Amazon founder and executive chair Jeff Bezos is planning to sell almost $5 billion worth of shares in the e-commerce giant, a regulatory filing showed, after its stock hit a record high.

The proposed sale of 25 million shares was disclosed in a notice filed after market hours on Tuesday. The stock had hit an all-time high of $200.43 during the session. It has jumped more than 30% so far this year, outpacing the 4% gain in the Dow Jones Industrial Average index.

After the sale plan, Bezos would own about 912 million Amazon shares, or 8.8% of the outstanding stock.

He sold shares worth roughly $8.5 billion in February, after the stock rallied 80% in 2023.

Bezos is ranked the second-richest person in the world with a net worth of $214.4 billion, according to Forbes. He is also the founder of space company Blue Origin, which launched a six-person crew to the edge of space in May.

Amazon posted upbeat first-quarter results in April, as the Seattle-based technology giant rode the artificial intelligence wave. The company recently replaced Adam Selipsky as the head of its cloud computing unit with insider Matt Garman.

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Amazon.com plans to launch a section on its shopping site featuring cheap items that ship directly to overseas consumers from warehouses in China, the Information reported on Wednesday, citing slides shown to Chinese sellers.

The new marketplace, Amazon’s most aggressive response to the growth of bargain sites like Temu and Shein, will offer unbranded fashion, home goods, and daily necessities, according to the slides, and will be delivered between 9 to 11 days to customers, the report said.

The e-commerce giant in a recent closed-door meeting told Chinese sellers it would start signing up merchants this summer and begin accepting inventory in the fall, according to the Information.

Amazon did not immediately respond to Reuters request for comment on the report.

Sellers joining the bargain site can determine their product selection and pricing, and can produce in small batches to test the demand for any new products they plan to launch, the report added.

It is not clear if these shipments will be made using a U.S. trade provision that exempts individual packages worth less than $800 from US customs duties, Information reported.

E-commerce powerhouse Shein, which is trying to expand its market share before going public, and PDD Group-owned e-retailer Temu, depend on the expedited clearance process, which is available for direct-to-consumer shipments valued at $800 or less.

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Milan:

Italy’s antitrust authority has fined two subsidiaries of Amazon 10 million euros ($10.70 million) for alleged unfair commercial practices, the regulator said on Wednesday.

According to the watchdog, Amazon has “significantly restricted consumers freedom of choice” by automatically pre-setting the ‘Subscribe&Save’ option, for regular scheduled deliveries rather than one-off purchases, for a wide selection of products.

“The pre-ticking of recurring purchase induces one to periodically buy a product – even without the effective need – thus limiting one’s freedom of choice,” the antitrust said in a statement.

Amazon was not immediately available for comment.

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The story so far: In a comprehensive slew of measures to ensure “contestable and fair markets in the digital sector” in line with the provisions of the Digital Markets Act (DMA), the European Commission on March 25 initiated ‘non-compliance investigations’ against Apple, Meta and Google’s parent Alphabet. It will also investigate Amazon’s ranking practices on its marketplace.

The Commission reportedly intends to conclude the investigation in 12 months.  

Where is the context of these non-compliance investigations?  

The non-compliance investigations concern Alphabet’s alleged rules on steering or directing its customers to its in-house services over those of its competitors in Google Play, and self-preferencing on Google Search. Apple will be investigated for allegedly similar practices in its App Store, as well as the way it positions its Safari browser. Lastly, Meta will be investigated for its “pay or consent model” — a subscription service that lets a user get rid of personalised advertising.  

The investigations fall in with the primary objective of the DMA to better regulate ‘gatekeepers’ and ensure fairer competitive practices in the digital market space. The idea is to mitigate paradigms that may create a “bottleneck” in the digital economy and fairness in competition and consumer access. For clarity, the Act designates companies with dominance in any of the ‘core platform services,’ such as app stores, online search engines, social networking services, web browsers and operating systems, among other things, as ‘gatekeepers’.  

