LONDON, Jan 5 (Reuters Breakingviews) – Europe’s antitrust tsar Margrethe Vestager appears to be clocking up some victories over technology groups like Amazon.com (AMZN.O) and Apple (AAPL.O). But dig into the detail of the behemoths’ possible concessions, and it’s clear that they’re giving away very little.
The European Commission in December accepted commitments offered by Amazon, ostensibly designed to stop the $880 billion e-commerce group using its dominant market position to favour its own services. The measures include restrictions on its use of merchants’ data, pledges to highlight alternative buying options on product pages, and opening its Prime subscription programme to independent delivery firms. Separately, Apple may allow other companies to set up app marketplaces on its iPhone, Bloomberg reported. That could be an attempt to get ahead of Europe’s recently introduced Digital Markets Act, which sets up a code of conduct for dominant digital companies.
At first glance, such measures seem like wins for Vestager’s campaign to boost competition in online markets. Apple’s lock on the app store allows it to charge transaction fees of up to 30%, which critics like Spotify (SPOT.N) call a tax. App developers could skirt those charges if they’re able to reach iPhone users through a third-party marketplace. Meanwhile the Amazon commitments are legally binding, with a breach punishable by a fine of up to 10% of annual turnover, or $47 billion based on 2021 figures.
The problem for Vestager is that Big Tech can probably brush off the changes. Take the Amazon concessions. The company promised to let merchants selling under the Prime subscription use rival delivery options, instead of just the e-commerce giant’s own offering. But independent logistics firms probably won’t be able to match Amazon’s speed and still make money. Vestager’s data restrictions, meanwhile, should stop the company using information on small merchants’ sales to undercut them with its own-brand products. But that won’t trouble Amazon much: private-label sales were 1% of its total, founder Jeff Bezos told the Congress in 2020.
Any offer from Apple to allow competing app stores carries a similar risk. The tech giant makes it possible to download certain third-party software onto its Mac laptops, like the Windows operating system. But the cumbersome process can involve putting the computer in recovery mode and turning off security settings. Chief Executive Tim Cook could conceivably try the same trick with third-party iPhone app stores, for example by making users plug their device into a computer.
If Vestager wants the concessions to stick, she’ll have to be ready to pounce on any gamesmanship. Europe’s fight with the U.S. tech giants will not end any time soon.
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Amazon.com on Dec. 20 said that it had reached a settlement with the European Commission, which had been probing whether the e-commerce group abused its dominant market position.
The technology giant said that it has agreed to restrictions on the use of sellers’ data on its platform, changes to its website to highlight alternative buying options, and more choices for logistics providers under its Amazon Prime programme.
Fellow large technology company Apple is preparing its own business model changes ahead of deadlines to comply with the European Union’s Digital Markets Act in 2024, Bloomberg reported on Dec. 13. These include allowing app stores operated by third parties on its iPhone, according to the report.
Column by Karen Kwok in London and Jonathan Guilford in New York. Editing by Liam Proud and Streisand Neto
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