Amazon CEO Jeff Bezos.
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  • The European Union's competition commissioner, Margrethe Vestager, is launching a formal investigation into Amazon.
  • The investigation will look into whether Amazon's use of data from independent retailers, who sell on its marketplace, is in breach of EU competition rules.
  • Amazon's role as both a seller and a platform for other merchants has become one of the most contentious areas of the business.
  • For more stories, go to Business Insider SA.

The EU is cracking down on Amazon.

On Wednesday, the European Commission announced that it will launch a formal investigation into Amazon. Reports of this investigation first surfaced on Tuesday.

The investigation will look into whether Amazon's use of data from independent retailers, who sell on its marketplace, is in breach of EU competition rules.

Competition Commissioner Margrethe Vestager, who is leading the investigation, said in a statement on Wednesday that she will be taking a "very close look" at Amazon's "dual role."

"We need to ensure that large online platforms don't eliminate these benefits through anti-competitive behaviour," she said. "I have therefore decided to take a very close look at Amazon's business practices and its dual role as marketplace and retailer, to assess its compliance with EU competition rules."

Vestager's team began preliminary work on an Amazon investigation last year. On Thursday, the European Commission said: "Amazon appears to use competitively sensitive information - about marketplace sellers, their products and transactions on the marketplace."

A spokesperson for Amazon did not immediately respond to Business Insider's request for comment.

Vestager is known for being a formidable force when it comes to scrutinizing big tech. Since taking on the role of EU Commissioner for Competition in 2014, she has taken action against Apple, Amazon, Facebook, and Google among others.

In July 2018, she fined Google $5 billion (R69 billion) for anti-competitive practices related to its Android operating system and in 2016, Apple was forced to pay $16 billion (R223 billion) in back taxes to Ireland.

Investigating Amazon would be one of her final acts before her five-year term ends, although she has indicated that she would like to serve for another five years.

And it's not just the EU that's interested in Amazon's use of data. Vox reported that the US Federal Trade Commission had also started questioning some of Amazon's rivals about some of its business practices including how it competes with its own third-party sellers.

The main concern for both regulators and competitors is that the company is so dominant that it's impossible for others to compete.

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