WASHINGTON (Reuters) – Amazon will make major changes to its business practices by giving customers more visible choices when buying products and giving Prime members more delivery options to end a competition probe in Europe, EU regulators said on Tuesday.
The European Commission said it accepted Amazon’s legally binding commitment to resolve two antitrust investigations. The deal has allowed the company to avoid a legal battle with the EU’s top antitrust regulator that could end in a hefty fine of up to 10% of global annual revenue.
The deal marks another step forward in efforts by EU authorities to rein in the power of big tech companies, a day after the European Commission accused Facebook parent Meta of distorting competition in the classifieds business.
“Today’s decision sets the rules that Amazon needs to abide by in the future, rather than Amazon making those rules for all players on its platform,” EU Competition Commissioner Margrethe Vestager told a news conference in Brussels. said at the press conference. “With these new rules, competing independent retailers, operators and European customers will have more opportunities and choices.”
The agreement applies only to Amazon’s business practices in Europe and is valid for seven years. Amazon has until June to make the promised changes.
“We are pleased that we have addressed the European Commission’s concerns and resolved these issues,” Amazon said in a prepared statement, adding that it still disagreed with some of the commission’s preliminary conclusions.
Amazon previously offered deals in July Solve both investigations. It refined these initial proposals after the committee tested them and received feedback from consumer groups, delivery companies, book publishers and academia.
The company promises to give competitors’ products 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 button below the first buy button for the same product, but with a different price or shipping offer.
“If Amazon can’t populate both buy boxes with its own retail offers, it will give independent sellers more visibility,” Vestager said. Regulators will monitor the performance of the second box, she said, and will require companies to buy if they don’t get enough. Adjust your presentation when your customers care.
Amazon also eased access for merchants and couriers to its Prime membership service. No longer discriminate against Prime sellers who do not use their own logistics and delivery services, allowing Prime members to freely choose delivery services. Currently, couriers can only deliver Prime packages with approval from Amazon.
The company also pledged to stop using “non-public data” from independent sellers on its platform to provide insights on how to compete with those merchants by selling branded goods themselves or “private label” products.
Amazon uses the data to decide which products to launch, how much to sell them for, which suppliers to choose or how to manage inventory, Vestager said.
The company has pledged to stop doing so with seller data, including sales, revenue, shipments, transaction prices, performance and consumer visits, she said.
Amazon faces similar scrutiny in US and UK.
In September, the office of California Attorney General Rob Bonta sued Amazon, accusing the company of stifling competition and raising prices across the marketplace through its policies. Amazon effectively prohibits third-party sellers and wholesale suppliers from offering lower prices elsewhere through contract terms that hurt other businesses’ ability to compete, his office said.
The company said it considers an item competitively priced when it is at or below what other retailers are displaying, which could spur price increases elsewhere. Some sellers who paid higher prices on Amazon may have lowered their prices on other sites, but didn’t do so out of fear that they would lose valuable Amazon real estate or face a shutdown, the lawsuit said.
The settlement comes amid a broader crackdown on big tech companies by regulators in Europe and elsewhere. In March, EU officials approved a new law that will take effect in 2024 to prevent so-called digital gatekeepers from dominating the market by prioritizing the use of their own products or using data collected from different services. Violations can result in fines of up to 10% of their annual revenue.