The CMA is flexing its muscle in ecommerce ahead of the expanded mandate under the Digital Markets, Competition and Consumers Bill
CMA issues dual decisions on ad data
On 3 November 2023, the CMA announced it had accepted binding commitments from Amazon and Meta in separate cases regarding their use of competitor data in operating their respective Marketplace retail platforms. Both investigations targeted the firms’ use of competitor data in achieving unfair competitive advantages in online retailing. The decision to accept these commitments followed a period of public consultation on the preliminary agreements from each company. This month’s decisions close the regulator’s year-long investigations into the advertising data collection and use practices of both platforms.
Scrutiny over Amazon’s internal Marketplace advantage
The investigation into Amazon centred on the platform’s ability to capture data from third-party sellers in its Marketplace, which could inform its own business decisions regarding Amazon Retail products. The CMA also suspects that Amazon unfairly favoured its own Retail offerings and offerings from sellers who used Amazon fulfilment services when selecting “Featured Offers” for inclusion in the “Buy Box” through which most Amazon purchases are made. In response, Amazon committed to no longer using any non-public data provided by or derived from third-party sellers to inform its own competing retail operations. The platform will also now only use “objectively verifiable and non-discriminatory conditions and criteria” when selecting Featured Offers. While these commitments settle the CMA’s investigation for the UK market, Amazon still faces a lawsuit filed by the Federal Trade Commission in the US regarding similar preferential treatment, among other alleged anti-competitive practices.
Meta found utilising competitor data for product development
Unlike the investigation into Amazon, the CMA’s case with Meta focused on the platform’s use of data from external competitors of their Facebook Marketplace that advertised on Meta. Specifically, the CMA found that Meta was using insights from the advertising data of Marketplace competitors to inform the development, improvement and operation of Facebook Marketplace as a product. Any competitor seeking to advertise with Meta is required to agree to the use of their data for reasons beyond the provision of advertising services, including the improvement of Meta products, under its terms and conditions for business tool services. Meta has committed to a technical fix to prevent the use of competitor data in Facebook Marketplace development for advertisers who opt out. The platform will also publish a public statement in its Code of Conduct for employees that data derived from competitors’ advertisements should not be used in competing product development. Meta faces further regulatory pressure on its advertising data practices from the European Data Protection Board in its recent binding decision to ban its use of user personal data for behavioural advertising.
The CMA previews its work under the DMCC
In both decisions, the CMA referenced its expectations for further regulation of ecommerce under the pending Digital Markets, Competition and Consumers (DMCC) Bill. While the CMA has been working on its capacity related to ecommerce and online choice architectures since 2019, the DMCC Bill would greatly expand its capacity to regulate the behaviour of online retailers. As we recently outlined, the CMA would be empowered to designate platforms like Meta and Amazon with Strategic Market Status under the DMCC regime, opening the firms up to regulatory interventions aimed at any misuse of “substantial and entrenched” market power. Once the Digital Markets Unit is placed on a statutory footing, consumers can anticipate a more coherent approach from the CMA in addressing anti-competitive behaviour online.
