Amazon cedes to Brussels over antitrust practices of its marketplace

Caught up in antitrust investigations, Amazon complies with European Commission requirements. The commitments, validated by Brussels, concern the collection of data on its marketplace, as well as access to its Prime and Buy Box services. These changes must be made within six months or face a substantial financial penalty.

All’s well that ends well. This saying is authentic for Amazon, which has just gone out of its way to avoid a financial penalty representing up to 10% of its global turnover. On December 20, the European Commission (EC) accepted the commitments offered by Amazon to respond to concerns from Brussels about practices considered anti-competitive. The decision of the European institution redistributes the cards and it is no longer Amazon that imposes its rules in Europe. It is worth remembering that, since 2019, the company has been under close surveillance by the EU and several investigations have been launched.

At the beginning of the year, the e-commerce giant made some efforts regarding its market. Several sellers were then able to express their opinions and, in that sense, the European Commission asked the company to improve its commitments. “Amazon then offered improved medicine. Today’s decision makes them binding on Amazon”, announces Margrethe Vestager, Executive Vice President of the European Commission and responsible for the strategy “A Europe adapted to the digital age and competition”.

Open antitrust investigations since 2019

The first investigation, launched in July 2019, concerned the retrieval of sensitive data from sellers on the Amazon marketplace. Margrethe Vestager points to “the use of big data and Amazon’s dual role as both a marketplace and a competitor to active sellers in its marketplace.” Under the cover of its marketplace, Amazon collects a lot of information from the confidential business data of 800,000 active sellers in the EU. The company then uses this data to make business decisions in its retail operations. EU fears related to Amazon’s ability to take less risk than competing retailers active on its platform, the latter not having access to this data. The investigation’s preliminary conclusion was that this use of data constituted an abuse of Amazon’s dominant position as a provider of marketplace services in France and Germany.

In November 2020, a second survey was opened on the role of the data collected in the selection of winners of the “Buy Box” – which corresponds to the yellow “Add to basket” and orange “Buy this article” buttons – allowing any user to buy a product literally with a few clicks. “Buy Box accounts for over 90% of all Amazon deal views and the same high share of all transactions. Therefore, it is very important that sellers have unbiased access to this box. But we were concerned that access to the box would favor Amazon’s retail operations,” recalls Margrethe Vestager. Amazon’s Prime program was also in the crosshairs of Brussels. This premium service offers several advantages – fast and free delivery, access to the streaming service, music, games and much more – for an annual fee of 69.90 euros. The service quickly democratized and is now the biggest consumer and most loyal consumer group in the Amazon marketplace. The risk was therefore that the company would promote its own retail and logistics operations through this Prime service.

Strong commitments to avoid sanctions

The changes made relate to the use of data, conditions of access to the Buy Box and conditions of access to the Prime program. On the data issue, Amazon will refrain from using non-public seller data for the benefit of its retail operations. This commitment applies both to Amazon employees and to the algorithmic tools that largely drive their business decisions. The data collected so far has included sales, revenue, shipments, transaction prices, performance or customer visits. Regarding the Buy Box, “Amazon will apply non-discriminatory conditions and criteria to the selection of offers” to appear in this buy box.

In addition, it undertakes to display a second Buy Box, which will appear when there is a second offer different from the first in price or delivery. “As Amazon cannot fill both buy boxes with its own retail offerings, this will give independent sellers more visibility,” adds the EC Executive Vice President. Finally, a set of changes is made to the Prime service with non-discriminatory conditions for sellers. Prime subscribers’ data will no longer be used elsewhere, in order to rule out any possibility of favoritism by Amazon’s logistics services.

Compliance until June 2023

The European Commission says it will closely monitor the e-commerce giant’s compliance with all aspects of the package, including a complaints mechanism and an oversight administrator. The complaint mechanism will be open to sellers and carriers to report any suspected non-compliance. Regarding the second buy box, called Buy Box, she adds that the performance of the latter will be monitored, and will request presentation adjustments if necessary. “The presentation of the second Buy Box is important to attract consumers’ attention to a greater variety of offers”.

“While we continue to disagree with several of the European Commission’s preliminary findings, we have constructively engaged to ensure that we can continue to serve customers across Europe,” an Amazon spokesperson said. The Commission said Amazon’s final commitments will remain in effect for seven years with respect to Prime and the showing of Buy Box’s second competing offering, and five years for the remaining parts of the commitments. The way Amazon operates in Europe is likely to change significantly in the future for the benefit of customers, sellers and shippers. The company has six months to fulfill these commitments, that is, until June 2023. Otherwise, the threat of a fine of up to 10% of total annual revenues is still imminent.

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