The Digital Markets Act came into force on November 1, 2022. Alphabet, Amazon, Apple, TikTok’s parent company ByteDance, and Microsoft were designated as ‘gatekeepers’ in September 2023. They were expected to fully comply with obligations under the DMA by March 7 this year. 

The Commission assessed the mandatory compliance reports submitted by these companies setting out compliance measures, and gathered feedback from stakeholders, including in the context of workshops, before launching the investigation.

“We have been in discussions with gatekeepers for months to help them adapt, and we can already see changes happening in the market,” Margrethe Vestager, Executive Vice-President of the European Commission in charge of competition policy, said in a press statement, adding, “But we are not convinced that the solutions by Alphabet, Apple and Meta respect their obligations for a fairer and more open digital space for European citizens and businesses”.

How are the steering rules non-compliant?  

DMA provisions stipulate that app developers be allowed to steer consumers to offers (and services) outside the gatekeeper’s app store, free of charge. This would eliminate exclusivity and dependence on a particular mode of payment, or enable access to an online game with an outside gaming account, among other such services.  

The Commission aired its concerns about Alphabet and Apple not being fully compliant “as they impose various restrictions and limitations.” It stated, “These constrain, among other things, developers’ ability to freely communicate and promote offers and directly conclude contracts, including by various charges.”  

Apple has maintained that the tight integration associated with its App Store is essential to provide a “uniquely secure and seamless user experience.” In their initial comments in January 2020, the iPhone maker said that the DMA is “too blunt a tool.”  

“It equates size with harm, and then imposes a one-list-fits-all set of regulatory obligations without providing an opportunity for the platform to explain, and the regulator to assess, whether – on balance – there are broader benefits to consumers or businesses,” Apple said. 

In a blog published this January, Spotify, however, had the following to say: “For years, even in our own app, Apple had these rules where we couldn’t tell you about offers, how much something costs, or even where to buy it.” It added that with the DMA, it would be able to share details about Spotify promotions, deals and better-value payment options with consumers in the EU.  

Additionally, Spotify said this would come without the “burden” of the mandatory 30% tax imposed by Apple on in-app purchases. 

Back home, the Competition Commission of India (CCI) on March 15 ordered a detailed probe against Google for alleged discriminatory practices on its Play Store pricing policy after having discovered a prima facie violation of competition law. The petitioners had argued that Google’s updated payment policies for their proprietary app store was “impacting several stakeholders, including app developers, payments processors and users alike.”  

What about Alphabet engaging in self-preferencing?  

The Commission wants to determine whether Google search results are discriminatory; in other words, whether the search giant engages in self-preferencing for its verticals (such as Google Shopping, Google Flights, and Google Hotels) over rival services. It has stated that Alphabet’s measures to comply with the DMA may not have ensured that third-party services featuring on Google’s search results page are treated in a “fair and non-discriminatory manner” in comparison to their own services.

Alphabet has found itself responding to similar allegations in the past as well. In October 2020, the U.S. Department of Justice (DoJ) accused Google of “unlawfully maintaining monopolies through anti-competitive and exclusionary practices in the search and search advertising markets” and directed it “to remedy the competitive harms.” According to the DoJ, the conduct harmed consumers by reducing the quality of their search (including on dimensions such as privacy, data, protection and user of consumer data), lowering choices, and impeding innovation. The case is ongoing.

Amazon too is facing heat for similarly tailoring the listings on its marketplace.  

What are the concerns about user choice obligations?  

Ecosystem captivity is the main concern. The Commission is looking to assess if Apple enables users to easily uninstall any pre-installed or presently default software applications on iOS, change default settings, and if it prompts users with choice screens that allow them to effectively and easily select alternatives to the default service, such as a browser or search engine on their iPhones. 

The investigation emanates from the Commission’s concern that Apple’s measures, including the design of the web browser choice screen, may be preventing users from “truly exercising their choice of services with the Apple ecosystem.” In other words, concerns over ecosystem captivity.  

As providers of both app storefronts and browsers, Google and Apple’s ‘walled garden’ ecosystems have also been hit with lawsuits across the Atlantic. 

