Amazon to make major business changes in EU settlement | Popgen Tech


Amazon will make major changes to its business practices to end competition investigations in Europe by giving customers more visible choices when buying products and, for Prime members, more delivery options, European Union regulators said on Tuesday.

The EU’s executive Commission said it accepted Amazon’s legally binding obligations to resolve two antitrust investigations. The deal allows the company to avoid a legal battle with the EU’s top antitrust watchdog that could have ended with potentially huge fines, worth up to 10% of annual global revenue.

The deal marks another advance by EU authorities as they clamp down on the power of Big Tech companies, and comes just a day after the Commission accused Facebook parent Meta of distorting competition in the classified advertising business .

“Today’s decision sets the rules by which Amazon will have to play in the future instead of Amazon setting these rules for all players on its platform,” EU competition commissioner Margrethe Vestager said at a press briefing in Brussels. “With these new rules, competitive independent retailers, carriers and European customers will have more opportunity and choice.”

The agreement applies only to Amazon’s business practices in Europe and will last for seven years. Amazon will have to make the promised changes by June.

“We are pleased to have addressed the European Commission’s concerns and resolved these cases,” Amazon said in a prepared statement, adding that it still disagreed with some of the Commission’s preliminary conclusions.

Amazon offered concessions in July to solve the two investigations. It improved those initial proposals after the commission tested them and received feedback from consumer groups, delivery companies, book publishers and academics.

The company has promised to give products from competing sellers equal visibility in the “buy box,” a premium piece of real estate on its website and app that leads to higher sales. The buy box has two buttons that allow customers to “buy now” or “add to cart.”

European customers will get a second buy box under the first one 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, it will give more visibility to independent sellers,” Vestager said. Regulators will monitor how the second box performs and ask the company to adjust the offering if it doesn’t get enough customer attention, she said.

Amazon also facilitates access for merchants and couriers to its Prime membership service. It will stop discriminating against Prime sellers who do not use its own logistics and delivery services and will let Prime members freely choose any delivery service. Currently, couriers can only deliver Prime packages if they have been approved by Amazon.

The company also pledged to stop using “non-public data” from independent sellers on its platform to provide insights on how to compete against those merchants through its own sales of branded goods or “private label” products .

Amazon uses the data to decide what kind of products to introduce, how much to sell them for, which suppliers to choose, or how to manage inventory, Vestager said.

She said the company has committed to stop doing this with seller data, including sales, revenue, shipments, transaction prices, performance and consumer visits.

Amazon faces similar scrutiny in the US and Britain.

In September, California Attorney General Rob Bonta sued Amazon, accusing the company of stifling competition and raising prices for products across the market through its policies. His office said Amazon effectively barred third-party sellers and wholesale suppliers from offering lower prices elsewhere through contract provisions that harmed the ability of other businesses to compete.

The company says it considers an item to be competitively priced when it is offered at or below a price displayed by other retailers, which could prompt higher prices elsewhere. Some sellers who pay more to sell on Amazon may lower their prices on other sites, but they don’t do so for fear of losing valuable Amazon real estate or facing suspensions, the lawsuit says.

The settlement comes amid a growing crackdown by regulators in Europe and elsewhere on Big Tech companies. In March, EU officials approved a new law that will take effect by 2024 to prevent so-called digital gatekeepers from dominating markets by favoring their own products, or using data collected from different services. Violations can result in fines of up to 10% of their annual income.


Source link