Amazon argues that the increase in fee revenue results from higher sales. Credit: sdx15 via Shutterstock.

In most of Europe’s biggest economies, Amazon is the main route for independent businesses to access online shoppers.

According to research by the Centre for Research on Multinational Corporations (SOMO), Amazon‘s dominance allows the company to get away with extractive and exploitative treatment of sellers on its platform.

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The organisation analysed Amazon’s corporate structure in Europe, its financial reports and the findings of competition investigations.

What are the key findings?

  • In 2022, Amazon raked in €23.5bn in listing and logistics fees from independent sellers in Europe. This was more than triple the €7.6bn in 2017.
  • Amazon added an estimated €2.75bn in advertising revenue from independent sellers in 2021. Since 2017, Amazon’s overall European advertising revenue has grown 17-fold.
  • In 2021 Amazon’s revenue from European sellers amounted to €24.95bn. Amazon’s European marketplace is so large that if spun off into a separate company, the new firm would immediately become Europe’s third-biggest tech company by revenue.
  • In this period, Amazon has also continuously increased the price of logistics services. The increases varied, but they could be as high as more than double in some categories.

Amazon’s monopolistic hold in Europe

SOMO researcher Margarida Silva comments: “For the past 20 years, Amazon has been expanding its monopolistic hold over online shopping in Europe. It is now so dominant that independent retailers who wish to sell online cannot avoid it. Sellers are locked into the platform and are essentially a captive clientele, making them a profitable source of monopoly rent.”

According to SOMO, Amazon argues that the increase in fee revenue results from higher sales. However, the company’s numbers show a slower rise in sales than the increase in the fees that Amazon charged from sellers.

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Higher sales are only part of the story. Prices for services such as logistics (Fulfilment by Amazon) have also been constantly raised, and advertising was made essential to achieve visibility and sales.

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Retailers Against VAT representative Richard Allen adds: “Whilst the technological innovation and advances made by Amazon are undeniable, these have come at a cost; one of monopolistic and monopsonistic control over the marketplace. This changes the internet from a place of genuine free market competition to one dominated by a single company able to take full advantage of its dominant position.”

Competition authorities

Competition authorities across Europe have started probing the company for abuses of its dominance.

The EU and Italian investigations show the company used sellers’ data to compete against them and pushed them into buying logistics services. A similar investigation is ongoing in the UK.

Despite increased scrutiny from competition authorities across the EU,  the conflict of interests at the root of Amazon’s monopoly power and wealth has not been addressed.

A fair digital transition

SOMO states that European competition authorities and policy-makers must either strictly regulate Amazon as a public utility or break up its different businesses to prevent conflicts of interest between its role as a platform intermediary, seller, and service provider.

Silva concludes: “To achieve a fair digital transition, Europe needs to break up the excessive market power wielded by corporations like Amazon. European regulators need to sharpen antitrust tools, revive structural solutions and put them to work.”

A US federal judge recently accused Amazon of manipulating prices on certain products. Meanwhile, the company’s workers have announced three new strike dates in the UK.