In a move seeking to settle an open antitrust investigation in the U.K., Amazon has offered to limit its use of data on marketplace sellers so its retail business cannot gain an unfair advantage over other sellers and provide a guarantee of equal treatment for all products displayed in the ‘Buy Box’ that appears on listings on its ecommerce marketplace, the national competition watchdog said today.
The ecommerce giant has also offered to allow third-party businesses using its marketplace to sell physical goods to negotiate their own rates directly with independent providers of Prime delivery services.
The Competition and Markets Authority (CMA) opened an investigation into aspects of Amazon’s U.K. business just over a year ago. It’s not taken the step of issuing a formal statement of objections — so, if accepted, Amazon’s commitments could avoid the company being subject to a longer and deeper probe.
On Prime, the U.K. regulator has been looking into how Amazon sets the eligibility criteria for selling under the Prime label loyalty program — and it suggests the changes proposed by Amazon now will enable customers to benefit from lower delivery costs where better rates are negotiated.
On marketplace seller data, the CMA’s concern is that Amazon’s access to commercially sensitive data relating to third-party sellers could give its retail business an unfair advantage by helping it decide which products to sell; how to manage stock levels; set prices; and make other important commercial decisions.
A blanket commitment by Amazon not to use third party data to gain an unfair advantage is intended to resolve that worry.
While Amazon’s control of the Buy Box — which is of course prime (ha!) real estate for sellers on the marketplace, given its prominent featuring of selected sellers into product listings — has triggered concerned products offered by third-party sellers are less likely to appear than similar offers from either Amazon’s own retail business or third-party sellers that use its delivery services. Hence, again, its promise of equal treatment to resolve the concern.
The CMA has now opened a consulting on Amazon’s proposed commitments, ahead of taking a decision on whether to accept them. But it said its “preliminary view” is the offer from Amazon addresses its competition concerns. (The consultation runs until September 1.)
In a statement, Ann Pope, senior director for enforcement at the regulator, added:
Amazon’s commitments to the CMA will help ensure that third-party sellers on Amazon Marketplace can compete on a level-playing field against Amazon’s own retail business and, ultimately, mean that customers in the UK get a better deal. The CMA took this action after it heard concerns that Amazon was using its strength in the market to gain an advantage over thousands of businesses which use Amazon Marketplace to reach customers.
In December, Amazon reached a settlement with the European Union over similar antitrust probes also focused on its use of marketplace seller data, the Buy Box and Prime. The commitments Amazon is offering to the U.K. regulator look similar to those already accepted by the EU — although there does appear to be some differences and/or nuance. Not least because the EU pushed back on a first offer from Amazon after criticism it was weak.
For example, under the EU settlement Amazon not only agreed to treat all sellers equally for the Buy Box ranking but also to display a second competing offer from a different seller if one exists that is sufficiently differentiated from the first one on price and/or delivery. Whereas the settlement proposed to the CMA makes no mention of displaying a second Buy Box.
The commitments Amazon offered the EU also apply for seven years (for Prime and Buy Box); and five years (for all other commitments). Whereas it’s not clear how long Amazon is proposing to maintain the U.K. commitments. (We’ve asked the CMA for more on that.)
One aspect that’s shared between the (proposed) U.K. settlement and what the EU already accepted from Amazon is a requirement that it appoints an independent trustee who will monitor its compliance with commitments. (“Under supervision of the Commission, an independent trustee will be in charge of monitoring the implementation and compliance with the commitments,” the bloc said in December when it settled the probes.)
Monitoring trustees have been a feature of other CMA settlements on Big Tech commitments. Such as in the case of Google’s commitments about how it would go about deprecating support for tracking cookies and developing and implementing its alternative “Privacy Sandbox” adtech stack.
“The CMA will have a direct say in this appointment, ensuring they have the necessary skills and expertise for the job,” the UK regulator said in the case of Amazon’s commitment to being monitored.
Clearly, what are rather broad-brush pledges from Amazon to the U.K. regulator at this stage — such as not to use third party seller data to give itself an advantage; and to give equal treatment to all sellers when it comes to being featured in the Buy Box — will need to be verified to ensure the ecommerce giant is living up to its word. So, if the CMA does accept Amazon’s offer a lot will rest on the quality of the monitoring trustee.
Update: Amazon has now sent this statement in response to a request for comment:
While we disagree with the CMA’s preliminary concerns, we have engaged constructively with them to address the matters they have raised and to preserve our ability to serve UK customers and the more than 100,000 UK-based small and medium-sized businesses selling through our UK store.
We are extremely proud of the work we’ve done to support our sellers’ success over the past two decades.