America’s tech giants often paint Margrethe Vestager, Europe’s czar of competition, as a cartoon villain. Antitrust charges brought by the European Commission’s Executive Vice President against Amazon on Tuesday reveal a more nuanced picture. The Danish company appears determined to mitigate the effects of the company’s dominance, rather than end them. Given the widespread calls for the fragmentation of the e-commerce giant, that should encourage founder Jeff Bezos.
The European Commission accuses Bezos’ company of illegally abusing its position as the preeminent marketplace for third-party retailers in Germany and France. Amazon is so big in these countries that independent online sellers have to use it as a forum to sell their products. After studying a sample of 80 million transactions, the Vestager team concluded that the Seattle-based company absorbs the data obtained from processing orders from other retailers, before automatically incorporating the information into its own sales strategy. retail. This would give Amazon an advantage in launching new products, choosing the supplier to use, and setting the price.
The company, which says it disagrees with the Commission’s statement, will undoubtedly resist the possibility of fines and potential remedies. One option is to erect internal electrified fences between the third-party marketplace business and Amazon’s own retail offering. The direct cost shouldn’t be a bother to the $ 1.6 trillion group, although the move would hurt their efforts to sell more high-margin, private-label products.
Still, it’s a bearable sacrifice, as private label retail offerings only account for 2% to 3% of Amazon’s sales, according to Bernstein estimates. And compared to the prospect of a total disintegration of the company, as numerous American and European politicians have argued in recent years, it is not something to fear.
This more surgical approach from Vestager may soon be enshrined in law. The upcoming European Digital Markets Law will include a list of “dos and don’ts” to prevent digital giants like Amazon from favoring their own services.
The prospect of tight control and scrutiny of their behavior may scare Bezos and the bosses of other US tech giants. But at least the European approach is based on the continued dominance of today’s giants. Maybe big tech and the Commission can get along after all.