Washington regulators are turning their sights on tech giants as concerns about anticompetitive practices mount.
The Federal Trade Commission will reportedly take on oversight of Amazon and Facebook in a probe of potential antitrust issues, dividing the task with the Department of Justice, which will oversee Apple and Google. The e-commerce behemoth will also come under scrutiny from the House Judiciary Committee, which announced on Monday that it is opening an antitrust investigation into big tech, which will look at whether the sector’s biggest companies are hindering competition and harming consumers.
“There is growing evidence that a handful of gatekeepers have come to capture control over key arteries of online commerce, content and communications,” Committee Chairman Jerrold Nadler, D-N.Y., said in a statement.
While the FTC has not yet announced a formal investigation of Amazon, the consumer protection agency has, over the past few months, questioned some of the retail giant’s competitors about several of its business practices, according to Recode.
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One of the topics the agency has focused on is one that has also come under fire from presidential candidate Sen. Elizabeth Warren and other politicians: Amazon’s alleged practice of competing with its own sellers using the data it collects as a platform. The company’s expansion into private-label goods has been well documented, and shoppers today will see Amazon-owned brands sold alongside third-party products in categories ranging from footwear to batteries. (Amazon now has 140 private label brands — up from only 27 in 2017 — and 511 exclusive brands, according to the independent analytics firm TJI Research.) These goods offer the company better profit margins, a wider selection of products and potential leverage to put pricing pressure on third-party sellers.
In a post published earlier this year on Medium, Warren — who has called for the breakup of Amazon, Google and Facebook — accused the retailer of “[crushing] small companies by copying the goods they sell on the Amazon Marketplace and then selling its own branded version.”
She repeated the accusation in a town hall in April, in response to which Amazon tweeted the following statement: “We don’t use individual sellers’ data to launch private-label products (which account for only about 1% of sales). And sellers aren’t being ‘knocked out’ — they’re seeing record sales every year.”
Per Recode, the FTC has also talked with the company’s rivals about its Fulfillment By Amazon program, which allows sellers to take advantage of Amazon’s storage, fulfillment and shipping services for items sold through other retailers (such as eBay and Etsy) — but at fees of up to 75% more than if the item had been sold through Amazon.com.
Finally, it’s looking at Amazon Prime, a program that surpassed the 100-million-member mark in the U.S. in the fourth quarter of 2018, according to an estimate from Consumer Intelligence Research Partners Inc. (CEO Jeff Bezos revealed last April that the service had surpassed that number globally.) The $119-per-year service bundles free one-day shipping with music, movie and TV streaming benefits; Whole Foods discounts; unlimited photo storage and more — benefits that critics say make it impossible for smaller players to compete.
The increased scrutiny comes at a time when politicians from both sides of the aisle have expressed concerns about data privacy violations and monopolistic behavior within the tech industry – issues that are sure to be debated throughout the 2020 presidential race.
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