EU launches in-depth probe on Amazon over data use

The EU investigation involves Amazon’s service to third party merchants who use the world’s biggest online retailer to access customers and broaden their reach. (AFP)
Updated 17 July 2019
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EU launches in-depth probe on Amazon over data use

  • Formal investigation opens a new chapter in the EU’s campaign to address the dominance of US tech firms
  • At the heart of the case is Amazon’s service to third party merchants

BRUSSELS: The EU’s powerful antitrust authority launched an in-depth investigation into Amazon on Wednesday, amid suspicions the US-based online behemoth misuses merchant data hosted on its website.
The formal investigation opens a new chapter in the European Union’s campaign to address the dominance of US tech firms with Google, Facebook and Apple also regular targets of regulators in Brussels.
With its probe, the EU competition watchdog is seeking to expand its oversight powers to data, the most prized asset for Silicon Valley giants that now dominate web-use worldwide.
“I have ... decided to take a very close look at Amazon’s business practices and its dual role as marketplace and retailer (and) to assess its compliance with EU competition rules,” the EU’s anti-trust commissioner Margrethe Vestager said in a statement.
At the heart of the case is Amazon’s service to third party merchants who use the world’s biggest online retailer to access customers and broaden their reach.
In providing this service, Amazon “continuously collects data about the activity on its platform,” the commission said.
Preliminary findings, according to the statement, indicate that Amazon “appears to use competitively sensitive information — about marketplace sellers, their products and transactions on the marketplace.”
The opening of a formal investigation procedure does not prejudge its outcome, but if fault is found the sanctions by the EU can reach up to 10 percent of sales.
“The stakes for the digital economy are high, because any action by the Commission can have an impact on the business model of web giants, which is based on data accumulation,” said Andrea Collart, of the consulting firm Avisa in Brussels.
The investigation, which has no deadline, is likely to be the final offensive by Vestager against big tech before the end of her current mandate on October 31.
In an email to AFP, Amazon said: “We will cooperate fully with the European Commission and continue working hard to support businesses of all sizes and help them grow.”
The probe adds to Vestager’s long list of cases against US Big Tech.
During her five-year term, Brussels has slapped Google with a combined $9.5 billion in antitrust fines and scrutinized Apple and Facebook for breaches of competition, tax and data rules.
Amazon in 2017 was ordered to pay back taxes of about €250 million to Luxembourg because of illegal tax breaks.
The company also settled with Brussels over its distribution deals with e-book publishers in Europe.


After one year in office, Pakistan's economy remains government’s biggest challenge

Updated 20 August 2019
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After one year in office, Pakistan's economy remains government’s biggest challenge

  • Pakistan’s stocks declined by 32 percent and its currency lost its value by 29 percent in a year
  • Economist say Pakistan has got major support from the Arab world due to its new political leadership

KARACHI: Pakistan’s ongoing economic turmoil has overshadowed the ruling Pakistan Tehreek-e-Insaf (PTI) party’s first anniversary celebrations, as analysts and traders point out that the country’s stock market has witnessed a decline of 32 percent, the national currency has lost its value by 29 percent and the bullion market price has escalated by 60 percent within the last one year.
Prime Minister Imran Khan assumed the country’s top political office on August 18, 2018, promising wide-ranging reforms and economic turnaround. However, his administration found itself struggling against tough economic challenges that included mounting current account and fiscal deficits.
The situation triggered tremendous uncertainty in the stock exchange, making it one of the worst performing markets in Asia. The bench mark KSE 100 index declined from 42,446 points on August 17, 2018, to 28,764 points on August 16, 2019, recording a staggering decline of 32 percent.
“The situation of the market became worse as it remained in the grip of negative sentiments in the backdrop of economic conditions fueled by current account deficit, interest rate hike, and currency devaluations,” Muhammad Faizan Munshey, head of foreign institutional sales at Next Capital, told Arab News.
The stock market on Monday rebounded and gained 798 points to close at 29,562. “The worst condition is almost over and the market is expected to rebound in the future as well,” he added.
Analyst believe that the country’s bourse has bottomed out and the prices are expected to rebound, provided that the growth drivers remain in place. “The government must focus on growth drivers, such as exports, job creation and tax collections, for economic recovery,” Samiullah Tariq, director research at Arif Habib Limited, told Arab News.
During the PTI’s first year in office, the country devalued its currency by almost 29 percent from Rs123.50 against a dollar to Rs159.10 in the interbank market.
Analyst believe the rupee devaluation was done to fulfil the conditions of the International Monetary Fund (IMF) before Islamabad could avail $6 billion bailout package. “There were two reasons cited for the rupee devaluation: the first was the IMF’s free-float requirement and the second was that the Pakistani rupee was overvalued and needed stabilization,” Zafar Paracha, general secretary of Exchange Companies Association of Pakistan, told Arab News.
Pakistan’s central bank governor in June this year tried to dispel the impression that the state bank was reluctant to intervene in the currency market due to the IMF conditions, saying that the country had “adopted a market-based exchange rate system.”
According to Paracha, however, the policy shift took place after the Pak rupee hit a high of 165 against the dollar, saying “it was only then that they [the State Bank and the IMF] realized that free float was not suitable for our market and decided to adopt the market-based exchange rate mechanism instead.”
He added that the lull in the currency market was due to Eid al-Adha related foreign currency inflows. “I don’t see any steps taken to stabilize the economy. Pakistan’s economy does not need ad hoc measures. The change of finance ministers also resulted in a complete shift in policies earlier this year. What the country requires at the moment, however, are carefully crafted stabilization policies that are kept in place for five to ten years.”
Much like the stock and currency markets, the bullion market also experienced volatility as the rate of gold hit Rs89,000 per tola – or approximately 12 grams – on Saturday before cooling down to Rs88,000 on Monday. This rate stood at Rs54,750 a year earlier.
Bullion traders expect the volatility to continue in the market, saying that there has also been a decline in the purchasing power of consumers. “We expect that gold would hit Rs100,000 in the foreseeable future,” Haji Haroon Rasheed Chand, president of All Sindh Saraf Jewelers Association, told Arab News.
Under the circumstances, senior economist say that the country will have to take tough measures with harsh economic and political implications. “Last year, around one million people lost their jobs, poverty increased because the prices of goods jacked up and the growth rate of our economy slowed down,” Dr Hafeez Pasha, former finance minister, told Arab News, adding that “hard times are going to end.”
“Due to our new leader, we have got major support from the Arab world,” he said. “The good thing is that our Arab friends supported the country when it was in dire need and we must thank them for what they have done for us.”
“We received $3 billion from Saudi Arabia and they also extended us the deferred oil payment facility that began in July this year. The United Arab Emirates also deposited $2 billion and Qatar extended $500 million as well,” he added.