The European Commission has charged Amazon with abusing its dominant position in online retail to gain an unfair advantage over competitors.
It said Amazon had used data on third-party sellers that use its marketplace to boost sales of its own-label goods.
The Commission also launched a fresh probe into the possible preferential treatment of sellers that use the tech giant’s logistics services.
Amazon rejected the charges, saying no firm “cared more” for small businesses.
It faces a potential fine as high as 10% of its global turnover if it is found guilty of breaching competition law – about £15bn ($19bn).
In a statement, the EU’s Competition Commissioner Margrethe Vestager said it was vital that platforms with “market power” did not “distort competition”.
“Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers,” she added.
“With e-commerce booming, and Amazon being the leading e-commerce platform, a fair and undistorted access to consumers online is important for all sellers.”
The European Commission has been investigating Amazon since July last year, following complaints from traders.
It says the tech giant accesses sensitive data from small and medium-sized companies that use its platform, such as sales figures, page visits or shipping information.
It then uses this to help with sales of its own-label products, or in choosing suppliers, the Commission says.
In a press conference on Tuesday, Ms Vestager said: “We do not take issue with the success of Amazon or its size.”
In a statement Amazon insisted that – far from being anti-competitive – its private-label products were good for customers and offered more choice.
“Amazon represents less than 1% of the global retail market, and there are larger retailers in every country in which we operate,” it said.
“No company cares more about small businesses or has done more to support them over the past two decades than Amazon.”
It also pointed out that there are more than 150,000 European businesses selling through its online marketplace.
The charges come as the coronavirus crisis has driven huge sales for the retailer, as people increasingly turn to online shopping.
In August, boss Jeff Bezos became the richest man in the world with a fortune of more than $200bn after the firm’s share price rocketed in the early months of the pandemic.