On the eve of their 25th anniversary, Amazon is making headlines once again. The UK watchdog, Competition and Markets Authority, has announced an investigation into Amazon’s recent investment in food delivery service, Deliveroo.
The Competition and Markets Authority has ordered Amazon to halt their multi-million-pound investment in Deliveroo for the foreseeable future. They believe that despite Amazon only taking a minority stake in the company, it could be priming the service for a full takeover in the near future.
Experts warn that this could damage competition in a highly saturated market and increase Amazon’s dominance over global commerce in the long-term.
The announcement of Amazon’s investment in Deliveroo was met with criticism from experts who claim that allowing large Silicon Valley companies like Facebook, Google, and Amazon to do so has decreased competition in the market, making it difficult for small companies to start-up and run successfully.
The CMA has also announced that they will undertake a full investigation of the planned investment and would undergo a ‘merger inquiry’ if they find evidence that this investment would ultimately damage competition.
A representative for Deliveroo has said that Amazon’s investment, which is part of a £460m fundraising effort from the company, will help the service expand globally and innovate to include new restaurants and improve infrastructure.
The company, founded in 2013 by former investment banker Will Shu, operates in 200 cities across Europe and has plans for global expansion across the pond – something Amazon can help facilitate with relative ease.
This announcement comes as the CMA toughens its stance on the influence of large American companies on British businesses, particularly SMEs. Amazon attempted to get into the food delivery service in the early 2010s but struggled to get off the ground in a market already controlled by companies like Just Eat. Their investment in Deliveroo is seen by many as their re-attempt to get into this volatile market by investing in an already established company.