Beware the European trustbusters. Italy’s antitrust watchdog has landed a €1.13bn fine on Amazon, which is already under pressure from regulators across the globe. The penalty, equivalent to more than a third of the ecommerce group’s net profits in the third quarter, is among the biggest meted out to American tech giants in Europe.
The magnitude is, however, of less importance than the signalling. Regulators in the US and Europe are gunning for Amazon and its ilk. Market dominance and troves of data give Big Tech big sway when it comes to granting access to third parties, be they vendors, advertisers or consumers.
The Italian competition authority takes issue with Amazon’s preferential treatment of third-party sellers who use its own logistics and delivery services. Given overlapping concerns, Amazon wanted the case absorbed into a broader European Commission investigation, which was opened after the Italian one. It is appealing against the Italian decision.
Third-party sellers account for more than half of sales made on Amazon. Those who do so via Fulfilment by Amazon, or FBA, which manages their logistics, last year accounted for more than 80,000 of the 185,000 small and medium-sized businesses in Europe that sell on the platform.
Regulators reckon they are effectively pushed into this in order to benefit from access to Amazon Prime members, who spend more. Not so, says Amazon, insisting it does not discriminate between sellers who use its fulfilment services and those who do not.
The Italian decision suggests European regulators will have little truck with this argument either. That involves a far bigger pool of platform vendors and could potentially produce a far heftier fine. The EU can theoretically levy fines of up to 10 per cent of overall annual sales. Based on Amazon’s expected revenues this year, that would be $46bn.
Of course, regulators are unlikely to go even close to the maximum threshold. But the amounts are still meaningful, even for Big Tech. Google was fined €2.4bn for using its dominant search engine to funnel shoppers to Google Shopping.
Big Tech is firmly on notice that regulators overseeing competition, data privacy and other issues are on the offensive. They have no bold, over-arching solution to the dominant positions of US giants. But they are happy to fight a war of attrition on a case-by-case basis.
The Lex team is interested in hearing more from readers. Is this fine justified? Please tell us what you think in the comments section below