Amazon Slapped With Huge $1.3 Billion Fine Following Antitrust Probe

Amazon Boxes Shaped Like A Robot
To borrow a phrase from the South, Amazon has grown too big for its britches. That alone is not worthy of a monumental fine, but according to the Italian Antitrust Authority, some of Amazon's business practices have unfairly harmed competitors (and by extension, consumers). As a result, it imposed a fine of around $1.28 billion.

The exact amount is €1,128.596.153.33 for "abuse of dominant position" in the Italian marketplace. It's this dominant position that allowed Amazon to "promote its own logistics service, called Fulfillment by Amazon," which is a requirement if sellers want access to what the watchdog deemed to be a set of "essential benefits to obtain visibility and better sales prospects."

One of those exclusive benefits is the Prime label. This not only helps certain sellers stand out from the crowd, but also lets them participate in special events managed by Amazon, including big sale events like Black Friday, Cyber Monday, and Prime Day. It also increases the chances that a seller's offer gets selected as a Featured Offered with prominent visibility.

Reading over the press release, it seems the Italian Antitrust Authority feels the Prime label should be more widely available, allowing third-party sellers to use it on offers not managed with a FBA subscription.

"The investigation has ascertained that these are functions of the platform that are crucial for the success of sellers and for increasing their sales. Finally, third party sellers using FBA do not have the stringent performance measurement system to which Amazon subjects non-FBA sellers and failure to pass which can also lead to the suspension of the seller's account," the watchdog wrote.

It's the watchdog's position that "as a result of the abuse, competing marketplaces have also been damaged," as sellers are discouraged from using them. Naturally, Amazon disagrees with the investigation's findings and massive fine. In a statement to Engadget, Amazon said it plans to appeal.

"We strongly disagree with the decision of the Italian Competition Authority (ICA) and we will appeal. The proposed fine and remedies are unjustified and disproportionate. More than half of all annual sales on Amazon in Italy come from SMBs, and their success is at the heart of our business model," Amazon said "Small and medium-sized businesses have multiple channels to sell their products both online and offline: Amazon is just one of those options. We constantly invest to support the growth of the 18,000 Italian SMBs that sell on Amazon, and we provide multiple tools to our sellers, including those who manage shipments themselves."

Amazon is coming off a monster quarter in which it increased its net sales by 15 percent to $110.8 billion. In its most recent earnings report, Amazon noted it nearly doubled the size of its fulfillment network since the pandemic began.