LONDON — European regulators announced an antitrust investigation on Thursday into whether Amazon used its dominant position in the region’s e-books market to favor its own products over those of rivals.
The European Commission said it was evaluating the legality of clauses that Amazon had used with European publishers, which required them to inform the e-commerce giant of more favorable terms for books that were offered to other digital retailers.
The announcement is the latest hurdle facing United States technology companies in Europe. European policy makers in recent years have pursued a series of tax, antitrust and other investigations into the businesses of Apple, Google and Facebook.
Amazon, the region’s largest e-commerce company, has also drawn scrutiny. The company’s complex tax practices in Luxembourg, home to its European headquarters, are the subject of a separate investigation by European authorities. The commission, which is the executive arm of the European Union, is also pursuing an antitrust investigation into whether large tech companies have impeded competition in the region’s online shopping industry.
How Europe Is Going After Amazon, Google and Other U.S. Tech Giants
The biggest American tech companies face intensifying scrutiny by European regulators, with — pressure that could potentially curb their sizable profits in the region and affect how they operate around the world.
The European authorities said the clauses being evaluated in the e-books investigation might have hampered competition by making it more difficult for Amazon’s rivals to offer lower prices. Amazon has been estimated to sell about eight out of every 10 e-books in Britain. In Germany, the percentage is just under half. In the United States, Amazon has an estimated two-thirds of the e-book market.
Antitrust officials added, however, that the opening of the investigation did not indicate that Amazon had broken the region’s competition laws.
“Amazon has developed a successful business that offers consumers a comprehensive service,” Europe’s antitrust chief, Margrethe Vestager, said on Thursday in a statement. “It is my duty to make sure that Amazon’s arrangements with publishers are not harmful to consumers, by preventing other e-book distributors from innovating and competing effectively with Amazon.”
In a statement, Amazon said it was “confident that our agreements with publishers are legal and in the best interests of readers.” The company said it would “cooperate fully during this process.”
The investigation is at an early stage and still could be dropped or end in a settlement without a formal finding of wrongdoing. If formal charges, known as a Statement of Objections, are eventually brought against Amazon and Amazon fails to successfully rebut those findings, the company could face a fine of as much as 10 percent of its most recent annual global sales.
The largest single fine levied by the commission, the European Union’s executive body in Brussels, is 1.1 billion euros in 2009 against Intel, the chip manufacturer, for abusing its dominance of the computer chip market. But the accumulated penalties paid by another American technology titan, Microsoft, were even higher, totaling almost €2 billion in European fines over a decade.
The e-books investigation that Amazon now faces in Europe contrasts with what the company has experienced in the United States. Amazon introduced the Kindle, the first truly popular electronic reader, in 2007. When Apple introduced the iPad three years later, publishers tried to use the new device as leverage against Amazon. The result was an antitrust price-fixing lawsuit filed by the United States Justice Department against five of the biggest publishing houses and Apple. The publishers settled and Apple lost, which gave Amazon ample public relations leverage and complete market dominance. It also left a lot of bruised feelings.
Apple is appealing the antitrust case, and a hearing in New York last December seemed to show that two of the three judges might be sympathetic to its arguments. A ruling is expected shortly.
Penguin Random House, the largest book publisher, is negotiating new contract terms with Amazon, and the discussions are reportedly not going well. Negotiations between Amazon and another publisher, Hachette, produced a monthslong battle last year that sent authors to the barricades and inspired abundant discussion about whether Amazon was saving the world of reading or ruining it.
In Europe, Amazon’s issues with publishers have been building. Last June, the German Publishers and Booksellers Association submitted a complaintto the German antitrust authority, asserting that Amazon’s monopolylike position in the e-book market violated competition law.
Later that summer, hundreds of writers from Austria, Germany and Switzerland signed an open letter to Amazon, accusing it of manipulating its recommended reading lists and of lying to customers about the availability of books as retaliation in a dispute with Bonnier, a leading publishing group in Germany, over e-book prices.
The Bonnier dispute echoed the fight between Amazon and Hachette in the United States. In response to the European authors’ complaints, Amazon contended Bonnier offered “most of its titles under conditions that make it significantly more expensive for us to sell a digital version, as compared to a printed edition.”
Amazon and Bonnier reached an agreement over the e-book pricing in October, but neither side revealed details.
The European Commission said on Thursday that the e-books investigation was distinct from the antitrust dispute between Germany and Amazon and was not the result of a formal complaint.
“The in-depth investigation launched today was at the commission’s own initiative,” said Ricardo Cardoso, a spokesman for the commission. “It concerns contract clauses that seem to shield Amazon from competition from other e-book distributors, including clauses granting it rights to be informed of more favorable or alternative terms offered to its competitors and rights to terms that are similar or at least as good.”
Alexander Skipis, president of the German publishers’ association, welcomed the commission’s move on Thursday as confirmation of unfair practices pointed out by the organization last year.
“The publishers’ association will continue to monitor very closely and call attention to unfair practices,” Mr. Skipis said, noting his group’s current examination of market practices by Audible, an Amazon subsidiary for audiobooks.
Ms. Vestager, a longtime Danish politician, has taken an assertive approach since becoming the European Union’s competition commissioner last year.
In April, she brought formal antitrust charges against Google, accusing the American tech giant of using its dominance as a search engine to “artificially” skew results to favor its own shopping service to the detriment of rivals.
In May, she announced an antitrust investigation into whether large tech companies were impeding competition in online shopping. The goal is to make it easier for people across the 28-member European Union to gain access to services like movie streaming, cloud computing and online shopping — as well as to help European companies to operate across the diverse region, regulators said.
Although the regulators said the investigation was not aimed at specific companies, Amazon is the leading e-commerce company in the region, with sales more than double those of its closest competitor.
The European Commission is also investigating whether Amazon and Apple receive unfair state support through low-tax agreements — Amazon in Luxembourg and Apple in Ireland — where the companies run their European operations.
Last month, Amazon said that it would start paying taxes in European countries where it has large operations, instead of funneling nearly all of its sales through Luxembourg, a low-tax haven that is the home base for a number of large tech companies.
On May 1, Amazon said that it had started reporting revenue from its operations in Britain, Germany, Italy and Spain. By altering how it reports its revenue, the online retailer may become liable for more tax in certain countries, though it may still be able to reduce its tax burden through other complex accounting practices.
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