Amazon strikes a deal
Amazon (AMZN) recently struck a deal with the EPA (United States Environmental Protection Agency) to settle allegations that the company had violated a US law relating to the sale of pesticides and insecticides. The company agreed to pay a $1.2 million fine as part of its settlement with the EPA.
Facebook (FB) also recently agreed to pay $35 million to settle a lawsuit related to its 2012 IPO (initial public offering).
Sale of unlicensed pesticide products
The $1.2 million penalty the EPA slapped on Amazon stemmed from the agency’s investigation of online sales of pesticide products in the United States. The investigation, which began in 2014, led to Amazon being ordered in 2016 to stop selling certain pesticide products on its online marketplace.
According to the EPA, certain merchants took advantage of Amazon’s marketplace to import and distribute pesticide and insecticide products that had not been licensed for sale in the United States. In some cases, the illegal pesticides sold on Amazon.com were misbranded.
Impact on expenses
The fine could see Amazon’s expenses rise in the current quarter. Amazon’s total costs and expenses were $58.3 billion in 4Q17, representing an increase of 37.2% YoY (year-over-year). At Facebook and Google’s parent, Alphabet (GOOGL), expenses jumped 30.2% and 27.3% YoY, respectively, in 4Q17. Amazon’s cloud computing rivals Microsoft (MSFT) and IBM (IBM) registered 13.4% and 7.7% YoY increases in their expenses, respectively, in 4Q17.
The chart above shows Amazon’s quarterly expense trend.