Italian watchdog hits Apple and Amazon with over $250m fine

Amazon and Apple have been penalized more than 200 million euros ($225 million) by Italy’s antitrust regulator for alleged anticompetitive cooperation in the sale of Beats headphones, a brand bought by Apple for $3 billion (£1.8 billion) in 2014.

Apple was fined 134.5 million euros, while Amazon was penalized 68.7 million euros for breaking EU law by placing restrictions on Apple and Beats sellers.

Big tech corporations from the United States have faced a slew of antitrust challenges in Europe, a strategy that is being closely scrutinized by Washington regulators, who have committed to tightening their grip on the technology sector.

Apple and Amazon both stated that they would file an appeal. Amazon stated the Italian authority’s decision was “unreasonable,” and that its part of the proposed penalties (€68.7 million) was “disproportionate and unfair.”

“We dispute the claim that Amazon gains by banning vendors from our site because our business model depends on their success,” a company spokeswoman stated.

Amazon also denied market dominance, claiming that its marketplace accounts for less than 1% of the global retail market and that larger retailers exist in every country where it operates, including Italy, and that businesses have multiple channels to sell Apple products, both online and offline. It also stated that third-party sellers account for more than 60% of its platform’s sales, with approximately 18,000 Italian SMEs selling on Amazon.

Meanwhile, Apple said “We believe we have done nothing wrong,” adding that it respected the watchdog’s judgment. Apple also claims that partnering with certain resellers improves customer safety by ensuring that products are genuine. ‘We strive to create the best products with the best user experience in the globe. It’s critical for our client’s safety and the quality of the products they buy that they know they’re getting real goods. Non-genuine products provide a subpar experience and are frequently harmful’ stated a spokeswoman for the company.

“To ensure that our customers buy authentic Apple products, we work closely with our reseller partners and have dedicated teams of professionals working with law enforcement, customs, and merchants around the world to ensure that only genuine Apple products are sold.”

A 2018 agreement between the two US businesses “restricted official and unofficial retailers of Apple and Beats items from utilizing Amazon,” according to the Italian watchdog. It permits only Amazon and a few select parties to sell certain things in that marketplace in a discriminatory manner.” It stated that the goal was to limit the number of shops and cross-border transactions. Because at least 70% of electronic goods purchased in Italy were purchased on Amazon, the agreement was bad news for consumers. 

According to the authorities, Amazon’s local marketplace accounts for at least 70% of consumer electronic kit purchases in the country, with “at least 40% represented by shops who utilize Amazon as a brokerage platform.”

“It thus appears essential that the application of competition rules ensure a level playing field for all retailers who use marketplaces as an increasingly important place for carrying out their commercial activity, especially in today’s context,” it continues, “avoiding the implementation of discriminatory behaviours that restrict competition.”0

With Europe pursuing antitrust lawsuits and US policymakers considering changes to make antitrust enforcement easier, a crackdown on Big Tech businesses could result in the split of the largest platforms. The Italian fine comes just two weeks after a European Union court rejected Google’s appeal of a 2.4 billion euro antitrust fine. Google, Apple, Facebook, Amazon, and Microsoft have all been accused of stifling competition, failing to pay their fair share of taxes, stealing media content, and endangering democracy by spreading fake news.

Critics of Big Tech want Apple and Google to reduce their grip on their online app markets; more competition in the digital advertising industry dominated by Google and Facebook; and better third-party access to Amazon’s e-commerce platform.

In terms of taxation, Italy, France, Germany, and Spain scored a major success in June when the G7 richest nations agreed to a global minimum corporate tax rate for the world’s largest corporations, including the US IT giants. Since then, about 140 countries have backed the 15% tax. The change aims to put a stop to giant companies like Apple and Google hiding earnings in low-tax countries. The EU has also announced proposals for massive fines of up to 10% of sales on tech companies that break competition rules, perhaps leading to their breakup.

The judgment against Apple and Amazon was quickly welcomed by Italy’s consumer group Codacons, which stated that “any limitation of access to operators on e-commerce platforms implies damage to consumers.”

It’s worth noting that, following complaints from Amazon marketplace sellers in 2018, Germany’s Bundeskartellamt opened an abuse investigation into the company, which was closed the following year after Amazon amended its general terms of business for sellers and promised additional changes to alleviate competition concerns.

Enjoyed this post? Never miss out on future posts by following us»