What are the concerns about Meta’s “pay or consent model”? 

To align with the DMA provisions, Meta in December last year introduced a subscription model that offered people in countries of the EU, European Economic Area (EEA), and Switzerland the choice to use Facebook and Instagram without any ads. Alternatively, they could continue using these services for free while seeing ads relevant to them; in other words, consenting to personalised advertising.    

Meta had argued that the subscription for no ads was the “best compliance solution.” According to them, this was a solution to comply with a “unique combination of connected and sometimes overlapping EU regulatory obligations with differing compliance deadlines.” It added that the option offered its users a “clear choice.”

The model, however, did not convince the Commission. It held that the model’s “binary choice” may not provide “a real alternative in case users do not consent, thereby not attaining the objective of preventing the accumulation of personal data by gatekeepers.”    

How will non-compliant companies be penalised? 

The companies face the prospect of being fined up to 10% of their global turnover or 20% in case of repeated infringement(s). Additionally, should the investigation come across any “systematic infringement,” the companies may be asked to sell a business or parts of it. A ban from acquiring additional services related to the systemic non-compliance could also be possible.

What were the reactions to the European Commission investigation? 

The announcement of the investigation has evidently not enthused participants or stakeholders in the ecosystem. Concerns continue to exist if overlapping prerogatives across the aisle can be addressed.  

Daniel Friedlander, Senior Vice President and Head of the Computer & Communications Industry Association (CCIA Europe), stated, “Last week’s DMA workshops highlighted many areas of uncertainty linked to DMA implementation, where different sectors and groups of access seekers expressed diametrically opposed requests that won’t be easily solved.” According to him, with many risks and opportunities still being reviewed, launching an investigation appears “premature.”  

An Amazon spokesperson told Reuters that the company was compliant with the DMA and has engaged constructively with the Commission on their plans since the designation of two of their services. “We continue to work hard every day to meet all of our customers’ high standards within Europe’s changing regulatory environment,” the spokesperson said.   

Brussels, Belgium:

Amazon on Wednesday lost its fight to suspend a requirement regarding its online advertising under EU tech rules after Europe’s top court backed EU regulators, saying EU interests outweigh the US online retailer’s material interests.

Under the Digital Services Act (DSA) which kicked in last year, Amazon was designated as a very large online platform subject to tough rules to tackle illegal and harmful content on its platform.

The company subsequently challenged a DSA requirement to make publicly available a repository containing detailed information on its online advertising and also asked for an interim measure until the court rules on the case.

A lower tribunal in September agreed to its request for an interim measure to suspend the contested obligation, which prompted the European Commission to turn to Europe’s top court.

The Luxembourg-based Court of Justice of the European Union (CJEU) set aside the suspension order and dismissed Aamzon’s application for an interim measure.

The judge said that Amazon’s argument that the obligation unlawfully limits its fundamental rights to respect for private life and the freedom to conduct a business was not irrelevant.

He also said that without a suspension, it was likely that Amazon would suffer serious and irreparable harm before any judgment annulling the Commission’s decision.

However, he said a suspension could have a detrimental impact on the objectives of the DSA.

“Suspension would lead to a delay, potentially for several years, in the full achievement of the objectives of the Regulation on a Single Market for Digital Services and therefore potentially allow an online environment threatening fundamental rights to persist or develop,” the judge said.

“The interests defended by the EU legislature prevail, in the present case, over Amazon’s material interests, with the result that the balancing of interests weighs in favour of rejecting the request for suspension.”

Amazon said: “We are disappointed with this decision, and maintain that Amazon doesn’t fit the description of a ‘Very Large Online Platform’ (VLOP) under the DSA, and should not be designated as such.”

The case is C-639/23 P(R) | Commission v Amazon Services Europe.

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Europeans scrolling their phones and computers this week will get new choices for default browsers and search engines, where to download iPhone apps and how their personal online data is used.

