Market News

Amazon Seeks to Settle EU Antitrust Charges

Story Highlights

Amazon has committed to not using non-public data in the EU to make retail decisions.

The world’s largest e-commerce platform, (NASDAQ: AMZN), is seeking to settle two antitrust charges by the European Union (EU).

The Charges Against Amazon

The company has been charged with unfairly using independent sellers’ data from its platform to make its marketing and product decisions. The EU has also alleged that Amazon uses anticompetitive tactics to select a seller for its “Buy Box” offer, which displays a single seller’s offerings in a convenient button to promptly purchase the items.

Amazon’s Commitments to the EU

To settle the charges, Amazon has offered a series of commitments. The tech giant has proposed that it will stop using non-public data available from third-party sellers on its platform for any retail decisions. Furthermore, the company has decided to apply equal treatment to all sellers while selecting the “Buy Box” offers and set “non-discriminatory conditions” for selecting sellers for Prime.

Following Amazon’s commitments, the EU is seeking feedback on them to settle the cases. If the EU accepts the commitments, then Amazon would have to comply with them for five years. The conditions are applicable throughout Europe, except in Italy, which has already fined Amazon and ordered changes to some of its practices.

Amazon’s willingness to settle the charges promptly shows how the pressure from global regulatory authorities is impacting the decisions of Big Tech. Other U.S. tech giants are also facing multiple anticompetitive allegations. The EU has come down hard on American technology companies, complaining that they use their monopolistic power to thwart competition and the survival of smaller companies.

Analysts’ View on AMZN

According to a Barrons report, Evercore ISI analyst Amit Daryanani believes that the regulations against Big Tech have little impact on consumer behavior. As per a company survey, less than 25% of Americans showed deep concerns about tech companies’ operating policies, and only 4% believed that regulation was a top priority.

Daryanani noted, “In our view, this reduces the risk of material legislation passing Congress as representatives are more likely to focus on issues that are of higher priority to their voters.” Nonetheless, the analyst believes that tech regulations will continue to make headlines. Whether these regulations have any real impact remains to be seen.

With 38 Buys versus one Hold, AMZN stock commands a Strong Buy consensus rating. The average Amazon price forecast of $176.96 implies nearly 60% upside potential to current levels. Meanwhile, the stock has lost 35% year to date.

AMZN Stock Is Set to Outperform

According to TipRanks’ Smart Score, Amazon has a score of nine, indicating that the stock is highly likely to outperform the market. Bloggers are bullish on the stock, and hedge funds have increased their holdings of AMZN stock by 1.5 million shares in the last quarter. Similarly, retail investors have increased their exposure to AMZN stock by 5.6% during the last 30 days.

Ending Notes

Amazon’s willingness to settle the EU charges shows that the company focuses on diverting its energy to business instead of fighting lengthy cases. Meanwhile, its Prime Day 2022 sales of some 300 million items sold globally showed meaningful growth over 2021 figures. Everything seems to be working well for the e-commerce giant. For now, all eyes are on its second quarter of fiscal 2022 earnings, scheduled for July 28.


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