Amazon Buy Box pricing manipulation
Amazon's Buy Box is a feature it displays on product pages to encourage shoppers to add a particular seller’s item to their cart. Between 82% to 90% of Amazon shoppers are estimated to use the Buy Box when purchasing products on Amazon.
In 2007, Amazon founder and CEO Jeff Bezos said that it uses 'very objective customer-centered algorithms' to automatically award the Buy Box to the lowest priced seller, provided they had the item in stock and were able to deliver it.
In 2016, Amazon said its Buy Box algorithm uses a range of factors, including price, seller rating, the closest item to the customer and free delivery. But the company does not disclose how the algorithm works.
In September 2016, a ProPublica investigation found that Amazon’s algorithms encourage customers to pay more than they need for popular products and give greater visibility to products that benefit the company.
By looking at 250 items on Amazon that are purchased at a high frequency, ProPublica discovered that almost three-quarters of the time Amazon would place its own products or those from companies that pay Amazon to fulfill orders into the Buy Box, even though they weren’t always the cheapest.
EU anti-trust investigations
In November 2020, the EU Commissioner Margrethe Vestager announced the EU’s antitrust unit was opening an investigation into Amazon’s criteria for sellers to feature in the Buy Box, probing concerns it artificially favours its own retail offers and those of sellers that use its logistics and delivery services.
In July 2022, Amazon offered several concessions to third-party sellers on its platform in Europe in an attempt to settle the investigation. These included Amazon committing to 'apply equal treatment to all sellers when ranking their offers for the purposes of the selection of the winner of the Buy Box' and adding a second Buy Box for products that are 'sufficiently differentiated from the first one on price and/or delivery.'
Germany's Federal Cartel Office (FCO) has also been investigating the extent to which Amazon is influencing the pricing of sellers on Amazon Marketplace by means of price control mechanisms and algorithms.
Italy market position abuse
In December 2021, Italy's competition authority fined Amazon USD 1.3 billion for abusing its market position by giving preferential treatment to third-party sellers that use its logistics service Fulfillment by Amazon (FBA). This included a higher higher chance of being featured in Amazon's Buy Box.
UK anti-trust investigation, lawsuit
In July 2022, the UK Competition Authority announced it is opening a formal investigation into whether Amazon has a dominant position in the market and whether it is abusing that position and distorting competition by giving an unfair advantage to its own retail business or sellers that use its services, compared to other third-party sellers on the Amazon UK Marketplace.
In October 2022, a class-action lawsuit was filed in the UK alleging that Amazon uses a 'secretive and self-favouring algorithm to ensure the Buy Box nearly always features goods sold directly by Amazon itself, or by third-party retailers who pay hefty storage and delivery fees to Amazon'.
According to Hausfeld & Co LLP partner Lesley Hannah, 'Amazon doesn’t present consumers with a fair range of choices – on the contrary, the design of the Buy Box makes it difficult for consumers to locate and purchase better or cheaper options.'
The suit, which is seeking an estimated GBP 900 million in damages to compensate tens of millions of consumers for alleged anti-competitive behaviour, is being bought by Julie Hunter, a consumer rights advocate, and is funded by LCM Finance, a global litigation funder.
Investigations, assessments, audits
Institute for Self-Reliance (2021). Amazon's Toll Road
ProPublica (2016). Amazon Says It Puts Customers First. But Its Pricing Algorithm Doesn’t
UK Competition and Markets Authority (2022). CMA investigates Amazon over suspected anti-competitive practices
European Commission (2022). Antitrust: Commission seeks feedback on commitments offered by Amazon concerning marketplace seller data and access to Buy Box and Prime
Autorità Garante della Concorrenza e del Mercato (2021). Sanzione di oltre 1 miliardo e 128 milioni di euro ad Amazon per abuso di posizione dominant | Report (pdf)
European Commission (2020). Antitrust: Commission sends Statement of Objections to Amazon for the use of non-public independent seller data and opens second investigation into its e-commerce business practices | Amazon Buy Box case register
European Commission (2018). Margrethe Vestager announces preliminary investigation into Amazon use of merchant data
News, commentary, analysis
Published: February 2023