They’re a part of changes required under the Digital Markets Act, a set of European Union regulations that six tech companies classed as “gatekeepers” — Amazon, Apple, Google parent Alphabet, Meta, Microsoft and TikTok owner ByteDance — will have to start following by midnight Wednesday.

The DMA is the latest in a series of regulations that Europe has passed as a global leader in reining in the dominance of large tech firms. Tech giants have responded by changing some of their long-held ways of doing business — such as Apple allowing people to install smartphone apps outside of its App Store.

The rules have broad but vague goals of making digital markets “fairer” and “more contestable.” They are kicking in as efforts around the world to crack down on the tech industry are picking up pace.

Here’s a look at how the Act will work:

Some 22 services, from operating systems to messenger apps and social media platforms, will be in the DMA’s crosshairs.

They include Google services like Maps, YouTube, the Chrome browser and Android operating system, plus Amazon’s Marketplace and Apple’s Safari Browser and iOS. Meta’s Facebook, Instagram and WhatsApp are included as well as Microsoft’s Windows and LinkedIn.

Threat of fines

The companies face the threat of hefty fines worth up to 20% of their annual global revenue for repeated violations — which could amount to billions of dollars — or even a breakup of their businesses for “systematic infringements.”

The DMA is a fresh milestone for the 27-nation European Union in its longstanding role as a worldwide trendsetter in clamping down on the tech industry. The bloc has previously hit Google with whopping fines in antitrust cases, rolled out tough rules to clean up social media and is bringing in world-first artificial intelligence regulations.

Now, places like Japan, Britain, Mexico, South Korea, Australia, Brazil and India are drawing up their own versions of DMA-like rules aimed at preventing tech companies from dominating digital markets.

“We’re seeing copycats around the world already,” said Bill Echikson, senior fellow at the Center for European Policy Analysis, a Washington-based think tank. The DMA “will become the defacto standard” for digital regulation in the democratic world.”

Officials will be looking to Brussels for guidance, said Zach Meyers, Assistant director at the Center for European Reform, a think tank in London.

“If it works, many Western countries will probably try to follow the DMA to avoid fragmentation and the risk of taking a different approach that fails.”

In one of the biggest changes, Apple said it will let European iPhone users download apps outside its App Store, which comes installed on its mobile devices. The firm long resisted such a move, with a big chunk of its revenue coming from the 30% fee it charges for payments — such as for Disney+ subscriptions — made via iOS apps. Apple warned “sideloading” apps will come with added security risks.

Apple cutting fee

Now, Apple is cutting those fees it collects from app developers in Europe that opt to stay within the company’s payment-processing system. But it’s adding a 50-euro cent fee for each iOS app installed through third-party app stores, which critics say will deter the many existing free apps — whose developers currently don’t pay any fee — from jumping ship.

“Why would they possibly opt into a world where they have to pay a 50 cent per-user fee?” said Avery Gardiner, Spotify’s Global Director of competition policy. “So those alternative app stores will never get traction, because they’ll be missing this huge chunk of apps that would need to be there in order for customers to find the store attractive.”

“That is utterly at odds with the very purpose of the DMA,” Ms. Gardiner added. Brussels will be closely scrutinising whether tech firms are complying.

EU competition chief Margrethe Vestager said after 10 years in the job, “I have seen quite a number of antitrust cases and quite a lot of creativity built into how to work around the rules that we have.”

Consumers won’t be forced into default choices for key services. Android users can pick which search engine to use by default, while iPhone users will get to choose which browser will be their go-to. Europeans will see choice screens on their devices. Microsoft, meanwhile, will stop forcing people to use its Edge browser.

The idea is to stop people from being nudged into using Apple’s Safari browser or Google’s Search app. But smaller players still worry that they might end up worse off than before.

Users might just stick with what they recognise because they don’t know anything about the other options, said Christian Kroll, CEO of Berlin-based search engine Ecosia.

Ecosia has been pushing for Apple and Google to include more information about rival services in the choice screens. “If people don’t know what the alternatives are, it’s unlikely many of them will select an alternative,” Mr. Kroll said.

