Amazon is under investigation by the competition watchdog over fears that shoppers could get a rough deal for prioritizing the promotion of its own products.
The Competition and Markets Authority (CMA) has sounded the alarm over potentially anti-competitive practices used by the US giant, which could lead to a “worse deal” for customers.
It said it will focus on how the brand determines eligibility criteria for sale under the Prime labelwhich comes with perks like free delivery as well as how it chooses which items are prominently displayed with options to “buy now”.
It will also investigate how the retail giant collects and uses data from third-party sellers, including whether this gives Amazon an unfair advantage over business decisions.
The overall aim is to find out whether Amazon has a “dominant position in the UK and whether it is abusing that position and distorting competition by giving an unfair advantage to its own retailers or sellers,” according to the CMA.
Sarah Cardell, general counsel at the CMA, said it was important to investigate whether the brand was unfairly boosting its own business, as “millions of people in the UK rely on Amazon’s services for prompt delivery of all types of products with a click of a button”.
The move comes as Brussels strikes a deal with the online retail giant amid EU competition concerns†
According to the Financial Times, Amazon plans to share more data with rivals and offer buyers a wider choice of products as part of the deal that is expected to be formally agreed after the summer.
Amazon isn’t the only tech giant closely watched by the watchdog, who also revealed on Wednesday that it was investigating Microsoft’s $69 billion (£58 billion) acquisition of Activision from Call of Duty maker Activision Blizzard.
Amazon said the company was collaborating with the CMA on its investigation, adding that more than 50 percent of the products it sells come from small businesses.
“There are now more than 65,000 small and medium-sized businesses in the UK selling on Amazon, creating more than 175,000 jobs across the country,” a spokesperson said.
British regulators have been cracking down on Big Tech in recent years. The latest CMA investigation comes a year after the watchdog opened an investigation into Amazon and Google alleged failure to prevent an influx of fake reviews making goods advertised on their websites appear artificially popular.
Great Britain unveiled last year plans for a new Digital Markets Unit within the watchdog to prevent Silicon Valley giants from crowding out competition and stifling innovation.
The unit was set up to make it easier for the watchdog to intervene in takeovers by major tech companies with “strategic market status,” although experts warned the start-up scene would be badly damaged by the proposals that would virtually ban major tech companies from making offers.
However, Rocio Concha, director of policy and advocacy at Which?, said it was vital to equip the unit with powers that protect consumers.
She said: “This [Amazon probe] is the latest in a growing body of research into concerns that tech giants are restricting competition and harming consumers.
“While welcome, these things could be slow and UK consumers would be better served by the government empowering the Digital Markets Unit to introduce and enforce a pro-competition regime for digital markets.”