Amazon’s ad practices and algorithms facing scrutiny in EU

The EU wants more information on recommender systems and ad transparency, signaling potential shifts in ecommerce advertising landscape.

The EU sent Amazon a new request for information (RFI) on Friday, focusing on the ecommerce giant’s recommender systems, advertising transparency and risk assessment measures.

• This is Amazon’s third RFI since being designated a very large online platform (VLOP) under the DSA.
• The company must respond by July 26.

Why it matters. The European Commission’s latest request for information (RFI) to Amazon signals intensifying oversight of big tech under the Digital Services Act (DSA), potentially leading to hefty fines for non-compliance.

Details. The EU is seeking information on:

• Transparency of Amazon’s recommender systems.
• Design and implementation of its ad repository.
• Risk assessment reporting.

Why we care. The EU’s focus on recommender systems could lead to more transparency in how ads are displayed and targeted on Amazon’s platform. This may provide advertisers with:

• Better insights into ad performance.
• More clarity on how their ads are being served to consumers.
• Potentially fairer competition in ad placement.

The big picture. The DSA aims to regulate digital services and protect users from online harms, with stricter rules for larger platforms like Amazon.

Between the lines. The Commission’s focus on these areas suggests concerns about the potential societal impact of AI-driven systems and the need for greater transparency in digital advertising.

What they’re saying. Amazon stated it’s “working closely with the European Commission” and shares the goal of creating a “safe, predictable and trusted shopping environment.”

What to watch. The EU’s response to Amazon’s information could lead to a formal investigation, with potential fines up to 6% of global annual turnover for DSA violations.