Mexico’s competition authority has reignited a global debate on how digital marketplaces balance power, transparency, and fairness. Following a detailed inquiry, the Federal Economic Competition Commission (Cofece) concluded that Amazon and MercadoLibre may be restricting fair competition in Mexico’s e-commerce market by favoring sellers who use in-platform logistics and by obscuring how “featured” products are selected. The findings have wider resonance, touching the core of how algorithms, logistics integration, and opaque ranking systems shape modern retail ecosystems.
The case is emblematic of the digital economy’s structural paradox: platforms act as both market and merchant, mediating access while simultaneously participating in trade. When they prioritize logistics or advertising services within their ecosystems, they effectively set the terms of market visibility—who gets seen, who gets sold, and who gets sidelined. Cofece’s investigation revealed that sellers in Mexico lacked clarity about the ranking process behind featured listings, and that participation in platform logistics significantly improved visibility. The implications extend beyond Mexico’s borders, reflecting concerns shared by regulators in Europe, the United Kingdom, and Asia over how self-preferencing distorts competition.
A central issue lies in what economists describe as the “black box of algorithmic visibility.” Unlike traditional retail, where shelf space is physically constrained but governed by contractual clarity, digital shelf space is infinite but governed by code. That code, when opaque, becomes an invisible gatekeeper. Research published in ScienceDirect defines this as “algorithmic asymmetry”—where one party (the platform) has full visibility into the ranking logic while the other (the seller) operates blind, forced into costly experimentation to achieve placement. A 2024 arXiv paper on measuring self-preferencing found that when platform-owned or affiliated sellers are favored by even small weighting changes in ranking algorithms, they can capture disproportionate sales without delivering better prices or quality.
The Mexican case echoes earlier rulings in Europe. In 2021, Italy’s competition authority fined Amazon for conditioning visibility and Prime eligibility on the use of its Fulfilment by Amazon (FBA) service, concluding that it limited rival logistics providers’ access to customers. Although the fine was later reduced by courts, the principle was upheld: tying visibility benefits to proprietary logistics can distort competition. Similarly, the European Union’s Digital Markets Act (DMA) now mandates that gatekeeper platforms disclose ranking parameters and ensure equal access for independent sellers. The United Kingdom’s Competition and Markets Authority (CMA) went further in 2024, requiring Amazon to publish clearer Buy Box criteria and limit the use of non-public seller data for its own retail operations.
These policy shifts mark an emerging global consensus: algorithmic transparency is not merely a technical issue, but a structural safeguard for digital competition. By controlling visibility and logistics, platforms exercise a hybrid form of power—simultaneously technological and economic. The result is a contest between convenience and contestability.
Case studies from sellers operating in emerging markets show how opacity erodes business confidence. Independent Mexican retailers reported to Cofece that they faced inconsistent outcomes in featured listings despite maintaining similar pricing, fulfillment speed, and ratings as competitors. Their only discernible disadvantage was reliance on third-party logistics rather than platform-provided services. In response, many shifted to in-house fulfillment programs, incurring higher costs to regain visibility. While this temporarily improved sales, it deepened dependence on the very systems they questioned.
This dependence has economic and social dimensions. Small and medium enterprises (SMEs), especially in developing economies, rely on marketplace exposure to reach national and international audiences. Yet without transparency, their marketing and logistics budgets are subject to unpredictable algorithmic dynamics. A 2023 OECD paper on competition in digital markets concluded that lack of ranking transparency amplifies inequality between global brands and local sellers, reinforcing concentration rather than reducing it. As platforms become infrastructure, opacity becomes a systemic tax on independence.
Academic studies corroborate these effects. Research from the Wiley Journal of Agricultural Economics found that on major marketplaces, the featured product—often occupying a single highlighted box—can account for more than 80 percent of total sales for that search term. Even a minor change in ranking weight can redirect millions in monthly revenue. In economic terms, this creates an “attention premium,” where visibility, not just price or performance, determines success. Sellers are thus incentivized to optimize for algorithmic preference, sometimes at the expense of genuine service or innovation.
