Record fine for Amazon

Amazon (AMZN) shares were down 1.13% on Thursday after the Italian antitrust authority handed Amazon a $1.28bn fine for abusing its dominant market position.

E-commerce giant Amazon (AMZN) received another record antitrust fine on Thursday.

The Italian antitrust authority said that Amazon was crowding out its competitors in the market for intermediary services on trading platforms by privileging third-party sellers who use its Fulfillment by Amazon (FBA) delivery services. According to the authorities, Amazon is thus abusing its dominant position on the Italian market to strengthen its monopoly position. Amazon said it would appeal, calling the proposed fine and remedy "unreasonable and disproportionate". The company said that its logistics services are not compulsory for any customers and that most third-party sellers on Amazon do not use it.

The move by the Italian authorities confirms the growing pressure by the European government to limit monopolies among big tech companies, which also include Apple (AAPL), Google's parent company Alphabet, Microsoft (MSFT), Meta Platforms (formerly Facebook) and others.

In the summer Amazon was fined €746 million by the European Union for breaching data privacy rules, and in early November Alphabet Google lost an appeal against a landmark European antitrust ruling and was fined $2.8 billion. Last year, French antitrust authorities fined Apple $1.2 billion for anti-competitive behaviour.

At the same time, it seems that despite the outcome of Amazon's appeal over this new fine, investors are more focused on the company's other problems.

In Amazon's report for the third quarter of 2021 (ended 30 September), Chief Financial Officer Brian Olsavsky said that "rising labour costs, lower productivity and cost inflation" have increased the company's operating costs by around $2bn. Moreover, he expects these costs to be $4bn in the fourth quarter.

Amazon's Q3 earnings per share fell by half from last year's value and analysts' forecast. Meanwhile, the company's Q4 guidance was also below analysts' forecasts.

Amazon (AMZN) shares have been weak since September 2020, after surging at the start of the pandemic. Over the past 12 months Amazon shares have gained 12.2% and added just 6.95% since the start of 2021, while the S&P 500 index has gained 27.2% and 24.2% respectively over the same periods.