Amazon to Appeal Record $1.2 Billion Fine Over Advertising Practices

Amazon to Appeal Record $1.2 Billion Fine Over Advertising Practices

Amazon says it intends to challenge a record $US886 million ($1.19 billion) fine imposed by a European Union privacy regulator over what the company says are perceived privacy violations related to its advertising technology.

A European Union privacy regulator has slapped Amazon with a record $US886 million ($1.19 billion) fine for mishandling personal data protected under the bloc’s privacy law, the General Data Protection Regulation (GDPR)

A data-protection commission in Luxembourg, where Amazon is headquartered in Europe, determined Amazon failed to comply with rules under General Data Protection Regulation concerning its processing of personal data. The fine was first disclosed publicly in a securities filing published Friday. The decision also requires Amazon to make changes to its practices.

The retail giant reported that it intends to defend itself “vigorously in this matter.”

A spokesperson for the company said the investigation was not related to any data breach and that no customer data had been obtained by a third party.

“These facts are undisputed,” the spokesperson said.

“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,” they added.

The fine is equal to roughly 4% of the company’s declared net income last year of $US21.3 ($29) billion. The framework for fines under the 3-year-old privacy law can extend to 4% of a company’s global annual revenue from the previous year, a significantly higher sum in this case.

Amazon’s reported revenue was over $US386 ($522) billion in 2020, an increase of more than 37% from the previous year.

The EU regulator did not immediately respond to a request for comment and the decision has yet to be posted on its website.

Amazon appears poised to appeal the decision, though on what grounds it’s unclear. Companies fined under the GDPR are able to appeal in court when they believe a fine is unreasonably large or in an effort to challenge the integrity of an investigation.

The Wall Street Journal reported a sharp increase in appeals on March, 15 of which had been filed alone in the preceding six-month period. Courts decided in most of those cases to overturn or reduce fines in most of those cases, the paper found.

At time of writing, Amazon’s stock was in a sharp dive that began with a 6% drop during pre-market trading, though the privacy case may play a minimal role at best. Financial reporters cited an unmet revenue forecast, increased operating cost linked to the covid-19 pandemic, and lacklustre sales growth as the primary cause.