File picture of Amazon founder Jeff Bezos, who is once again the world’s richest man
| Photo Credit: AP

Amazon founder Jeff Bezos took back his spot as the world’s richest man on Monday, dethroning Elon Musk on the Bloomberg Billionaires Index.

Mr. Bezos’ net worth stands at $200 billion, according to the tracker, surpassing the Tesla chief’s $198 billion.

Mr. Musk, who also heads X (formerly Twitter) and SpaceX, has seen his riches fall by more than $30 billion as Tesla’s share price has dropped 25% in recent months.

Adding to Mr. Musk’s woes, a court in January approved the annulment of his enormous Tesla compensation agreement, worth $55.8 billion and originally struck in 2018.

Amazon’s rising stock

Mr. Bezos, who no longer runs Amazon, has meanwhile benefited from the e-commerce giant’s rising stock price.

Even after recently selling off $8.5 billion in stocks he remains the company’s largest shareholder.

The French CEO of the luxury group LVMH, Bernard Arnault, remains in third place in the rankings of the world’s richest people, worth $197 billion.

Washington, United States:

Finnish telecom giant Nokia said Tuesday it is suing Amazon in five global jurisdictions, including the United States and India, over patent infringements on video-related technologies. 

Nokia said it is also suing HP, formerly known as Hewlett-Packard, in a US court, also for using Nokia video technology without its permission.

“We’ve been in discussions with each of Amazon and HP for a number of years,” said Arvin Patel, Nokia’s chief licensing officer, in a blog post.

“But sometimes litigation is the only way to respond to companies who choose not to play by the rules followed and respected by others,” he added.

Suits against Amazon were also lodged in Germany, Britain and at the EU’s patent court.

The company said the cases involved Amazon’s Prime Video service as well devices that were in violation of Nokia’s patents on “video compression, content delivery, content recommendation and aspects related to hardware,” the blog post said. 

Nokia said the streaming market is estimated to reach $300 billion by 2027, but decried what it saw as a mismatch between those who invested in developing the technology “and those who benefit the most.”

The company said it had successfully reached agreements on such technology with Apple, Samsung and other device makers.

“Our preference is to reach amicable agreements with the companies who rely upon our technology, and our door remains open for constructive, good-faith negotiations,” Nokia’s Patel said.

Nokia earlier this month said it would cut up to 14,000 job as profits fell on weakening demand for its 5G equipment in North America.

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Washington:

Amazon’s first pair of prototype satellites for its planned Kuiper internet network were launched to space on Friday from Florida, the company’s first step before it deploys thousands more in orbit to beam the internet globally.

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If you spend much time online you’ve probably seen one of Temu’s colourful ads – punctuated by its catchy tagline: “shopping like a billionaire”.

Temu specialises in selling various everyday items, including clothing, toys and household goods, for extremely low prices. Shanghai-based company PDD Holdings launched the online marketplace late last year (initially in the United States) to cater to overseas customers.

Since then, Temu’s reach has skyrocketed. The total value of products sold went from US$3 million in September last year, to US$400 million in April. At the time of publishing this article, Temu was the most popular free iPhone app in the US, United Kingdom, Australia and Germany.

Why has Temu been such a massive success? It’s safe to say the platform has some winning strategies that keep consumers coming back. But beyond that, similar to other e-commerce platforms, using it isn’t entirely risk- or guilt-free. Here are some things to consider if you’re thinking of giving it a shot.

What are Temu’s secrets to success?

1. Value

Many Australians might associate “made in China” with cheap price tags and low quality. However, Temu’s consumers are beginning to view it as offering affordable products that do not necessarily compromise on quality. In some cases, 10-20 products will only set you back US$20-30.

Temu claims it can offer these prices as a result of cutting out the middlemen in the supply chain. While the manufacturers provide the product details and the products themselves, Temu handles everything else – from customs processing to international shipping. This streamlining helps reduce unit costs.

Nonetheless, achieving such value doesn’t come without a cost. Concerns are rising that Temu and its suppliers may be operating at a loss. However, it’s common for startups to experience negative cash flow in their initial years due to heavy marketing investments, including offers of competitive prices and marketing campaigns – all of which is done to build brand awareness and gain acceptance.

