by Susanne Wixforth
In 2018, Amazon generated a turnover of about 210 billion euro worldwide, an increase of over 30
In the long run, the platform economy not only poses a risk to the stability and budgets of countries where the corporations earn their money but do not pay taxes—it also undermines social cohesion. If the European Union wants to win back the trust of its citizens, it has to make sure that burdens are equitably distributed.
EU competition law offers an approach to tame those platform giants: the European Commission obliged Amazon to refund 250 million euro in taxes; Google had to return 12 billion. But the losses to the exchequer are only one facet of the problem. Others are the exploitation of workers and the elimination of market competitors through unfair business practices, as well as the deleterious environmental impacts of, for example, excessive packaging by Amazon and the destruction of returned mint-condition goods.
Amazon generates its turnover mainly through four channels: as one of the biggest online retailers, as the operator of by far the largest online marketplace for third-party suppliers, as one of the largest providers of online services and as the distributor of the ordered products.
Because of its large market power in some trading segments, independent traders depend on Amazon to reach their customers. There is evidence that Amazon is trying to force traders out through its sheer market power, for instance through copying products and undercutting prices.
But traders are fighting back—meanwhile, several competition proceedings against Amazon are pending due to their numerous complaints. The German Federal Cartel Office initiated an anti-abuse proceeding in 2018 and the Austrian Federal Competition Authority followed in 2019. But what about the company’s employees?
Amazon’s rapid growth is at the expenses of its employees and the social-security systems of its countries of
Workers can cover distances of 16-20 km per hour and lift 50 tons of packages per day. They may be expected to handle 300 packages per hour—taking breaks is often not possible, even to go to the toilet. Because of work accidents or
Amazon cleverly plays with what is legally possible: to break strikes, temporary workers are hired. Safeguard measures are often reduced to a minimum. Through classification into more
Because the company is not paying living wages, the German trade union ver.di
EU competition law is armed with strict sanctions to prevent unfair competition, not only between companies but also between member-states. The idea behind it is that a European single market can only function if both sets of parties abide by fair rules.
The greater the market power of a company, the easier it is to enforce (unfair) conditions against its rivals. Therefore, the Treaty on the Functioning of the European Union (TFEU) prohibits the abuse of a market-dominant position. It is obvious that because of its threefold function—as
Through network effects and economies of scale, the company is further expanding its position and thus driving competitors out of the market, following the motto ‘the winner takes it all’. This is fatal for other market participants as well as workers. Amazon’s monopoly position makes it easy to break strikes in pursuit of living wages by recruiting temporary workers or outsourcing to countries with lower minimum wages.
Therefore, trade unions are urged to use the anti-abuse procedure of EU competition law to their advantage. The commission is conducting a market survey to identify any abusive practices by the company. Provided there is sufficient evidence, it will open a procedure in which third parties will have the opportunity to submit comments.
The concerns of employees, such as
Electronic platforms have the same characteristics as classic physical infrastructures such as the post, rail, telecommunications
Especially with the GAFA companies, the higher their market concentration, the more the share of wages in their net product decreases. For example in Ireland, the wage ratio fell by 13
Wealth for all requires competition for all. Competition law alone does not go far enough here: it only becomes relevant when oligopolistic structures have already been consolidated. In the digital age of winner-take-all markets, the platform economy has to be subject to legal regulation. An economy of untamed superstars produces one thing above all—many losers.
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(Susanne Wixforth is head of
Welcome to GAFA land of tech giants where winner takes all
by Susanne Wixforth