Amazon has reached a settlement with European Union (EU) authorities that would require the e-commerce giant to make major changes to its business operations.
According to The New York Times insiders, this may mean avoiding a prolonged court battle and possible penalties totaling billions of dollars.
Settlement Effectiveness
The deal will resolve two antitrust probes in Europe. It would oblige Amazon to offer rivals equal access to crucial online real estate, unidentified sources claimed.
Amazon can also not use nonpublic information on independent merchants to influence its product offers.
Even though Amazon faces no financial punishment, the settlement signifies progress for European authorities.
Officials have spent years attempting to push the tech giant to adjust business methods they feel thwarted the competition, erode data privacy measures, and facilitate unlawful online activity.
The accord may foreshadow adjustments at Apple, Google, and Meta, who are all facing EU antitrust probes and scrambling to comply with new European digital rules taking effect in 2024. This might impact app stores, internet advertising strategies, and social network harmful content standards.
Sources say the Amazon arrangement is similar to a proposed settlement published by the EU in July. It lasts five years and applies exclusively to Amazon's EU business, but the firm might adapt certain modifications elsewhere.
The arrangement may save Amazon up to 10% of its $470 billion worldwide sales last year.
"Buy Box" Anomaly
Agustin Reyna, head of legal and economic affairs at the European Consumer Organization, encouraged authorities to probe Amazon's practices. He predicted the firms would keep their dominance otherwise.
Regulators should not overlook Amazon's market dominance, he warned.
Amazon agreed to provide merchants equal access to the "Buy Box" - the prominent "Buy Now" and "Add to Cart" buttons on a product listing. Amazon promises to produce a second offer box if pricing or delivery time differs enough.
Suppose Amazon detects a product for sale at a lower price on another site. In that case, it will deactivate those two buttons and substitute them with less attractive wording and images, which may significantly cut sales.
Andy Jassy, who succeeded Jeff Bezos as CEO last year, has said Amazon's Buy Box policy benefitted customers by keeping costs low and delivery times short. Nevertheless, the design has drawn antitrust attention.
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Probe Findings
The California attorney general sued Amazon in September, saying that vendors regularly boost prices on other websites to match Amazon's pricing and preserve their Buy Box placement.
The California case contended that selling on Amazon costs third-party merchants more; thus, they can not decrease prices. Merchants would rather pay more on other sites to receive the Buy Box than risk losing sales on Amazon, the complaint argues.
Amazon committed in the EU settlement to cease utilizing competitors' nonpublic data. Independent merchants that rely on Amazon to reach consumers have claimed that the firm utilizes sales terms, income, and inventory to decide what items to manufacture, sell, and push, like Amazon Basics.
In another success for independent merchants, vendors will be able to join Amazon's Prime program without utilizing the company's logistics operation. This modification will allow merchants to work with different suppliers on inventory and delivery.
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