Home Business Amazon Offers to Level the Playing Field With Third-Party Sellers to Avoid EU Fines

Amazon Offers to Level the Playing Field With Third-Party Sellers to Avoid EU Fines

Amazon Offers to Level the Playing Field With Third-Party Sellers to Avoid EU Fines
Source: Amazon

To resolve a 2019 EU antitrust probe, Amazon has made a number of concessions to third-party retailers on its marketplace in Europe.

The European Commission charged Amazon with abusing its twin roles as a marketplace operator and a merchant by outwitting smaller sellers using the sales information it gathers from them. Amazon reportedly proposed to “refrain from utilizing non-public data pertaining to, or derived from, the actions of independent sellers on its marketplace, for its retail business that competes with those sellers” as a solution to this problem, according to the EU.

It has long been assumed that Amazon produces knockoffs of well-known goods like Peak Design bags and Allbirds sneakers using its knowledge of platform sales. However, the examination by the EU focused on more subtle means by which Amazon can use this information.

Along with the data concession, Amazon is also recommending alterations to the ways in which it markets to Prime members and uses its “Buy Box” function (a button on product listings that allows customers to add an item to their cart or buy it immediately).

Because only one seller may be shown in the Buy Box, it is highly prized real estate. Despite claiming that Amazon’s algorithms are biased in favor of its own items, EU inspectors apparently struggled to make a case against the corporation. To address this, Amazon has pledged to “apply equal treatment to all sellers when ranking their offers for the purposes of selection of the winner of the Buy Box” and has announced the addition of a second Buy Box for goods that are “sufficiently differentiated from the first one on price and/or delivery.”

Regarding Prime, Amazon commits to “not to use any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services” and to allow third-party sellers to offer Prime delivery times without having to use Amazon’s own logistics service. It basically states that it won’t utilize the private information it collects from sellers to compete with them, similar to the prior data guarantee.

Before Amazon makes any adjustments, these concessions will need to be finalized as a “market test.” Amazon’s competitors are being asked by the European Commission to evaluate the firm’s obligations and provide input by September 9th. The transaction can then be modified if required, although prior reports indicate that only small modifications, if any, will be made. The European Economic Area will implement Amazon’s concessions for five years if they are approved (though not in Italy, which is pursuing its own case against Amazon on related matters).

Both Amazon and the EU are able to declare some level of success in the investigation thanks to the settlement. While the EU, and in particular its antitrust chief Margrethe Vestager, can highlight concrete improvements to the company’s platform that would level the playing field in the world of online shopping, Amazon gets to dodge a multibillion dollar punishment. Additionally, the agreement forgoes the unavoidable legal battles and appeals that come with any significant Big Tech sanction.

Although the settlement announced today is Amazon’s reaction to an antitrust probe that has been ongoing for years, it also anticipates the EU’s Digital Markets Act (DMA), which is anticipated to take effect in 2024. The DMA contains obligations for businesses like Amazon to disclose more data with customers and aims to level the playing field for digital businesses. So, in addition to ending one EU probe, Amazon is also preparing for adjustments that, regardless of the outcome of this inquiry, would eventually be required of it.

Amazon said it had “serious concerns” about the DMA and disagreed with the Commission’s findings in this case in a press release provided to TechCrunch. However, it added that it had “engaged constructively with the Commission to address their concerns and preserve our ability to serve European customers.”