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Amazon hit with record €746 million fine for violating EU’s GDPR

The e-commerce platform’s troubles don’t end here as Amazon is also facing multiple antitrust probes initiated by the European Commission, and by the CCI in India. 

Luxembourg’s National Commission for Data Protection (CNPD) fined Amazon €746 million on July 16 for violating the European Union’s General Data Protection Regulation (GDPR), a regulatory filing by Amazon revealed. In addition to slapping a fine on the tech company, CNDP imposed “corresponding practice revisions,” the filing stated.

The CNPD is the concerned regulator because Amazon’s EU headquarters is located in Luxembourg.

Why it matters? This is the largest fine that has ever been imposed for a violation of the GDPR – the EU law for data protection and privacy that has become the model for data protection laws around the world since it went into effect in 2018.

Why was Amazon fined?

The CNPD issued the fine claiming Amazon’s processing of personal data did not comply with the GDPR.

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The fine appears to be the result of a complaint filed by French advocacy group La Quadrature du Net, which in 2018 alleged that Amazon’s targetted advertising practices are a violation of GDPR.

However, neither Amazon nor CNPD has publically commented on the exact nature of the violations and the suggested business practice revisions. “Local laws bind the Luxembourg authority to professional secrecy and prevent it from commenting on individual cases, or confirming receipt of a complaint,” Bloomberg reported.

“Luxembourg’s fine would represent roughly 4.2% of Amazon’s reported net income of $21.3 billion for 2020, and 0.2% of its $386 billion in sales. Under the GDPR, regulators can fine up to 4% of a company’s annual revenue,” Wall Street Journal reported.

What has Amazon said?

“We believe the CNPD’s decision to be without merit and intend to defend ourselves vigorously in this matter,” Amazon stated in the filing.

Amazon also told The Verge: “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.”

Amazon added that “there has been no data breach, and no customer data has been exposed to any third party.”

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Other EU investigations into Amazon in progress

The EU is also investigating other aspects of Amazon’s business, including an antitrust investigation launched in November 2020 into Amazon’s marketplace and retail practices in Germany and France in which the European Commission is looking into whether Amazon is leveraging non-public seller data in favour of its own retail business.

The Commission also opened a second antitrust probe into Amazon’s practices of artificially favouring its own retail offers and those of sellers that use Amazon’s fulfilment services, over independent sellers.

Status of India’s data protection bill

The Personal Data Protection (PDP) Bill, which is India’s version of GDPR, will impact how businesses collect data about Indian users and the rights that users have over the data that is collected about them.

The Bill was first introduced in the Winter Session of the Indian Parliament in 2019 and was referred to a Joint Parliamentary Committee (JPC). The JPC was expected to present the report to the parliament in the current Monsoon Session but was granted an exemption till the Winter Session. This is the third such extension that the JPC has received.

Amazon facing CCI probe in India

In January 2020, the Competition Commission of India (CCI) initiated a probe into the alleged anti-competitive practices of Amazon and Flipkart. However, multiple legal challenges put the investigation on hold until the Karnataka High Court gave a go-ahead on July 11. Amazon and Flipkart’s appeal against this decision was dismissed by the court on July 23, but Flipkart has appealed to the Supreme Court and it was reported that Amazon is likely to follow suit. While CCI has resumed its investigation, the Supreme Court’s decision in this matter will ultimately decide the fate of this investigation.

The CCI’s probe against Amazon and Flipkart was ordered to investigate four alleged violations:

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  1. Exclusive launch of mobile phones
  2. Promoting preferred sellers on their websites
  3. Deep discounting practices
  4. Prioritising some seller listings over others

Changes to e-commerce rules on the horizon

On a different front, Amazon might face challenges from the proposed amendments to e-commerce rules.

The government on June 21 proposed amendments that give the existing Consumer Protection (E-Commerce) Rules, 2020 more teeth. The proposed changes include new rules to address abuse of FDI regulations, the establishment of a grievance redressal mechanism, new display and labelling criteria for foreign goods, the prohibition of flash sales, introduction of fallback liability, among other things. Many of the proposed changes are in fact aimed at preventing e-commerce platforms from engaging in the alleged practices that the CCI is currently investigating.

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