EU to investigate Amazon next year, its share price drops by 3% post report

Amazon could face a substantial fine of up to 10 per cent of its annual global revenue if it is found guilty of breaching the European Union's Digital Markets Act

The European Union’s antitrust regulator is likely to investigate the US-based online retailer Amazon over favouring its own products and services on its marketplace, Reuters reports. The inquiry against Amazon is being pursued by EU regulators under its landmark antitrust legislation. 

As per the Reuters report, Amazon could face a massive fine of up to 10 per cent of its annual global revenue, if it is found guilty of breaching the European Union’s Digital Markets Act (DMA), a law that aims to rein in the power of big tech companies. 

 

The decision on whether to proceed with an investigation will be made in the coming months by Teresa Ribera, the incoming EU antitrust chief, according to sources. Ribera, a Spaniard, is set to assume her position next month, succeeding Margrethe Vestager.

 

Amazon defends DMA compliance

 

Amazon has responded saying it complies with the Digital Markets Act (DMA) and has been collaborating constructively with the European Commission since two of its services were classified as key gateways between businesses and consumers, making them subject to the new regulations. Following the publication of the Reuters report, Amazon shares dropped by as much as 3 per cent, reaching $196.91.

 

EU scrutinizes Amazon’s practices

 

The DMA, implemented last year, prohibits Amazon and six other major tech firms from prioritizing their own products and services on their platforms, among other restrictions. In March, the European Commission, which serves as the EU’s antitrust regulator, announced it was collecting data on Amazon’s handling of its private-label products on its marketplace. The Commission declined to comment on the matter on Thursday.

 

Amazon denies ranking bias

 

In its March compliance report, Amazon asserted that its ranking models do not favour products based on whether they are sold by Amazon Retail, independent sellers, or whether they are Amazon-branded or third-party items. Meanwhile, Apple, Google (owned by Alphabet), and Meta Platforms are also under investigation in relation to the DMA. Decisions regarding these cases will fall under Ribera’s authority once she assumes her role, one source noted.

 

[With inputs from Reuters]