Amazon’s big antitrust concession in EU may not be a concession at all

Amazon avoided a potential massive multibillion-dollar fine this week when it agreed to make a series of changes to its shopping site and business practices in Europe that regulators hope will help level the playing field for the hundreds of thousands of merchants who sell goods through the site, as well as logistics companies that compete with the tech giant.

The deal marks the first time in Amazon’s history it has made a bevy of changes as the result of a government investigation, and it could serve as a blueprint for deals that regulators in the US could push for over concerns of anti-competitive behavior.

But at least one of the big changes that EU antitrust officials are framing as an Amazon concession had already been under consideration inside the company for many years, according to two sources familiar with the initiative. Another change Amazon agreed to make in Europe — to stop using certain data it collects about sellers on its third-party marketplace — is a shift that won’t actually impact the company because this data is not particularly useful, a source told Recode.

So while Amazon’s deal appears to be a win for regulators, it may include changes the company can easily accept because they won’t materially affect its competitive edge.

“It appears Amazon’s strategy all along was to make it seem like it was giving things up that it was perfectly comfortable to give up,” one of the sources said.

Amazon has until the summer to make these and other agreed-upon changes, which will apply to its shopping sites across the EU other than in Italy, where the government has undergone its own investigation into the tech giant.

Amazon and spokespeople for the European Union’s antitrust commission did not respond to a request for comment.

In the first instance, the change in question involves Amazon’s “Buy Box,” the section of the shopping site that shows the price and delivery date for a given product, along with “Add to Cart” and “Buy Now” buttons. When there are multiple parties that sell the same product, Amazon’s algorithm chooses which business “wins” the Buy Box and gets the sale. With the EU deal, Amazon has agreed to start displaying two Buy Boxes on its sites in Europe when there is a second competing offer that is materially different in price and/or delivery speed. The idea is that third-party sellers will now have a better chance to get in front of shoppers when competing against Amazon for the sale of the same product.

Yet inside Amazon, a similar idea had already been discussed since at least 2018, before any major known antitrust investigations into the company, according to multiple sources. Dubbed Project Packard, the initiative aimed to show multiple Buy Box offers to shoppers in an effort to provide more options for customers, including the option to wait longer for an item if it meant getting it for a cheaper price. Later, the idea of multiple Buy Box offers was also seen internally as a potential olive branch to sellers who complained publicly about how difficult it was to win that top placement.

“For Amazon to ‘concede’ and show multiple offers is … something they probably would have done anyway,” according to a former Amazon manager familiar with the initiative.

The EU says it can request changes to the presentation if the second Buy Box offer isn’t attracting “adequate consumer attention.”

The EU agreement also forbids Amazon from using “non-public data relating to, or derived from, the independent sellers’ activities on its marketplace, for its retail business. This applies to both Amazon’s automated tools and employees that could cross-use the data from Amazon Marketplace, for retail decisions.” The use of this data was seen as unfair because it could help Amazon’s retail business, which stocks and sells some of the very same merchandise as its sellers, gain a competitive advantage over those sellers. The data could also be used to help Amazon clone popular products for its private-label brands.

Amazon already had a policy against its employees or systems using non-public data from individual Amazon sellers, but that policy was occasionally broken, according to published reports. The new deal forbids Amazon from using that data, but also pooled or aggregate data from multiple sellers, which Amazon employees and systems previously were able to use. However, according to a source, executives have discussed internally how the aggregated data is not particularly valuable in any event.

“Aggregate data just tells you that the [product] category is hot,” according to the source. “You don’t have to look at non-public data for that.”

“That’s why people were gaming the system to use individual seller data,” they added.

Whether the data is useful or not, Amazon has agreed not to use it for its own retail business, as well as its private label business, which includes brands like Amazon Basics. Earlier this year, Recode reported that some Amazon executives had been on board with the idea of getting out of the private-label business altogether if it meant avoiding harsher remedies in any potential antitrust investigations. Amazon is still in that business, however, and the new deal with the EU does not directly affect that business line.

The agreement also includes several changes related to the role Amazon Prime plays for the company. The first lets sellers qualify for the Prime badge, even if they don’t use Amazon’s warehousing and shipping service, known as Fulfillment by Amazon. Another agreement prohibits Amazon from using information gathered through Prime about the performance or rates of outside logistics providers to benefit Amazon’s logistics and delivery business.

The agreement on the changes lasts between five and seven years. But whether they result in a more competitive experience for the merchants, big and small, who sell on and compete with Amazon, is an open question.