Amazon is being investigated in the UK for unfairly granting certain sellers an advantage on its marketplace.
Markets watchdog stated that Amazon's practices could be anti-competitive, leading to poorer deals for customers.
This investigation will focus on Amazon's decision-making process regarding which products get preferred listing spots.
Amazon stated that it believes it has always done its best to help small businesses sell on Amazon.
The Competition and Markets Authority (CMA), is following a similar probe by the European Commission in May.
This online retailer giant hosts the marketplace for independent businesses to advertise their products. It also sells its products there.
The CMA suggests that Amazon might be favoring its own retail business over third-party sellers.
Additionally, the regulator stated that Amazon provides services to independent businesses for a fee - including storage and delivery - which may give an unfair advantage to sellers who purchase these services.
After concluding its investigation into Amazon, the CMA can impose a financial penalty on the company or order it to alter its practices.
Sarah Cardell, CMA's General Counsel, stated that "Millions" of UK residents rely on Amazon for quick delivery of all kinds of products.
"This is a critical area, so it's right we carefully examine whether Amazon is using 3rd-party data to give an unfair advantage to its retail business and whether it favors sellers who use its logistics or delivery services - both which could weaken competition." Ms. Cardell stated.
She added that Amazon is used by thousands of UK businesses to sell their products.
"Any loss in competition is a loss for consumers. It could result in them paying more, receiving lower quality products or having fewer choices.
CMA will first investigate how Amazon collects data from third-party sellers and whether this information is used to gain an unfair advantage in business decisions made by its retail arm.
The probe will also examine how Amazon determines which suppliers are preferred first in the "Buy Box", an area prominently displayed on Amazon's product pages. Customers can place their order in the box by clicking "Buy Now" and "Add to Basket".
The regulator also promised to look into how Amazon determines which products can be sold under the Prime label. This will allow for faster and free delivery.
Amazon spokesperson said that they will cooperate closely with the CMA in their investigation. However, Amazon believes it has always worked hard for small businesses selling on Amazon success. This is in both our and their best interests.
"We are proud to continue providing support to businesses of all sizes throughout the UK."
According to the CMA, it will seek to communicate with the European Commission during its investigation into the UK.
The CMA is also investigating Amazon and Google for possible fake reviews.
The watchdog also fears that Amazon and Google might be selling to "law-abiding" businesses, which could lead to them losing business to companies using false recommendations.
