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Amazon nears pact to end EU’s most advanced antitrust probe

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Amazon is nearing a settlement with European Union antitrust chief Margrethe Vestager that would end her most advanced Big Tech antitrust probe without a fine or a bruising legal battle, according to people familiar with the matter.

The European Commission could accept an offer by the company before the August summer break that would allow it to shut down antitrust investigations into how Amazon uses data from smaller sellers and how it picks which retailers are featured in a highlighted Buy Box that can massively boost their sales, the people said on condition of anonymity because the pact isn’t yet final.

Closing the three-year probe without a fine would be a win for Amazon and could also allow Vestager to claim victory by getting an internet giant to make changes without much effort. She’s still fighting Google at court over some €8.25 billion in fines while facing criticism that EU orders failed to squeeze significant changes from the search firm. And she’s got multiple cases against Apple, Google and Meta Platform’s Facebook to push forward before she leaves office in two years’ time.

An antitrust settlement extracts a pledge from companies to change business behavior in return for the Commission dropping the case. After the Commission agrees a pledge with a company, it sends it out for feedback from customers and rivals before making the commitments legally binding. While there’s a potential fine if a company breaks its promise, the process avoids a lengthy court appeal and essentially shields a company from further legal trouble, because it doesn’t admit to wrongdoing, hampering any damages claims from wounded rivals.

Amazon is aiming to solve Commission concerns by leaning on the recently-adopted Digital Markets Act (DMA), by potentially sharing some data with other sellers on the platform, two individuals with direct knowledge of the case said. The EU’s 2020 statement of objections flagged worries that Amazon may not be playing fair if it uses information gleaned from other retailers on the platform, such as on what’s selling well, and uses those insights to get its retail arm to start offering something similar.

The DMA sets a list of dos and don’ts for digital firms that act as gatekeepers. It would stop Amazon from using non-public data that business users don’t have access to. One solution would be to make that data available to other vendors.

The Amazon case also influenced the new rules. In November 2020, Vestager told reporters that “data on the activity of third-party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers.” Just a month later, her DMA proposal included an outright prohibition for gatekeepers from using the non-public data of business users to compete against them.

Amazon’s offer will also aim to resolve a newer probe into how Amazon selects which retailer wins a spot in its Buy Box feature, also a target of a record Italian competition €1.13 billion fine for Amazon last year, the people said.

“This is smart thinking,” said Christophe Carugati, a researcher at the Bruegel think-tank. “Amazon will have to comply with the new rules anyway, and such a remedy would provide guidance on what compliance with this particular DMA provision could look like in practice.”

The Commission declined to comment on a settlement, saying its investigation is still open. Amazon also declined to comment. It has previously said that it will cooperate with the Commission’s investigations, even if it disagrees with regulators’ analysis.

A sign of things to come?

The DMA restrictions aren’t likely to hit Big Tech companies until early 2024. In the meantime, EU officials are scrutinizing anticompetitive behavior in several cases where the DMA could apply: Apple’s treatment of music streaming providers, app payment restrictions and app store practices i; Google’s adtech supply chain; and Facebook’s marketplace.

“The Commission and the gatekeepers will have an incentive to seek commitments, especially if the likely competition remedy is similar to a DMA provision that they will have to implement anyway,” Carugati said.

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