By Jeph Ajobaju, Chief Copy Editor
Amazon, already grappling with a court case in the United States, is in for a historic €746 million (about $887 million) fine after a European Union (EU) data privacy regulator ruled it had violated EU privacy law.
The EU said the General Data Protection Regulation (GDPR) was violated in a decision related to advertising, and it imposed on Amazon the largest fine in the three-year history of signature law, followed by Google’s 2019 fine of €50 million.
CNN reports that the fine was imposed on July 16 and disclosed on July 27 in a financial filing.
Amazon, Google, and others that are part of tech behemoth now incurring the ire and the searchlight of American lawmakers, are also being investigated by British regulators over alleged breach of consumer protection law.
Critics charge they are not doing enough to protect shoppers from fake product reviews.
The probe is the latest in a string of investigations piling up against tech giants around the world, as officials and policymakers scrutinize claims of anti-competitive behavior, per CNN.
The investigations could result in hefty fines and increase pressure on companies including Facebook (FB) and Apple (AAPL) to change the way they do business.
The UK Competition and Markets Authority (CMA) said in June that its formal inquiry, which builds on a preliminary probe launched May 2020, could force Amazon (AMZN) and Google (GOOGL) to change the way they deal with fake reviews or result in court action.
Processing personal data
In the latest case, regulators said Amazon’s processing of personal data didn’t comply with GDPR requirements, and the company acknowledged it has been ordered to change its business practices.
Amazon said the regulatory decision was “without merit” and added that it plans to “defend ourselves vigorously in this matter.
“The decision relating to how we show customers relevant advertising relies on subjective and untested interpretations of European privacy law, and the proposed fine is entirely out of proportion with even that interpretation,” per CNN.
The penalty for the alleged violation was imposed by data regulators in Luxembourg, where Amazon has its European headquarters.
A spokesperson for the Luxembourg data authority, CNPD, declined to comment, citing the ongoing nature of the legal proceeding.
The fine marks the latest example of European regulators zeroing in on Big Tech.
Officials in Europe and the UK have increasingly been scrutinizing the business practices of companies including Amazon, Apple (AAPL), Facebook (FB) and Google (GOOG) amid allegations they have harmed competition and abused consumer privacy.
GDPR seeks to rein in how digital platforms use consumer data and to regulate data breaches.
In a further statement to CNN Business, Amazon said customer information had not been leaked or exposed.
“Maintaining the security of our customers’ information and their trust are top priorities,” the statement said. “There has been no data breach, and no customer data has been exposed to any third party. These facts are undisputed.”
Under the EU’s privacy law, violations can carry penalties of up to €20 million or 4 per cent of a company’s global revenue, whichever is higher.
US sues Amazon to court for selling hazardous products
Amazon was sued to court last month by the United States Consumer Product Safety Commission for selling dangerous products from monoxide detectors that fail alarm to children’s pajamas that could catch fire.
The firm owned by Jeff Bezos is also in the dock for selling nearly 400,000 hair dryers that could electrocute people if dropped in water, per CNN.
Amazon’s stock has soared 225,233 per cent under Bezos, bringing its market capitalisation up to $1.7 trillion as of February. Bezos himself has enjoyed equally massive gains with a net worth of about $200 billion, according to Bloomberg data.
However, dozens of Amazon’s own products have been reported as dangerous – melting, exploding or even bursting into flames. Many are still on the market.
CNN reports that the lawsuit is another sign of a far more aggressive stance by the CPSC this year. In the past, the agency has often pulled its punches rather than push a court fight with companies it believes sell dangerous products.
The products cited are not sold directly by Amazon (AMZN) – they’re sold by third parties using Amazon’s platform.
Many of those companies that sold the dangerous products cited by CPSC are foreign, and the CPSC has limited ability to force a recall of their products if they are found to be hazardous.
The CPSC said cracking down on Amazon is the only way to keep consumers safe from these products.
“Today’s vote to file an administrative complaint against Amazon was a huge step forward for this small agency,” says Acting Chairman Robert Adler.
“But it’s a huge step across a vast desert – we must grapple with how to deal with these massive third-party platforms more efficiently, and how best to protect the American consumers who rely on them.”
Amazon collects $80b commissions
Third-party sellers account for more than half the physical goods sold on Amazon. The company collected $80 billion in commissions and other payments by third-party sellers last year.
The complaint concedes that Amazon did stop selling the products when notified by CPSC staff, and that it notified buyers of the products of the hazard and offered them cash refunds.
But the complaint says “Amazon’s unilateral actions are insufficient to remediate the hazards posed by the … products.”
The CPSC wants to force Amazon to stop selling the products in question, to work with CPSC staff on a recall of the products and to directly notify consumers who purchased them about the recall and offer them a full refund.
Amazon countered that it takes prompt action when it is made aware of safety problems with products sold on the site, either by Amazon or third-party sellers.
It said in the instances it did not recall products it was because “CPSC did not provide Amazon with enough information for us to take action and despite our requests. It said it offered CPSC to expand its capabilities to handle recalls for products.
“We are unclear as to why the CPSC has rejected that offer or why they have filed a complaint seeking to force us to take actions almost entirely duplicative of those we’ve already taken,” Amazon said.