale do we allow that.
Does a store (online or B&M) have exclusive license of your aggregate heatmap while you walk/browse through the store? - I think many would argue that's probably valid.
Does it have the right to link that to your demographics/psychology to optimize the store? They probably do ... but for your benefit? Sounds like "personalization" - a bit murky. How about if it's for their benefit (personal price segmentation)? That sounds bad/unethical. How about if it's to only serve the "right people"? That's clearly on the edge of legality.
The remedy is to have cyberethics on how personal/private data is controlled and aggregated. It's not about "opening things up" but using Amazon as a case study as to how to draw borders/distinctions on proprietary vs. personal data. GDPR++
Monopoly, oth, is all about aggregation and that's what's being discussed here.
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.
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.
I'd be much more happy if they were investigated for predatory pricing. That's the real issue with Amazon imoh.
You might find https://www.newyorker.com/business/adam-davidson/teddy-roose... interesting.
Not into "monopoly" by the "antitrust", the title is misleading.
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.
Still, something that is normally illegal for real shops, AFAIR, and should be investigated.