Margrethe Vestager, the European Union’s Competition Commissioner, announced last week (June 11) that the EU is looking into Amazon e-books business practices on its home turf.
According to the Commission, Amazon’s contracts with publishers force them to reveal better deals offered by competitors, which gives the U.S. giant a clear advantage when striking its deals. In other words, Amazon is abusing its dominant market position – a big no-no for the EU which is, by the way, desperately trying to bring its tech firms back into the game in Europe.
On May 6, the European Commission released its proposal to gather all 28 EU member states into a “single digital market.” The proposed initiatives revolve around copyright, eCommerce, telecoms rules, free flow of data and value-added taxes. The European Commission’s vice president for the digital single market, Andrus Ansip, said to WSJ, “Europe has a potential customer base of 500 million people, whereas the U.S. has 350 million, but with 28 different laws, technology firms can’t grow in Europe."
Vestager said in a written statement: “Amazon has developed a successful business that offers consumers a comprehensive service, including for e-books. Our investigation does not call that into question. However, it is my duty to make sure that Amazon’s arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon. Our investigation will show if such concerns are justified.”
This is not good news for Amazon, yet it was expected. The online marketplace could be fined up to 10 percent of its global turnover if found guilty. Amazon is currently the largest distributor of e-books in Europe and is increasingly popular. The Commission is also looking into Amazon’s deals with Luxembourg which allow it to pay extremely low taxes, reports Reuters.