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Amazon Roundup: EU Video, China Hacking, eBay, Privacy, Wages

Zacks

The top stories from last week include new video creation rules, Chinese hacking allegations, eBay’s EBAY poaching claims and more. Here are the details-

Funding European Video

A new EU rule that is pending approval by member states requires streaming services like Amazon Prime Video and Netflix NFLX to ensure that at least 30% of their libraries are made up of content made in Europe.

Once signed off, the individual states will get two years to frame laws based on the rule, which may raise the requirement to up to 40% or see that a certain fixed percentage of the content is from the country itself. The streaming companies may either commission the content themselves, or buy stuff that’s already available from local producers, or contribute to national film funds.


Both Netflix and Amazon Prime are apparently close to the target anyway in their efforts to satisfy the customer. But while Netflix picks the kind of content with more universal appeal, Amazon tries to pick content that’s hyper local.

Chinese Hacking

Apple AAPL and Amazon AMZN have categorically denied that their systems were compromised in the manner described by a Bloomberg Businessweek report.

The report relied on 17 unnamed informants that it claimed were company insiders and government intelligence experts. It said that Chinese spies infiltrated the supply chain of San Jose, California-based Super Micro Computer to place computer chips inside equipment that was later sold to around 30 companies and multiple U.S. government agencies during their assembly that would help them gain access to internal networks.

In Amazon’s case, it said that the company discovered extra chips when examining hardware from its Elemental acquisition back in 2015. Amazon has said that there is “no truth to these claims.”

China's Ministry of Foreign Affairs hasn’t responded to this allegation although it has previously denied this kind of activity.

eBay Allegations

eBay has accused Amazon of allowing its sales reps to infiltrate its internal messaging system by camouflaging their own identities, suggesting offline contact and other methods to move them to Amazon. eBay was alerted by one of its own loyal sellers after such communication with an Amazon sales rep.

It then discovered that around 50 Amazon sales reps worldwide over a number of years sent more than 1,000 messages to sellers on its platform, according to the cease-and-desist letter it sent Amazon, as seen by the WSJ.

eBay is probably getting ready to take the matter to court to recover damages. It has asked Amazon for the names and addresses of the reps involved and the sales from any eBay merchants that moved to Amazon as a result. It claims that the actions are in contravention of California’s Comprehensive Computer Data Access and Fraud Act, a law covering computer crime.

Amazon has said that it is thoroughly investigating the case.

Privacy

Amazon said it terminated an employee guilty of sharing a customer’s email address with a seller. The company has a zero tolerance policy about customer privacy and said that no other information was shared. But it also didn’t shed any light on the overall scope of the problem, i.e., how many employees have been taking bribes to share how many email addresses. The WSJ reported earlier that both Chinese and U.S. employees were being investigated on the issue.

If customer emails reach sellers, they can try to game the review system, for example by offering discounts and freebies to people that have submitted bad reviews to get them to change their view. Since the ranking system on the product search page is directly linked to reviews from verified purchases, negative reviews can lower visibility of products while positive reviews can increase visibility and thereby boost sales.

Minimum Wage

After eliminating bonuses and stock awards for its warehouse workers and other hourly employees, Amazon has announced a positive change by raising the minimum wage for all its employees, whether full-time, part-time, temporary (including those hired by agencies), or seasonal workers across the U.S. effective November 1.

A Bloomberg study shows that despite the raise, Amazon employees continue to be paid below the median wage rates in 57% of locations in the U.S. Also, despite strong protests in places like Germany, the new policy will be operational only in the U.S. and UK.

Brazil Logistics Project

Amazon is partnering with Goldman Sachs-backed Brazilian trucking startup CargoX to use its bulletproof trucks for the delivery of high-value goods, including electronics. Earlier, in April, Reuters reported that it was in talks with Brazilian airline Azul SA for the delivery of goods. These actions seem to indicate that Amazon will soon be significantly increasing operations in the country, six years after its entry.

Recommendation

Amazon shares carry a Zacks Rank #3 (Hold). Instead, you can check out the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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