Amazon to make big business changes to EU deal
Amazon will make major changes to its business practices to end antitrust investigations in Europe by giving customers more visible options when buying products and, for Prime members, more delivery options, union regulators said on Tuesday. European.
The EU Executive Commission said it had accepted Amazon’s legally binding commitments to resolve two antitrust investigations. The deal allows the company to avoid a legal battle with the EU’s main antitrust watchdog that could have ended with potentially hefty fines, worth up to 10% of annual global revenue.
The deal marks another move by EU authorities in clamping down on the power of big tech companies, and comes just a day after the Commission accused Facebook parent company Meta of distorting competition in the classifieds business.
“Today’s decision sets out the rules that Amazon will need to follow going forward rather than Amazon determining these rules for all players on its platform,” EU competition commissioner Margrethe Vestager said at a news conference in Brussels. “With these new rules, competing independent retailers, carriers and European customers will have more opportunities and choices.”
The agreement only applies to Amazon’s business practices in Europe and will run for seven years. Amazon will have to make the promised changes by June.
“We are pleased to have addressed the concerns of the European Commission and resolved these matters,” Amazon said in a prepared statement, adding that it still disagreed with some of the Commission’s preliminary conclusions.
Amazon had offered concessions in July to solve the two investigations. He improved on those initial proposals after the commission tested them and received feedback from consumer groups, delivery companies, book publishers and academics.
The company promised to give rival sellers’ products equal visibility in the “buy box,” a premium real estate piece on its website and app that leads to increased sales. The checkout box has two buttons that allow customers to “buy now” or “add to cart”.
European customers will get a second buy box below the first for the same product, but with a different price or delivery offer.
“Since Amazon can’t fill both Buy Boxes with its own retail offerings, this will give independent sellers more visibility,” Vestager said. Regulators will monitor the performance of the second box and ask the company to adjust the presentation if it doesn’t get enough attention from customers, he said.
Amazon is also making it easier for merchants and couriers to access its Prime membership service. It will stop discriminating against Prime sellers who do not use their own logistics and delivery services and allow Prime members to freely choose any delivery service. Currently, couriers can only deliver Prime packages if they are approved by Amazon.
The company has also pledged to stop using “non-public data” from independent sellers on its platform to provide information about how to compete against those merchants through your own sales of brand name or “private label” products.
Amazon uses the data to decide what kinds of products to launch, how much to sell them for, which suppliers to choose or how to manage inventories, Vestager said.
He said the company has pledged to stop doing this with seller data, including sales, revenue, shipping, transaction prices, performance and consumer visits.
Amazon faces similar scrutiny in the US and Britain.
In September, California Attorney General Rob Bonta’s office sued Amazon, accusing the company of stifling competition and raising product prices across the marketplace through its policies. His office said Amazon effectively prohibited third-party sellers and wholesale suppliers from offering lower prices elsewhere through contractual terms that hurt other companies’ ability to compete.
The company says it considers an item competitively priced when it’s offered at or below the price shown by other retailers, which can lead to higher prices elsewhere. Some vendors who pay more to sell on Amazon could lower their prices on other sites, but don’t do so for fear of losing valuable Amazon real estate or facing suspensions, the lawsuit says.
The deal comes amid a broader crackdown by regulators in Europe and elsewhere against big tech companies. In March, EU officials approved a new law that will take effect in 2024 to prevent so-called digital gatekeepers from dominating markets by giving preference to their own products or using data collected from different services. Violations could result in fines of up to 10% of your annual earnings.