Amazon is being investigated by Britain's antitrust watchdog over concerns that some of its practices in the UK may be anticompetitive and result in a worse deal for shoppers.
The Competition and Markets Authority (CMA) will look at whether Amazon is distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared with other third-party sellers in the Amazon UK Marketplace.
The investigation will look at how the tech giant is using third-party seller data and how it decides the criteria for selling under the Prime label.
The CMA will also scrutinise how Amazon selects the preferred choice in the "Buy Box", which is displayed prominently on Amazon's product pages and provides customers with one-click options to "Buy Now" or "Add to Basket" from a specific seller.
Sarah Cardell, general counsel at the CMA, said: "Millions of people across the UK rely on Amazon's services for fast delivery of all types of products at the click of a button.
"This is an important area so it's right that we carefully investigate whether Amazon is using third-party data to give an unfair boost to its own retail business and whether it favours sellers who use its logistics and delivery services - both of which could weaken competition.
"Thousands of UK businesses use Amazon to sell their products and it is important they are able to operate in a competitive market.
"Any loss of competition is a loss to consumers and could lead to them paying more for products, being offered lower quality items or having less choice."
As the probe progresses, the CMA said it will aim to communicate with the European Commission, which has been looking into similar concerns in the EU.
EU regulators charged Amazon with breaking antitrust rules two years ago, alleging that it was collecting data from independent companies that sell through its marketplace and then using it to benefit its own retail business.
Information collected was said to include the number of products ordered and shipped, sellers' revenues on the marketplace, the number of visits to sellers' offers and sellers' past performance.
The data allowed Amazon to adjust its offers accordingly, the European Commission claimed.
A second EU investigation was opened to examine whether Amazon was giving preferential treatment to its own offers and those of sellers using its logistics and delivery services.
The issues stem from Amazon's dual role as a platform: it provides a marketplace for independent sellers - which gives it access to a lot of data - but also sells products within the same marketplace, the European Commission said.
An Amazon spokesperson said: "We will work closely with the CMA during their investigation, although we believe we've always worked hard to help small businesses selling on Amazon to succeed, which is in both their and our best interests.
"We remain proud of the continued support we provide to businesses of all sizes across the UK. More than 50% of all products sold on Amazon are from small businesses, and sales from our selling partners continue to grow faster than Amazon's retail sales.
"There are now more than 65,000 small and medium-sized businesses in the UK that sell on Amazon, supporting more than 175,000 jobs across the country."