EU turns up heat on Amazon: recommender algorithms and ad transparency under scrutiny

The European Commission is dialing up its regulatory efforts on Big Tech, and Amazon has found itself in the crosshairs again. The Commission has issued a fresh request for information (RFI) to the e-commerce giant, demanding explanations regarding its compliance with the Digital Services Act (DSA).

The DSA, a landmark piece of EU legislation that came into effect in November 2023, aims to create a safer and fairer online environment. This latest move by the Commission indicates a particular focus on two key areas: recommender algorithms and ad transparency.

Recommender Algorithms

The way Amazon tailors product recommendations to users has raised concerns. Critics argue that these algorithms can perpetuate biases, unfairly limit consumer choice, and potentially lead to manipulation. The Commission is likely seeking details on how Amazon's recommendation systems function, including data collection practices and the criteria used to personalize recommendations.

Ads

The EU wants a clearer picture of how Amazon displays and manages advertisements on its platform. This could include information on the origin of ads, the criteria used to target users, and the distinction between organic search results and paid placements.

"The Commission is particularly interested in how Amazon ensures that the ad library is comprehensive and accessible," a Commission spokesperson told reporters. This suggests a desire for users to have easy access to information about the advertisements they encounter on the platform.

This is not the first time the EU has aimed at Amazon's practices. The company has faced previous investigations related to competition concerns, data privacy issues, and dissemination of illegal goods. The current scrutiny falls under the umbrella of the DSA, which empowers the EU to hold large online platforms accountable for content moderation, data handling, and user protection.

While it remains to be seen if the latest RFI will lead to a formal investigation of Amazon’s DSA compliance, the stakes remain high for the e-commerce giant. Any confirmed violations could get very costly as penalties for breaching the pan-EU law can reach up to 6% of global annual turnover. For context, the company’s full-year revenue for 2023 was $574.8 billion placing the penalty value at over $30 billion.

Amazon has yet to publicly respond to the Commission's latest request.