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Amazon Overhaul Settles 2-Year EU Antitrust Probe

Amazon’s European shopping experience will soon be a little different for consumers and sellers alike, with the e-commerce giant planning to adding a second “buy box” on its marketplace and allowing Prime sellers to choose any carrier for their logistics and delivery services.

The European Commission accepted various commitments, first offered by Amazon over the summer, ending two years of antitrust investigation across two separate probes and ensuring the e-commerce giant won’t pay a hefty fine amounting to 10 percent of global sales.

Amazon’s changes will address the use of third-party data and Amazon’s simultaneous roles as a marketplace host and a competitor, the rules dictating how sellers appear in the buy box, and the rules governing how sellers and carriers participate in the Prime program.

The company will have to implement these commitments by June 2023, according to Margrethe Vestager, executive vice president of the European Commission.

First, the Big Tech firm said it would refrain from using non-public seller data to the benefit of its retail operations, which has long been a massive criticism of the company both in the United States and internationally and a primary talking point arguments calling for government to break up the company into smaller pieces.

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This means that Amazon will not be able to use insights about other sellers’ operations on its platform to optimize its own decision making, which could restore a level playing field for platform sellers.

In particular, the commitment applies to the use of seller data for the purposes of selling branded goods as well as Amazon’s private-label products. Amazon has been fiercely criticized for this practice, namely regarding the alleged launch of its own competing brands based on seller data.

Currently, Amazon uses third-party seller data to help make decisions such as which product to launch, which price to set, which suppliers to choose, or how to manage inventories. The commitment will prevent this from happening and cover all types of seller data, the Commission says. Such seller data covers sales, revenues, shipments, the transaction prices, the performance, or consumer visits.

Amazon will also display a second buy box immediately below the first one, which gets a prominent space at the top of the site. It will appear when there is a second offer that is different from the first one on price or delivery. As Amazon cannot populate both buy boxes with its own retail offers, this commitment is designed to give more visibility to independent sellers and prevent instances of preferential treatment to its own products or certain sellers.

Amazon will apply non-discriminatory conditions and criteria for the selection of offers to appear in the buy box. This applies to all steps of the ranking and selection process, and to all metrics that influence the buy box selection, according to the Commission.

“The buy box represents over 90 percent of all views of offers on Amazon and the same high share of all transactions,” Vestager said in prepared remarks. “So it is very important for sellers to have an unbiased access to that box. But we had concerns that the access to the box was favoring Amazon’s retail operations.”

Vestager said the Commission will monitor the performance of the second buy box, and can request adjustments to the presentation in case consumers “do not seem sufficiently attracted to it.”

Addressing the third concern, the tech titan is making four changes for the rules to participate in the premium Prime Programme. 

Amazon will apply non-discriminatory conditions and criteria for sellers to qualify for Prime, meaning there will be no discrimination between Amazon offers and offers of sellers that use independent carriers for Prime deliveries. Secondly, Prime sellers will be free to choose any carrier for their logistics and delivery services, and will be able to negotiate terms directly with the carrier of their choice. This is currently not possible as carriers can only deliver Prime parcels if they are qualified by Amazon.

With the commitment, Amazon says no data generated by the activity of other carriers would flow to Amazon’s logistics operation. And finally, Amazon will no longer prevent carriers from contacting the end customer directly by email to track their parcels. Today, Amazon is in control of the communication between customers and the carrier.

The e-commerce giant appeared to be prepared for the potential concessions when it made it easier for European Prime members to cancel their subscription in two clicks.

“We are pleased that we have addressed the European Commission’s concerns and resolved these matters,” an Amazon spokesperson told Sourcing Journal. “While we continue to disagree with several of the preliminary conclusions the European Commission made, we have engaged constructively to ensure that we can continue to serve customers across Europe and support the 225,000 European small and medium sized businesses selling through our stores.”

These small- and medium-sized businesses (SMBs) accounted for more than 50 percent of everything Amazon sold in its online stores in 2021, selling more than 2.2 billion products on Amazon store across Europe, recording more than 14.5 billion euros ($15.4 billion) in sales.

Antitrust concerns are not over

Although the European Union is off its back, Amazon still has other antitrust fights ahead. In the U.S., a dismissal of a prior antitrust lawsuit levied by Washington D.C. Attorney General Karl Racine remains under appeal, while California Attorney General Rob Bonta sued the firm in September. Both cases are based on allegations that Amazon stifles price competition across retail.

And then there’s the federal government, which has not launched an antitrust suit, but appears to be inching closer to doing so. Two major pieces of bipartisan legislation have been introduced in Congress since June 2021, both designed to limit the breadth of Big Tech companies like Amazon, Google, Facebook owner Meta and Apple.

In March, the House Judiciary Committee accused Amazon of obstructing Congress by refusing to provide information sought by the body’s antitrust subcommittee, calling for the Department of Justice to investigate “potentially criminal conduct” by Amazon and some of its executives.

The U.K. government has yet to open litigation against Amazon, but its top anti-competition watchdog has been investigating its business practices since July. However, a U.K. class-action lawsuit alleges that Amazon caused millions of customers to pay higher prices for products sold its website and app by obscuring better-value deals and instead promoting the buy box. That lawsuit is seeking damages of as much as 900 million pounds ($1 billion).