What you need to know
- Amazon has made a series of concessions to address the European Union’s concerns over its use of the sellers’ data to gain market advantage.
- The online retail giant has agreed not to use the sellers’ data for its own retail business and in-house products.
- Amazon has also committed to giving equal treatment to sellers when ranking their offers for the “buy box” button on its website.
- The EU could have imposed a fine of up to 10% of Amazon’s global annual turnover without these concessions.
Amazon’s business is so immense that it’s constantly being watched by regulators worldwide, not the least of which is the European Commission’s antitrust watchdog. The regulators have been probing the retail giant’s marketplace practices since at least 2019 for antitrust violations, some of which have now been addressed by the company.
The EC has announced (opens in new tab) that Amazon agreed to make changes to its business practices in order to settle two antitrust probes. The regulators have accepted those concessions and will continue to monitor the company for at least the next seven years.
Concerns about how Amazon leveraged its market dominance emerged as early as 2019, when the EC discovered that the company used the sellers’ data to adjust its retail strategy. This occurred in several of Amazon’s major European markets, including France and Germany. The watchdog’s investigation later concluded that this practice “distorted fair competition on its platform and prevented effective competition.”
To address this concern, Amazon has agreed to stop using non-public data from independent sellers to gain an unfair market advantage. The company has also stated that it will not use such information to sell its private label products.
In a separate antitrust probe, the EC was concerned that Amazon’s criteria for the “buy box” tool and Amazon Prime favored its own retail business and third-party sellers that use its logistics and delivery services. Moving forward, the retail behemoth will give equal treatment to sellers when ranking their products for the “buy box,” which appears on the right side of a product.
Amazon will also “display a second competing offer to the Buy Box winner if there is a second offer from a different seller that is sufficiently differentiated from the first one on price and/or delivery.” The company has also promised to make sure that discrimination against sellers in Amazon Prime will be a thing of the past. As for Prime members, Amazon will give them the liberty to choose any delivery service.
The EC will monitor Amazon’s compliance with its commitments pertaining to Prime and Buy Box for seven years. Meanwhile, the rest of the commitments will be in effect for the next five years. If Amazon breaks them, regulators may impose a fine of up to 10% of Amazon’s annual global turnover, which could amount to $47 billion, according to CNBC (opens in new tab).
Earlier this year, Amazon’s business practices were also embroiled in an antitrust lawsuit in the United States for allegedly fixing third-party prices and undermining competition. This forced the company to shut down its “Sold by Amazon” program and pay $2.25 million, which looked like a negligible sum when compared to its revenues.