The European Commission sent Amazon another request for information (RFI) on Friday regarding its compliance with EU rules for digital services, as part of its latest move targeting key markets.
The development highlights areas where the EU executive is stepping up its scrutiny of e-commerce giants, with the EU requesting more information about Amazon’s recommendation system, advertising transparency provisions and risk assessment measures.
The committee’s RFI to Amazon in November last year focused on risk assessment and mitigation measures related to the distribution of illicit products, as well as fundamental rights protections related to recommendation systems.
The EU’s Digital Services Act (DSA) requires platforms and services to adhere to a set of governance standards, including in areas such as content moderation. For online marketplaces, the law also requires them to implement measures to address the risks associated with the sale of illegal goods. Large marketplaces such as Amazon have an additional layer of algorithmic transparency and accountability obligations under the regime, which is what the Commission RFI focuses on.
The additional rules have been in place for Amazon since late August last year, following the EU’s designation of Amazon as a Very Large Online Platform (VLOP) in April 2023. It is the Commission’s job to enforce these additional obligations on VLOPs.
While it’s unclear whether the latest Commission RFI to Amazon will lead to a formal investigation into DSA compliance, the stakes remain high for the e-commerce giant. Confirmed violations could be very costly, with fines for breaches of EU law reaching up to 6% of global annual revenue. (Note: The company’s full-year 2023 revenue was $574.8 billion, meaning the regulatory risk, at least on paper, is in the billions.)
In a press release detailing the action, the commission said it had sent Amazon an RFI regarding the steps it had taken to comply with the DSA rules regarding transparency of recommendation systems and parameters. It also said it was requesting additional information about Amazon’s advertising storage maintenance provisions, another legally mandated transparency measure for the large platform.
The committee also said it wanted more details on Amazon’s risk assessment report. The DSA requires VLOPs to proactively assess systemic risks that may arise on their platforms and take steps to mitigate them. Platforms must also document their compliance processes.
“In particular, Amazon is requested to provide detailed information about its compliance with the provisions relating to the transparency of its recommender systems, the inputs, functions, signals, information and metadata applied to these systems, and the options available to users to opt out of profiling for recommender systems,” the EU wrote. “The company must also provide detailed information about the design, development, deployment, testing and maintenance of the online interface of the advertising library in the Amazon Store, and the supporting documentation related to the risk assessment report.”
The EU has given Amazon until July 26 to provide the requested information. The next steps after that will depend on Amazon’s response assessment. However, failure to respond satisfactorily to the RFI could result in sanctions.
Last year, the EU identified online marketplaces as one of the priority issues for implementing the DSA rules on VLOPs, and this is the area it has been paying attention to.
Late last month, it sent separate RFIs to competing marketplaces VLOP Shein and Temu, shortly after it designated the two companies. But in their case, the Commission’s RFI raised concerns about illicit product risks and manipulative design (including potential child safety risks), and requested more information about how they operate their own referral systems.
Why is there so much interest here? Algorithmic alignment has the power to influence the overall experience of platform users, determining the content and/or products they see.
In short, the EU wants the DSA to open up these black-box AI systems to ensure that the platform’s commercial agenda (whether it’s to grab users’ attention or drive more sales) isn’t the only thing programming these automated decisions. The DSA therefore wants to act as a guardrail against the risk of AI-driven social harm, such as platforms pushing content that is detrimental to people’s mental health or encouraging shoppers to buy dangerous products. But achieving these goals will require enforcement.
Meanwhile, Amazon is unhappy with the EU system. Last year, it challenged DSA’s designation as a VLOP. And last fall, it won a temporary suspension of one element of VLOP’s DSA compliance, namely the requirement to post an ad library. But in March, the EU General Court overturned the earlier decision and overturned the partial suspension.
“Now that Amazon has been designated a very large online platform and the court has rejected Amazon’s request to halt its obligation to make its ad repository publicly available, Amazon must comply with the full set of DSA obligations,” the commission wrote today. “This includes diligently identifying and assessing all systemic risks associated with its services, providing options for a recommendation system that is not based on user profiling, and making its ad repository publicly available.”
Given that Amazon spent money on lawyers to argue why it did not need to comply with the DSA ad library elements, and subsequently had the cease-and-desist order overturned, it is not surprising that the Commission is now seeking more information in this area.
The EU has received questions and has also contacted Amazon for a response to the Commission’s RFI.
A company spokesperson emailed TechCrunch the following statement: “We are reviewing this request and working closely with the European Commission. Amazon shares the European Commission’s goal of creating a safe, predictable, and trustworthy shopping environment. We believe this is important to all players in the retail industry, and we invest significantly in protecting our stores from bad actors, illegal content, and creating trustworthy shopping experiences. We have built a strong foundation for DSA compliance.”
