Mercado Libre and Amazon ordered by Mexican regulators to separate streaming services

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In a move aimed at fostering fair competition in Mexico’s online retail market, the country’s Federal Commission on Economic Competition (COFECE) has ordered major online retailers Amazon and Mercado Libre to reveal their algorithms and separate their TV streaming services from their marketplaces. The commission’s preliminary finding stated that the two firms control a staggering 85% of online sales in Mexico, creating an environment devoid of competitive conditions.

COFECE’s order targets Amazon’s Prime Video streaming service, which it claims has been used as an incentive to attract and retain customers, thereby reducing the likelihood of vendors and buyers using alternative marketplaces. The commission argues that bundling streaming services with marketplace memberships increases the cost of competition entering the market.

Under the new directives, Amazon and Mercado Libre are required to separate memberships from streaming services within six months, with a possible extension. The streaming services must be offered and billed separately from the marketplace. Additionally, Amazon must disclose to vendors the criteria used in selecting promoted items to ensure transparency.

The commission also stipulated that Amazon should not consider the “logistics” method in determining the order or prominence of search results, addressing complaints that Amazon Prime forces vendors to use its delivery services.

In response, Amazon stated that it is collaborating with COFECE and emphasized its pro-competitive practices in Mexico, which it believes spur competition and innovation across the retail industry, benefiting customers and sellers alike.

The commission did not specify the sanctions the companies might face if they fail to comply. However, Mexican federal law allows for fines of up to 8% of a company’s revenues for monopolistic practices.

This move by Mexican regulators echoes similar actions taken in Europe in 2022, where Amazon agreed to make significant changes to its business practices to address competition concerns. Additionally, in 2023, the U.S. Federal Trade Commission and 17 states filed an antitrust lawsuit against Amazon, alleging that the company inflates prices and stifles competition in the online retail market.

The actions taken by COFECE underscore the growing global scrutiny of big tech companies and their practices, highlighting the need for transparency and fair competition in the digital marketplace.

(Source: Associated Press | Fortune | Stratfor | MSN)

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