Yesterday, Amazon (NASDAQ: AMZN) was slapped with a hefty $1.28 billion fine by Italian anti-trust regulators. I’m sure you’ll all be shocked to hear that the U.S. tech company was found guilty of abusing its market dominance.
And here I was believing that Amazon was just our friendly neighborhood multinational.
Market dominance? We’ve no idea what you mean
So what happened? Well, Italian regulators concluded that Amazon had taken advantage of its dominant position in the e-commerce space to “encourage” sellers to use its logistics service – Fulfilment by Amazon.
In the words of the regulators, this practice was carried out “to the detriment of the logistics services offered by competing operators, as well as to strengthen its own dominant position.”
Amazon, of course, disagrees and looks set to appeal against the “unjustified and disproportionate” fine. The company reiterated just how much it supports small and medium-sized businesses in Italy through its suite of seller tools.
As for what this means for Amazon, it remains unclear. The company’s stock price fell by 1.13% yesterday, which could well be linked to the news. The fine, despite being a considerable sum of money, only equates to 0.33% of Amazon’s revenue from 2020 so will have little monetary impact on the firm.
What is important, however, is the cascade of similar events that could follow now that a precedent has been set. The European Commission is investigating similar claims against Amazon in the wider European market. Should further fines be levied and more investigations continue to open up, there could be very impactful repercussions for Amazon.
Investors will need to keep a keen eye on news of any investigations into the company. As the saying goes, there’s no smoke without fire, and Amazon can only hope the flames don’t fan too wide.
Financial Writer at MyWallSt
Pádraig’s favorite stock is Nike. Growing up as a sports fanatic, seeing Nike collaborate with athletes like Jordan, Lebron, and Ronaldo inspired him and cemented the brand in his mind. Now, despite having failed miserably in his attempts to earn a fabled Nike sponsorship, he still believes in the innovation and creativity behind Nike and is convinced they will only grow stronger as the world's leading sports brand.