UK retailers slam Amazon with £1bn lawsuit for data misuse

7 Jun 2024

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According to an association of UK retailers, Amazon manipulated its marketplace and profited from illegally obtained data from other retailers.

Amazon has been slammed with a billion-pound lawsuit in what has become one of the biggest cases of collective action taken by UK retailers for alleged misuse of their data.

The British Independent Retailers Association (BIRA) filed the lawsuit in London’s Competition Appeal Tribunal on behalf of UK retailers yesterday (6 June) claiming £1bn in damages for what it describes as illegal misuse of data and manipulation to make a profit through its online marketplace.

BIRA claims that Amazon has been using data belonging to UK retailers on its marketplace since October 2015 and engaging in a “product entry strategy” that resulted in sales revenue and profits being diverted from these retailers to the online shopping giant.

It alleges that said data is non-public and belongs “solely and specifically” to the retailers. The group also accuses the company of manipulating the Amazon Buy Box – the ‘add to cart’ or ‘buy now’ section next to a product listing that includes suggested offers based on Amazon’s algorithm.

Andrew Goodacre, CEO of BIRA, said that the filing of the claim is the “first step” towards retailers obtaining compensation for what Amazon has done.

“We have seen a significant shift in consumer buying behaviour and, if small business want to sell online, Amazon is the dominant marketplace in the UK. As a result, for small retailers with limited resources, Amazon is the marketplace to start online trading,” Goodacre said.

“While the retailers knew about the large commissions charged by Amazon, they did not know about the added risk of their trading data being used by Amazon to take sales away from them.”

According to BIRA, this confidential data is commercially valuable to Amazon and helps it decide whether to enter a new product segment based on its earnings and sales potential as well as which elements of the product to copy, how to price an item and which consumers to target.

This, together with the Buy Box, the association claims, meant that Amazon knew it could “successfully enter and take away profits” from UK retailers.

In 2022, the UK Competition and Markets Authority (CMA) opened an investigation into Amazon because of concerns that its marketplace practices were negatively impacting consumers and sellers in the country.

Late last year, the CMA accepted a voluntary commitment from the retail giant in response to its preliminary investigation. The CMA said Amazon has committed to give independent sellers a “fair chance” to be featured in the Buy Box section of the Amazon Marketplace. The regulator claims that most sales on the marketplace take place from this feature. Amazon also said it will not use Marketplace data it obtains from third-party sellers to give itself an “unfair competitive advantage”.

BIRA described these commitments by Amazon as designed to “avoid a full investigation and detailed decision from the CMA about its conduct”.

Amazon posted strong financial results in its latest quarterly earnings report last month, with net sales up 13pc and operating income from its cloud services nearly doubled. The e-commerce giant recently announced the launch of an Irish store, Amazon.ie, to go live next year.

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Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com