Amazon Inc has agreed to a deal with European Union (EU) antitrust authorities to address concerns over of how non-public data undermines rivals and pledged to treat all sellers equally.
Under the agreement, the US tech behemoth committed to adhere to treating all sellers equally on its platform and said it would make competitors’ products “more visible” on its “buy box”, which generates the majority of purchases on the site.
Now, Amazon will add another second buy box that shows alternative offers for customers who decide that speed of delivery did not matter to them.
Major EU victory
The deal has brought to an end investigations into the $866bn company.
“Amazon can no longer abuse its dual role and will have to change several business practices,” said Margrethe Vestager, the EU’s competition chief.
“Competing independent retailers and carriers as well as consumers will benefit from these changes opening up new opportunities and choice,” she added.
The agreement will see Amazon abandoning its long running business practices. Under the new deal, sellers will also be able to choose logistics companies and negotiate their contracts directly. The legally binding deal will remain in force for between five and seven years and comes after three years of investigations.
Saved by the bell
By agreeing to the measures, Amazon has avoided being charged for violating of EU laws and being heavily penalised. Normally, a violation attracts a fine of up to 10% of global revenues. For amazon, this could mean several billions.
Should Amazon breach this agreement, the EU commission would be able to enforce this fine without finding any infringement of antitrust rules. In some cases, regulators can impose a penalty payment of 5 per cent per day of Amazon’s daily turnover for every day of non-compliance.
“We are pleased that we have addressed the European Commission’s concerns and resolved these matters,” Amazon said in a statement
The company insists it disagreed with a number of EU commission’s preliminary conclusions but had engaged “constructively to ensure it could continue to serve customers across Europe.”
But some analysts have raised concern over what they believe to be “overregulation” in Europe.
Overregulation can cause immeasurable harm. Companies have a duty to protect their business & brand without compromising consumer experience. Excellent article by @mvpeers applicable in the present Indian regulatory context. @EU_Competition @cci_india https://t.co/QOurXfQFwb
— Lloyd Mathias (@LloydMathias) December 22, 2022
“Although the EU punished Amazon, Apple, Google, Microsoft and other American technology giants, American companies still have an advantage because they still firmly occupy the European market,” DaiWW wrote on Twitter Saturday.
Although the EU punished Amazon, Apple, Google, Microsoft and other American technology giants, American companies still have an advantage because they still firmly occupy the European market. pic.twitter.com/WB8RfUfAad
— DaiWW (@BeijingDai) December 24, 2022
Under the Digital Markets Act, which was enactedin November, the big platforms must give equal treatment to data and bars self-preferential treatment, a practice of where a company prioritise its products in searches above rivals on its online marketplace. Amazon is not the first US giant to run into trouble in Europe.
Meta Platforms Inc, the parent company of Facebook, was also served with a complaint from the EU’s antitrust watchdog on Monday amid concerns the social network’s classified advert service was not fair to rivals. MetaNews has recently covered Meta’s EU antitrust case.
Yet others hailed the agreement as a milestone against big tech.
And EU can show that antitrust gets results the DMA can't. Ergo: the two can & should co-exist. Legally, strategically, it is a poster-child /1 https://t.co/OcgzAit7yy
— Lewis Crofts (@lewis_crofts) December 20, 2022
By giving its users access to Facebook Marketplace, the network’s platform for buying and selling goods, the social network has “a substantial distribution advantage that competitors cannot match”, the European Commission said. Meta dismissed the claims as baseless and vowed to challenge them.