Regulation

Amazon And Google Face New European Problems

European regulators this week continued to show their love, respect and admiration for U.S.-based tech and eCommerce firms, removing hurdles that might hamper their success on that continent.

Ha!

Assuming that caught your attention, here’s the real story: It’s shaping up as a busy week for regulators in Europe (including Turkey, which for purposes of this article, qualifies as Europe). This newest round of regulatory focus involves Amazon and Google and comes as rules crafted by the European Union continue to have an increasing impact on digital economies and endeavors throughout the world.

Amazon Probe

Let’s start with Amazon. The way it deals with third-party sellers has come under review by the European Commission — specifically, EU Competition Commissioner Margrethe Vestager.

The problem?

The way the eCommerce operator uses the data it collects from those merchants who list and sell their products via Amazon’s marketplace, putting them into competition with the marketplace host. As The Financial Times put it, Vestager “said that the preliminary probe focused on the online retailer’s dual role as a competitor, but also host, to third-party merchants.”

Those third-party sellers accounted for more than half of all products sold via Amazon, according to the company — a mark achieved for the first time last year, which underscores how important outside merchants are to the Amazon business model. Vestager’s office has sent questionnaire to third-party sellers in Europe in pursuit of more information.

“The questionnaires, which are to be returned in the next two months, were sent based on the commission’s own market observations and the results of its eCommerce sector inquiry completed in 2017,” the Financial Times stated, adding that Amazon CEO Jeff Bezos, at a recent event, accepted the inevitability of such probes.

The questionnaires, which are to be returned in the next two months, were sent based on the commission’s own market observations and the results of its eCommerce sector inquiry completed in 2017.

Now it is the point in these types of stories to note that preliminary investigations — and Vestager’s office does call its Amazon probe that, a preliminary investigation — don’t always lead to further scrutiny of big fines. That said, a chicken always comes from an egg (unless some mad scientist has proven that wrong), and the $5 billion fine levied against Google by the EU earlier this year — antitrust punishment for its Android operating systems dominance — started as a similar type of probe by EU authorities.

Google Fine

Speaking of Google …

It has been fined about $15 million by Turkey’s competition authority, which said the U.S.-based search and advertising services provider violated “competition laws with its mobile software sales,” according to a report Thursday (Sept. 20) from Reuters. Further details were not immediately available, and Google did not immediately respond to a request for comment.

In news that Alanis Morissette might find ironic — the rest of us might just stick with “interesting” — Amazon earlier this week announced its formal debut in Turkey, saying that its local eCommerce site features products in 15 different categories, including books, consumer electronics, sports, outdoor, tools and more. Expansion into Turkey is just the latest in Amazon’s efforts to be operational across the globe. Last week it announced Souq, an online retail and marketplace website in Saudi Arabia, is launching the Amazon Global Store.

European Tone

Turning our head back to continental Europe, the last few months has brought a bevy of developments that signal a new regime for big U.S-based tech firms operating there. Earlier this year, for instance, French President Emmanuel Macron told executives from major technology companies — including Facebook, Microsoft, Intel and IBM — that innovation needs to be accompanied by tough regulations and societal contributions.

Around that time, Peter Thiel, the technology investor who co-founded PayPal, put his thoughts into the mix when he described some of the motivation behind the European Union’s push to put more taxes and regulation on digital firms as jealousy of the relative success of U.S. companies.

“The good reasons are these privacy concerns, and the bad reasons are there are no successful tech companies in Europe, and they are jealous of the U.S., so they are punishing us,” Thiel said.

One of the attitudes behind all that smack is European suspicion of the de facto personal database that is social media. The European experience with authoritarianism, of course, has helped to shape that attitude, reminders of which are not difficult to find.

For instance, a German intelligence official, Hans Georg Maassen, said Europe might have to impose regulation on social media if it does not increase its transparency and do more to prevent the spread of dangerous and illegal content. The proliferation of “fake news” has spooked officials in Europe — and around the world — and the continent has its own experience with Russian meddling in politics and elections.

European Investment

Europe is not technological backwater, of course. A record $19 billion in technology investment flowed into Europe last year, up from $14.4 billion in 2016, according to an estimate from Orrick, Herrington & Sutcliffe LLP, a U.S.-based international law firm that serves technology firms. Such investments “are happening not just in the traditional U.K. and German markets, but also in markets such as the Netherlands, Spain, Finland and Slovenia,” according to Christopher Grew and Shawn Atkinson, partners in the firm’s technology companies group.

Nor is Europe sitting on the sidelines when it comes to dealing with the increasing consumer backlash over online privacy. The General Data Protection Regulation, or GDPR — compared to Frankenstein by PYMNTS’ own Karen Webster — was enacted in May and has already shaken up global privacy efforts (consider California’s new privacy law, for example). That said, a recent report indicated that the GDPR isn’t being followed by some of the globe’s biggest technology companies.

Europe intends to be an even bigger player in privacy and tech regulation, and this latest news about Amazon and Google signals that the effort will continue.

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