UK competition watchdog pauses Amazon's investment into Deliveroo food delivery service

The U.K. competition watchdog announced Friday it launched a probe into online retail giant Amazon’s purchase of a large stake in London-based food delivery service Deliveroo.

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The investigation suggests authorities were taking a harder line on the expansion of big tech in the country, and the probe effectively pauses any plans to merge Amazon operations with Deliveroo. The U.K.’s Competition and Markets Authority said it has “reasonable grounds for suspecting” that the agreement could “result in Amazon and Deliveroo ceasing to be distinct.”

The deal was not billed as a takeover by Amazon, and Deliveroo has a number of industry competitors such as Uber and Just Eats.

The U.K. competition watchdog has launched an investigation into Amazon’s purchase of a significant stake in food delivery service Deliveroo on Friday July 5, 2019. (AP)

"You might not think there is much competition between Deliveroo and Amazon right at present given Deliveroo is very focused on food delivery but that's too simplistic," Nicole Kar, the head of the London Competition Practice at law firm Linklatrs, said in a statement. "Amazon wants to get any product to the customer fast and to 'own' the customer for everything they possibly want to buy in their life and every way they want it delivered."

It was not immediately clear how much money Amazon spent on their stake in Deliveroo, but the delivery service's last fundraising round brought in $564 million from multiple investors. Of those investors, Amazon was the largest.

Both Amazon and Deliveroo pledged Friday to work closely with regulators.

"There are a number of major companies within the restaurant food delivery sector and this investment will enable Deliveroo to expand, innovate and, we believe, will enhance competition," Deliveroo said in a statement.

Amazon says the expansion will benefit consumers by increasing choice and by "creating new jobs as more restaurants gain access to the service."

The online retail giant got out of the restaurant delivery industry in the U.S. last month after its Amazon Restaurants failed to make a mark among competitors like GrubHub and Uber Eats. The service was also canceled in the U.K.

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Likewise, American authorities are taking steps to reign in the growing power of large tech firms. The U.S. Justice Department and the Federal Trade Commission are moving to investigate Google, Facebook, Amazon and Apple over their aggressive business practices.

The Associated Press contributed to this report.