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Germany opens ‘anti-competition’ probe into Amazon with tougher law

Germany's competition authority said Tuesday it had opened an inquiry into online retail giant Amazon over potential "anti-competitive practices", using a new law giving regulators more power to rein in big tech companies.

Published: 18 May 2021 12:31 CEST

Germany opens 'anti-competition' probe into Amazon with tougher law

An Amazon warehouse in Brandenburg. Photo: picture alliance/dpa/dpa-Zentralbild | Patrick Pleul

Federal Cartel Office head Andreas Mundt said his office is examining whether Amazon has “an almost unchallengeable position of economic power” and whether it “operates across various markets”.

If so, it would be deemed of “paramount significance”, said Mundt, adding that the regulator could “take early action against and prohibit possible anti-competitive practices by Amazon”.

“This could apply to Amazon with its online marketplaces and many other, above all digital offers,” he added.

Under the amendment to Germany’s competition law passed in January, the watchdog said it now has more power to “intervene earlier and more effectively” against big tech companies, rather than simply punishing them for abuses of their dominant market position.

READ ALSO: ‘I want to know origin of my grapes’: Amazon loses fruit and veg ruling in German court

The German reform coincided with new EU draft legislation unveiled in December aimed at curbing the power of the internet behemoths that could shake up the way Silicon Valley can operate in the 27-nation bloc.

The push to tighten legislation comes as big tech companies are facing increasing scrutiny around the globe, including in the United States, where Google and Facebook are facing antitrust suits.

The Amazon probe is only the second time that Germany’s Federal Cartel Office has made use of its new powers, after first employing them to widen the scope of an investigation into Facebook over its integration of virtual reality headsets.

The watchdog already has two traditional abuse control proceedings open against Amazon.

One involves the company’s use of algorithms to influence the pricing of third-party sellers on Amazon Marketplace, while another is probing the extent to which Amazon and major producers such as Apple exclude third parties from
selling brand products.

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Cookie fight: Austrian activist in tough online privacy fight

The 35-year-old Austrian lawyer and his Vienna-based privacy campaign group NOYB (None Of Your Business) is currently handling no fewer than 800 complaints in various jurisdictions on behalf of internet users.

“For an average citizen, it’s almost impossible right now to enforce your rights”, Schrems told AFP. “For us as an organisation, it’s already a lot of work to do that” given the system’s complexity due to the regulators’ varying requirements, he added.

The 2018 General Data Protection Regulation (GDPR) imposes strict rules on how companies can use and store personal data, with the threat of huge fines for firms breaching them.

While hundreds of millions of euros in fines have been imposed following complaints filed by NOYB, Schrems said the GDPR is hardly ever enforced. And that’s a “big problem”, he added.

He said the disregard for fundamental rights such as data privacy is almost comparable to “a dictatorship”. “The difference between reality and the law is just momentous,” Schrems
added.

‘Annoying’ cookies

Instead of tackling the problems raised by the GDPR, companies resort to “window dressing” while framing the rules as an “annoying law” full of “crazy cookie banners”, according to Schrems.

Under the regulation, companies have been obliged to seek user consent to install “cookies” enabling browsers to save information about a user’s online habits to serve up highly targeted ads.

Industry data suggests only three percent of internet users actually approve of cookies, but more than 90 percent are pressured to consent due to a “deceptive design” which mostly features “accept” buttons.

Stymied by the absence of a simple “yes or no” option and overwhelmed by a deluge of pop-ups, users get so fed up that they simply give up, Schrems said. Contrary to the law’s intent, the burden is being “shifted to the individual consumer, who should figure it out”.

Even though society now realises the importance of the right to have private information be forgotten or removed from the internet, real control over personal data is still far-off, the activist said. But NOYB has been helping those who want to take back control by launching
privacy rights campaigns that led companies to adopt “reject” buttons.

Shift of business model

Regulators have imposed big penalties on companies that violated GDPR rules: Facebook owner Meta, whose European headquarters are in Dublin, was hit with fines totalling 390 million euros ($424 million) in January.

One reason why tech giants like Google or Meta as well as smaller companies choose against playing by the GDPR rules is because circumventing them pays off, Schrems said.

Thriving on the use of private data, tech behemoths make “10 to 20 times more money by violating the law, even if they get slapped with the maximum fine”, he added.

Contacted by AFP, both companies said they were working hard to make sure their practices complied with the regulations.

Schrems also accuses national regulators of either being indifferent or lacking the resources to seriously investigate complaints. “It’s a race to the bottom,” Schrems said. “Each country has its own way of not getting anything done”.

Buoyed by his past legal victories, Schrems looks to what he calls the “bold” EU Court of Justice to bring about change as it “usually is a beacon of hope in all of this”.

Meanwhile, the European Commission is considering a procedures regulation to underpin and clarify the GDPR.

In the long-run, however, the situation will only improve once large companies “fundamentally shift their business models”. But that would require companies to stop being “as crazy profitable as they are right now,” Schrems said.

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