Amazon’s Deliveroo deal probed as U.K. targets tech giants

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Amazon.com Inc.’s purchase of a minority stake in U.K. food startup Deliveroo faces a British probe in another sign of mounting antitrust scrutiny of American tech giants.

The Competition and Markets Authority said Friday it’s opening an in-depth investigation of Amazon’s investment of about $500 million, saying it risked a “substantial lessening” of competition “in the supply of online food platforms in the U.K. and in the supply of online convenience groceries.”

The regulator now has until June 11 to rule on the deal after the companies didn’t offer remedies to allay its earlier concerns over the tie-up.

Many were surprised by the CMA’s initial decision to investigate the transaction because the agency doesn’t typically review minority acquisitions. Lawyers said scrutiny of the deal may be down to growing fears about monopolies in Big Tech that have been allowed to go unchecked in the past.

Deals like Facebook Inc.’s 2014 acquisition of WhatsApp sailed through with relatively little antitrust oversight at the time, but are now raising questions among regulators who see large tech companies leverage user data from those acquisitions in other areas to boost their market power.

“A homegrown U.K. business like Deliveroo should have broad access to investors and supporters,” an Amazon spokesman said in an emailed statement. He added the company believes the investment “will lead to more pro-consumer innovation by helping Deliveroo continue to build its world-class service and remain competitive in the restaurant food delivery space.”

The in-depth probe comes as competition heats up in the global food delivery market.

The likes of Uber Technologies Inc.’s Uber Eats platform are going up against a proliferation of apps for a share of the fast-growing sector, while other players are consolidating.

Dutch groups Prosus NV and Takeaway.com NV have been vying to take over British food delivery firm Just Eat Plc, while Germany’s Delivery Hero SE in December said it would take control of South Korea’s biggest food delivery app, Woowa Brothers Corp.

In an emailed statement, Deliveroo said it was “confident that we will persuade the CMA of the facts that this minority investment will add to competition, helping restaurants to grow their businesses, creating more work for riders, and increasing choice for customers.”

Bloomberg News