Amazon is investing $550 million in Italy, just 5 months after a former exec started working for its government

Online retailer Amazon.com is set to announce on Friday the first in a series of investments in Italy worth at least 500 million euros ($550 million), a bet on the government's plan to go from laggard to leader in digital commerce, sources said.

Amazon will invest 150 million euros to build a major storage and logistics center outside Rome, its second in Italy, said one source close to the matter. The new center, due to open next year, will employ 1,200 people.

"There are wide margins of growth for small and medium businesses in Italy, which are still very much behind their European counterparts on e-commerce," the source said.

It will be the biggest foreign IT investment to be unveiled in Italy since Prime Minister Matteo Renzi announced in April a new tactic to speed up broadband rollout across the country. He enlisted the help of state-controlled utility Enel to lay fibre-optic cable alongside its existing power network.

The news comes just five months after Amazon's former SVP of worldwide retail Diego Piacentini left the company to work pro-bono at the digital-technology office of the Italian prime minister. At the time of his departure, Piacentini said he wanted to "give back to the country" where he was born and lived for 40 years. It's unclear whether he had any role in engineering this deal.

Amazon was not immediately available for comment.

The European Union's fourth-largest economy comes last in the EU for Internet usage, with barely half of Italian households subscribing to fixed-line broadband.

However, online shopping is growing and will have almost doubled between 2011 and the end of this year when transactions are estimated to reach around 19 billion euros, according to national ecommerce association Netcomm.

Old power stations

Amazon also plans to build data centers in Italy in the next 12 months for its expanding cloud-service division, housing them in old power stations belonging to Enel, two sources said.

Enel Chief Executive Francesco Starace has said previously that Amazon is among companies interested in acquiring three old stations, following reports by newspaper Corriere della Sera.

Amazon has a share of 14 percent of Italian Internet retailing, second to eBay with 24 percent, according to research firm Euromonitor International.

It has already invested some 450 million euros in the last six years in Italy, its fourth largest European market, after the United Kingdom, Germany and France.

Amazon founder and CEO Jeff Bezos will visit Italy and is set to meet Renzi in Florence on Friday, sources said.

Amazon has been pushing hard for its international sales growth in recent months. Just last month, Amazon revealed a plan to invest an additional $3 billion in the Indian market.

Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.