Amazon can face fines under the EU's data privacy rules implemented in 2018 for the collection and use of individuals' data and violations of the General Data Protection Regulation (GDPR).
Amazon.com Inc could face a $425 million fine in Europe for allegedly violating privacy laws.
The Luxembourg data protection commission or the CNPD has proposed that Amazon pay the largest-ever fine under European Union privacy laws, reported the Wall Street Journal, citing people familiar with the matter.
The tech behemoth's EU headquarters are in Luxembourg that operates in the fields of e-commerce, media and cloud computing.
According to the report, The CNPD has distributed a draught verdict to the EU's other 26 national privacy regulators, punishing Amazon's privacy abuses and proposing a fine.
The case concerns Amazon's collection and use of individuals' data, as well as violations of the General Data Protection Regulation (GDPR), EU's landmark data privacy rules implemented in 2018.
It should be understood that GDPR requires businesses to obtain people's permission before using their data or face steep fines.
The other EU privacy regulators must agree on any draught decision before it becomes final under GDPR, which could take months and result in changes to the fine amount.
The penalties proposed by Luxembourg would be equivalent to almost 2 per cent of Amazon's reported net income of $21.3 billion in 2020 and 0.1 per cent of its $386 billion in sales.
For the most serious violations of the law, a firm can be penalised up to 4 per cent of its global revenues under GDPR.
The draft decision ruling, as well as the scale of the punishment, indicates a new wave of privacy enforcement against tech giants in Europe at a time when Silicon Valley behemoths are being scrutinised around the world.
In December 2020, an Irish regulator fined Twitter over $500,000 under GDPR for a fault in its Android app that exposed certain users' protected tweets.
Since the GDPR took effect three years ago, the greatest penalty imposed under the rule has been a €50 million ($6,07,35,950) fine levied by France's privacy commission against Google.
Even this week, the French anti-competition authority has decided to fine Google €220 million ($268 million) for abusing its "dominant position" in the online advertising business.
The Wall Street Journal's report has revealed that Amazon is the latest tech giant to face intense pressure in Europe.
However, the Digital Services Act and Digital Markets Act, presented by the European Commission in December 2020 and awaiting approval by the European Parliament and Council of Ministers, will soon apply to US tech behemoths.
The acts seek to hold tech platforms accountable for the content they host, as well as introduce new pro-competition measures for online markets.