The European Commission accused Amazon of abusing its dual-position as both marketplace operator and retailer; using the sales data it collects from smaller vendors to outmaneuver them. To remedy this, the EU says Amazon has offered to “refrain from using non-public data relating to, or derived from, the activities of independent sellers on its marketplace, for its retail business that competes with those sellers.”
It’s long been suspected that Amazon uses its insight into sales on its platform to produce copies of popular products like Allbirds shoes and Peak Design bags. The EU’s investigation, though, looked at more subtle ways that Amazon could take advantage of this data.
In addition to the concession on data, Amazon is also proposing changes to how it sells products to Prime subscribers and how it deploys its “Buy Box” feature (a button on product listings that allows customers to add an item to their cart or buy it immediately).
In the case of the Buy Box, only one seller can be featured, making it much sought-after real estate. EU investigators claimed that Amazon’s algorithms are not impartial and favor its own products, but reportedly had trouble building a case against the company. In response, Amazon is committing to “apply equal treatment to all sellers when ranking their offers for the purposes of the selection of the winner of the Buy Box” and will add a second Buy Box for products that are “sufficiently differentiated from the first one on price and/or delivery.”
With regards to Prime, Amazon is promising to let third-party sellers offer Prime delivery times without having to use Amazon’s own logistics service, and is committing “not to use any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services.” As with the earlier data promise, it’s essentially saying that it won’t use private data it gathers from sellers to compete with them.
These concessions constitute a preliminary “market test” and will need to be finalized before Amazon makes any changes. The European Commission is asking Amazon’s rivals to assess the company’s commitments and offer feedback before September 9th. The agreement can then be adjusted if necessary, though earlier reports suggest a deal is all but certain, and only minor changes (if any) will be made. If Amazon’s concessions are accepted, they will go into place for five years across the European Economic Area (though not in Italy, which is pursuing its own case against Amazon on related matters).
The settlement allows both Amazon and the EU to claim some degree of success in the probe. Amazon gets to avoid a multi-billion dollar fine, while the EU — and, in particular, the EU’s antitrust chief Margrethe Vestager — can tout tangible changes to the company’s platform that will level the playing field in the world of online retail. The settlement also forgoes the inevitable appeals and court cases that accompany any major Big Tech fine.
Although the settlement announced today is Amazon’s response to a years-old antitrust investigation, it also looks ahead to the EU’s Digital Markets Act (DMA), which is expected to go into force in 2024. The DMA is intended to level the digital playing field, and also includes requirements for companies like Amazon to share more data with clients. As well as settling one EU investigation, then, Amazon is also getting ahead of changes it would be forced to make in due time regardless of the outcome of this investigation.
In a press statement given to TechCrunch, Amazon said it had “serious concerns” about the DMA and disagrees with the Commission’s conclusions in this case, but says it has “engaged constructively with the Commission to address their concerns and preserve our ability to serve European customers.”