Amazon has reportedly come to an agreement with the European Union to settle a long-running antitrust complaint over how it prioritises its own products on its marketplace. The e-commerce giant has agreed to increase the visibility of rival sellers, in a move that is perceived to be a positive sign that the EU’s upcoming Digital Markets Act (DMA) will be able to curb the power of Big Tech.
However, it is yet to be revealed how Amazon will address complaints that it uses marketplace data to give its own products a boost in other ways.
Amazon antitrust investigation approaching a conclusion
The antitrust investigation into Amazon was opened in July 2019, with the European Commission stating it wanted to “assess whether Amazon’s use of sensitive data from independent retailers who sell on its marketplace is in breach of EU competition rules.” The investigation has been looking at whether Amazon uses data from third-party sellers, that it gathers in its role as a marketplace provider, in an uncompetitive way. The commission has also been looking at how products that appear in the ‘buy box’ – a section at the top of the Amazon marketplace which gives products prominence and through which most sales on the site are made.
The company was then hit with formal antitrust charges in November 2020.
Amazon has been in hot water over self-preferencing before, and was fined €1.3bn by Italian authorities in 2021 for disproportionately favouring its own products.
According to a report in the FT today, the global retail giant has come to an agreement with the European Commission which will increase the visibility of rival products in the “buy box”. The European Commission plans to announce the deal on 20 December, according to four people with direct knowledge of the timing who spoke to the FT. The agreement has reportedly been run past rival sellers, which previously complained Amazon’s own products have an unfair advantage in the marketplace, and agreed by EU officials.
The agreement will last five years, meaning it must comply with the upcoming Digital Markets Act, which comes into force in May and aims to control the power of Big Tech companies like Amazon, which have the role of both platform providers and participants in the markets they serve. The DMA aims to put an end to any unfair practices by these so-called gatekeeper companies, and by coming to an agreement in advance Amazon would avoid a potential fine of up to 10% of a company’s turnover if it were found to be in contravention of the DMA.
“This isn’t an action conducted or concluded under the DMA, which won’t come into force until May 2023, but it’s significant because any agreement reached will also need to be consistent with the provisions of DMA to avoid further legal troubles for Amazon,” explains Emily Taylor, CEO of Oxford Information Labs and associate fellow at Chatham House.
This is therefore a positive step, Taylor says, as it shows a willingness on Amazon’s part to comply with the Digital Markets Act. Amazon has previously denied its behaviour is uncompetitive. Tech Monitor has approached Amazon and the European Commission for comment.
How will Amazon address the data issue?
While Amazon’s solution to perceived self-preferencing in the buy box has been reported, what it will do about how it uses other data remains unclear.
German online consumer association Bundesvserband is one of several organisations to express concern about how marketplace data is used to aid Amazon in selling its own product lines. In a statement released in October, it said that “along the entire value chain, including procurement of goods, pricing, storage, shipping and online marketing, no data may go from Amazon Marketplace to Amazon Retail. There must be a clear separation, a kind of ‘Great Wall of China’, between these organizations. This separation must be guaranteed in particular at the same Amazon locations and extend across all organizational levels.”
The association added: “This must also explicitly apply to documents that Amazon Marketplace requests from sellers for reasons of risk assessment. These documents contain prices, quantities and producer addresses, which are absolute business secrets of the seller and must not be disclosed to the competitor Amazon Retail.”
Amazon will need to find an adequate solution to this question if it is to avoid falling foul of the DMA.