Amazon slides as the EU puts more tech giants in its regulatory sights

Amazon shares fell 1.7% Wednesday after the European Union announced it was investigating the e-commerce giant for antitrust violations.

At a press conference in Brussels on Wednesday, Margrethe Vestager, the EU’s competition commissioner, answered a journalist’s question about whether the EU suspected Amazon of committing antitrust violations.

Vestager confirmed that her team had launched a preliminary investigation into how Amazon was using data from third-party sellers on its platform. It is not yet a formal inquiry, she added.

“The question here is about the data,” Vestager said at the press conference.

“Because if you as Amazon get the data from the smaller merchants that you host – which can be of course completely legitimate because you can improve your service to these smaller merchants – well, do you then also use this data to do your own calculations? What is the new big thing, what is it that people want, what kind of offers do they like to receive, what makes them buy things.”

Back in July, Google-parent Alphabet was hit with a record-breaking $US5 billion fine, levied by the same commission, for abusing the market dominance of Android. Shares largely shrugged off the penalty.

it’s not clear when -or if- the Amazon investigation will result in any punishment, but it could result in a fine similar to Alphabet’s. At the time, Wall Street regarded that ruling as decidedly in Amazon’s favour. “This is a pro-Amazon ruling,” Baird analyst Colin Sebastian told clients.

The $US5 billion fine was about 40% of Alphabet’s $US12.62 billion profit in 2017, and a penalty of the same size would be greater than Amazon’s 2017 profit of $US3.03 billion.

Amazon is up 60% this year.

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