This is especially true in the fast-paced e-commerce sector, where success and failure happen swiftly. Temu and its suppliers, who are mainly from Temu’s sister e-commerce platform Pinduoduo, are likely aware of this dynamic.

2. An effective marketing strategy

Unlike other e-commerce platforms that focus on functional benefits such as saving money, Temu caters to consumers’ emotional needs. It overlays the shopping experience with the idea of “shopping like a billionaire” – which also aligns with its value-based strategy.

Temu entered the market at a time when consumers were grappling with global inflation, leading them to seek “value”. In the first month after its launch in the US, Temu invested some US$200 million in advertising and planned a US$2 billion budget for the year.

Given China’s leadership in live-streaming influencer marketing, Temu is now recruiting social media influencers, suggesting it might leverage its Chinese expertise to explore a social-commerce strategy. Social commerce harnesses a sense of “friendship” conveyed by influencers, making the online shopping experience more engaging and product recommendations more convincing. It also works especially well with sales promotions.

Sales promotion tactics

While Temu employs common sales tactics seen on other e-commerce platforms, it uses what is arguably the broadest array of these techniques. Here are just some examples:

• Gamified experiences. Gamified advertising hinges on two core elements: challenge and reward. Interacting with Temu’s spinning wheel is a minor challenge, but the substantial discount offered is a major reward. Such “games” create the illusion of getting lucky, and therefore generate positive emotions in consumers – while the reward gives them an incentive to engage more seriously with their browsing, increasing the likelihood of spending.

• Lightning deals and limited-time offers. One commonly used promotion tactic involves creating the illusion of scarcity through supposedly “exclusive” offers that are time-sensitive and won’t come by again. This can trigger a fear of missing out in consumers.

• Discounts and free shipping Offering simple price reductions and very affordable sales is a time-honoured way of securing a loyal customer base. In addition, Temu has the allure of offering free shipping on orders with a very low minimum spend.

• Loyalty program. Consumers can opt in to Temu’s marketing emails in exchange for receiving more promotional content, including email-only promotions. E-commerce companies often have access to your personal information (such as your name, address, age and phone number) and behavioural data (such as from your search history and online sessions). With this data, the company can build your user profile and target you with personalised promotions and content to encourage spending.

• Search engine marketing. Many consumers will see Temu ads at the top of their search results on Google (in the form of “sponsored” posts) when they search for a product.

• An AI-powered promotional strategy. Temu’s sister company operating in China, Pinduoduo, is renowned for its AI-driven recommendation system. It’s likely Temu uses similar AI algorithms, drawing on users’ browsing and purchase history to provide personalised recommendations (a practice Amazon also partakes in).

Defending against manipulation

Temu’s greatest benefit to consumers lies in its offer of value. It may still have lower-quality items, but this is common among all e-commerce platforms.

Also, Temu’s business model is built around emphasising top-selling products, which helps filter out low-quality products. Its 90-day free return policy further acts as a buffer for unsatisfactory purchases.

Nonetheless, Temu’s value-oriented approach may not be a good thing for consumers on all fronts. Exposed to such a wide array of marketing tactics, users might become more prone to overconsumption – which leads to environmental waste and post-purchase regret.

It’s worth considering your actual needs before using an e-commerce platform such as Temu. You should also familiarise yourself with the sales promotion tactics being used. Research suggests understanding these tactics, as well as advertisers’ intentions, can even empower young children to be sceptical and form a cognitive defence against them.

Also, in light of Temu’s gamified advertising strategy, consumers ought to temper their enthusiasm for rewards. Moving forward, one useful approach may be for schools and governments to introduce educational programs or social marketing campaigns that teach advertising tactics, and recommend coping strategies.

Temu didn’t respond to The Conversation’s request for comment.

Shasha Wang, Senior lecturer, Queensland University of Technology and Xiaoling Guo, , The University of Western Australia

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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