With its market value evaporating by $75 billion, Amazon is facing a huge fine. Will its monopoly be broken?

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The entertainment industry has been undergoing a lot of changes recently. The traffic superstars who were once admired by thousands of people have fallen from the clouds to the dust overnight, facing "tears behind bars" and "big bowls of prison food", which makes people angry and sigh. On the other hand, in the cross-border circle, the "traffic giant" Amazon has also suffered a heavy blow recently, hit by a sharp drop in stock prices and a sky-high fine.

Last Thursday, e-commerce giant Amazon officially released its second-quarter earnings report, but its results were contrary to market expectations. Looking ahead to the third quarter, the estimated sales of between $106 billion and $112 billion are also unsatisfactory.

After the financial report was released, Amazon's stock price suffered a sharp drop, with a flash crash of 8.11%, the largest single-day drop since May 2020, and the stock prices of online retailers fell across the board. As of the close of Friday, Amazon's stock price fell 7.56%, and its market value evaporated by about US$75 billion.

   ▲ The picture comes from the Internet

In addition, many major banks such as JPMorgan Chase and Credit Suisse have lowered their target prices for Amazon. In response, Amazon's chief financial officer said that the "large base" last year was the reason for the slowdown in year-on-year growth this quarter, and it will continue to slow down in the next few quarters.

During the pandemic in 2020, lockdowns around the world and the prevalence of the stay-at-home economy promoted the rapid growth of e-commerce, and Amazon, as the leading e-commerce company, benefited the most. However, as various places reopened, the proportion of people's online consumption has dropped significantly.

Taking the North American market as an example, net sales increased by 43% in the second quarter of last year and 22% this year. Although the growth momentum is still strong, it is halved compared with the same period last year. Obviously, the slowdown in online consumption has had a certain impact on Amazon's revenue growth.

Although Facebook and Apple, which released financial reports at the same time, also expected future growth to slow down, Amazon was the only one among the top five technology companies in the United States that failed to meet analysts' market expectations.

To make matters worse, a securities document recently disclosed by Amazon showed that it was heavily fined by the Luxembourg Data Protection Authority and faces a sky-high fine.

It is learned that Amazon submitted a document to the U.S. Securities and Exchange Commission last Friday, which showed that the Luxembourg Data Protection Authority issued a sky-high fine of 746 million euros (880 million U.S. dollars) to Amazon because Amazon's European department violated the EU General Data Protection Regulation.

According to the EU General Data Protection Regulation, companies that collect personal data without user consent will be fined 4% of their annual revenue. While Amazon is facing a huge fine, it has also been ordered to modify certain unspecified business practices.

As early as June, foreign media reported that the Luxembourg Data Protection Commission had drafted a proposal regarding Amazon's privacy leaks, with an expected fine of more than US$425 million, which would be distributed to data protection agencies in 26 other EU countries.

It is understood that this is the highest fine ever imposed by the European Union. However, in the face of the tough accusations of the Luxembourg Data Protection Commission, Amazon's official spokesperson firmly denied that it leaked user data to third parties and will further appeal.

In fact, it is not only Amazon that is targeted by the EU's privacy protection law. In recent years, many technology giants have been sanctioned for violating privacy protection regulations. Previously, Google was fined a huge amount of US$57 million by the French privacy regulator, the National Information and Freedom Commission.

It is not difficult to see that nowadays, both the United States and the European Union are increasingly strict in regulating major technology giants and launching a number of antitrust investigations. So far, Amazon has been subject to two rounds of investigations for monopoly issues.

Considering the decline in Amazon’s performance in the second quarter, it is reasonable to speculate that the market structure monopolized by Amazon may change in the future.

However, in response to the news that Amazon suffered a huge fine, some sellers expressed gloating, while others worried that what Amazon lost might be exploited back by the sellers.

   ▲ The picture comes from the seller communication group

What do you want to say about the various accusations Amazon is facing? Feel free to leave a comment in the comment section.