Amazon Is Next In Line For A Hefty EU Fine

Europe would appear to be on a mission to line up all the letters in the FAANGs acronym -- of Facebook, Apple, Amazon, Netflix and Google -- and make them pay for low tax bills, poor regard for privacy and antitrust issues.

Yesterday the news everyone was expected was announced. After receiving complaints from companies selling their wares on Amazon, and then looking into them, the European Commission is now launching a full-scale investigation into what data Amazon has access to and how it uses it. 

It feels like a coming together of the fines over privacy and data use that Facebook has been hit with and the mega fines Google has been slapped down with for antitrust behaviour with search and then Android.

With Facebook we have had a UK fine -- the maximum that could be raised at the time -- for its part in Cambridge Analytica and then also telling the EU authorities a rather tall tale that it would not combine WhatsApp data with its own when it bought the messaging service. Clearly, a decision was taken that the data was worth the GBP94m fine for breaking a promise on privacy.

Google has been on the wrong end of some eye-watering fines for favouring its own companies in search (2.42bn Euros) in 2017 and then a year later for the antitrust case on Android (4.34bn Euros).

Put an allegation of misuse of data with a splash of antitrust and you have a new recipe for the European Commission to hit one of the FAANGs with. Amazon stands accused of having access to third party data, from other retailers on its site, which could inform them how to price their own products. The probe is also expected to look at how brands are positioned on the page and obtain access to promotional positions.

The simple question the European Commission will be looking at is whether Amazon uses the data it receives from third-party retailers to its own advantage and that of retailers paying to be promoted on the site.

Apparently, the agreements between Amazon and retailers that sell on its site will come under close scrutiny. This is an obvious area where the European Commission could force Amazon to agree to not process data that could be an asset to its own sales operation.

It comes at a difficult time for Amazon, which is on the road to turning the duopoly of Facebook and Google into more of a three-legged stool, as I like to think of it.

This drive to become an advertising powerhouse is driven by data -- namely what people are looking at and searching for, which in turn shows what they are in market for. Any attempts to curb the data gathering Amazon is allowed to do would surely have an impact on this part of the retail giant's business.

The fact that the European Commission has gone from an initial look at how Amazon operates to what is now a full-blown investigation does not bode well for the company. 

It is hard to imagine anything other than a large fine. The only question will be, as the public mood shifts to expect the big tech companies to be hit harder financially, whether there will be enough zeros in the final figure.

We only have to look at the outcry from politicians in the US at Faceboook's $5bn fine from the FTC over Cambridge Analytica to see that there is a more hawkish feeling around regulation and the big tech companies. The figures sound high, but in context, they rarely make a huge dent in their corporate bank account. 

What is clear, however, is that the European Commission clearly feels it has enough on Amazon to very publicly announce a full investigation. There is usually only one outcome when things reach this stage, and it's not good for the other party.

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