The UK’s Competition and Markets Authority (CMA) has announced the acceptance of commitments from Amazon and Meta, following separate investigations into their business practices. This development aims to enhance fair competition on their respective online retail platforms, Amazon Marketplace and Facebook Marketplace, with expected benefits for both sellers and consumers.
Fair Competition on Retail Platforms In the case of Amazon Marketplace, the CMA’s commitments from Amazon address the level of competition third-party sellers face, aiming to provide equal opportunities for their offers to be featured in the prominent ‘Buy Box’. This move is designed to prevent customers from missing out on potentially better deals from these sellers. Moreover, Amazon is to refrain from exploiting seller data to benefit its retail arm and must allow sellers to negotiate their own Prime delivery rates with independent providers. Compliance will be monitored by a CMA-approved independent trustee.
The probe into Amazon’s practices began in July 2022 amid concerns of potential abuse of its dominant market position and unfair advantages over Marketplace sellers and competing logistics services. Following a consultation launched in July 2023 regarding Amazon’s proposed commitments, the CMA has now formalised these agreements.
Meta’s Advertising Data Usage Similarly, Meta has committed to altering how it uses data from advertising customers to prevent an unfair competitive edge. Competitors who advertise on Meta platforms will have the option to ‘opt out’ of having their data used to enhance Facebook Marketplace. Furthermore, Meta has agreed to restrict the use of ad data in product development, aiming to eliminate any undue advantage over its advertising customers’ products or services.
Industry Leaders’ Reactions Sarah Cardell, the CMA’s Chief Executive, has expressed approval of these resolutions, anticipating similar outcomes in future, particularly with the prospective enactment of the Digital Markets, Competition and Consumers Bill. Ann Pope, the CMA’s Senior Director for Antitrust Enforcement, has also affirmed the benefits of Amazon’s commitments for independent UK sellers and customers.
The acceptance of these commitments concludes the CMA’s investigations under the Competition Act 1998 into Amazon Marketplace and Meta’s use of advertising data. The CMA will ensure Amazon’s and Meta’s adherence to their commitments and is prepared to take action if violations are suspected.
About Amazon Marketplace and Facebook Marketplace Amazon Marketplace serves as a vital e-commerce platform for an estimated 280,000 independent sellers, as of 2019. The ‘Buy Box’ is a key feature on Amazon product pages, offering customers quick purchasing options from specific sellers. Amazon boasts significant UK sales, with nearly $30 billion reported in 2022, highlighting its position as a leading market player in Europe.
Meta, the owner of Facebook, operates Facebook Marketplace, a feature within the Facebook app and accessible on other devices, enabling users to view or post classified ads for items on sale. The commitments from Meta are set for a five-year term following implementation, subject to potential future adjustments.
These commitments stem from the CMA’s enforcement authority under the Competition Act 1998 and precede a new regulatory framework expected to be overseen by the CMA’s Digital Markets Unit, which is currently under parliamentary consideration in the UK. This upcoming legislation seeks to introduce a new regime for major digital firms, promoting competition, innovation, and consumer and business protection.