Comparative examples from other jurisdictions reveal how transparency reform can rebalance these dynamics. The UK CMA’s 2024 agreement with Amazon established that sellers must be informed of the main factors determining Buy Box visibility, including performance metrics and delivery standards. The EU’s DMA went further, mandating a second Buy Box option where multiple eligible offers exist, thereby preventing monopolization of consumer attention. These rules do not force platforms to reveal proprietary code but ensure that ranking logic meets fairness and auditability standards—principles that Cofece’s report implicitly endorses.
In economic terms, transparency lowers transaction costs for sellers by providing predictable pathways to visibility. When sellers can see and understand performance thresholds, they can allocate investment efficiently—improving logistics, ratings, and inventory based on measurable criteria rather than speculative trial-and-error. Conversely, opacity shifts bargaining power decisively toward the platform, which can extract higher rents from dependent sellers through fees, advertising spend, or mandatory logistics participation. This asymmetry, over time, can suppress innovation and drive market consolidation.
For consumers, transparency ensures that the products they see first are selected for objective reasons—reliability, service, and value—not invisible affiliations. Behavioral economics research suggests that most buyers select from the first page of results or the highlighted offer, rarely exploring alternatives. When that highlight is determined by undisclosed commercial arrangements, competition shifts from merit to manipulation. The societal cost is subtle but significant: diminished consumer trust and distorted market signals.
The logistics component of the Mexican case also highlights the importance of supply-chain plurality. If platform-integrated logistics dominate visibility, independent carriers may lose critical scale, undermining national infrastructure resilience. During the COVID-19 pandemic, such concentration effects became clear when delivery backlogs cascaded across tightly integrated networks. Mexico’s market, still in a growth phase, depends on maintaining multiple logistics routes and fostering interoperable standards rather than single-provider dominance.
Looking forward, a governance framework for seller transparency can blend regulation, market discipline, and design innovation. Four principles stand out:
- Disclosure — Platforms should publicly list key ranking factors (e.g., delivery reliability, price competitiveness, customer satisfaction).
- Parity of Access — Sellers should qualify for visibility through either proprietary or accredited third-party logistics that meet transparent service-level standards.
- Data Firewalls — Non-public seller data must not be used to favor platform-owned retail or logistics arms.
- Independent Oversight — Regulators and third-party auditors should have access to anonymized performance logs to detect systemic bias.
Mexico’s inquiry, though national in scope, aligns with this evolving global standard. The lesson for platforms is clear: transparency is not a compliance burden but a mechanism for sustaining trust. It reduces regulatory risk, enhances marketplace credibility, and supports long-term growth. For policymakers, the challenge is balancing enforcement with innovation—ensuring that transparency requirements do not ossify design but clarify accountability.
Ultimately, seller transparency is the next frontier of e-commerce governance. Digital marketplaces began as democratizers of trade, lowering barriers to entry for millions of small sellers. But as algorithms, logistics, and visibility become intertwined, the risk is that these systems replicate the concentration they once promised to dissolve. By mandating fair and explainable visibility criteria, regulators can restore the original promise of online markets: competition driven by value, not opacity.
Key Takeaways
- Mexico’s Cofece found that opaque ranking criteria and integration with in-platform logistics reduce competition and transparency for sellers.
- EU and UK precedents have established frameworks for Buy Box fairness, data separation, and ranking disclosure without stifling innovation.
- Academic research confirms that small changes in algorithmic ranking can reallocate large shares of marketplace demand, amplifying inequality.
- Transparent ranking rules enhance competition, lower seller costs, and maintain supply-chain resilience through multiple logistics options.
- Platform transparency is emerging as a new form of digital infrastructure governance, essential for trust, fairness, and economic inclusion.
Sources
- Reuters — Sellers on Amazon, MercadoLibre face competitive barriers, Mexico watchdog rules — Link
- OECD — Competition Policy in Digital Markets — Link
- European Commission — Digital Markets Act: Ensuring Fair and Open Digital Markets — Link
- UK Competition and Markets Authority — Investigation into Amazon’s Marketplace — Link
- Italian Competition Authority — Amazon fined over self-preferencing tied to FBA — Link
- ScienceDirect — Self-Preferencing by Platforms: A Literature Review — Link
- arXiv — Measuring Self-Preferencing on Digital Platforms — Link
- Wiley — An Empirical Examination of Buy Box Assignments in Online Marketplaces — Link
