Congress wants to hear from Amazon founder and CEO Jeff Bezos.
In a letter sent on Friday and signed by members of the House Judiciary Committee, Bezos was asked to come testify before Congress regarding Amazon’s treatment of third-party merchants. If he declines to come in, the letter warned, he may be subpoenaed. (Signatories included Jerry Nadler, D-N.Y.; chairman of the Judiciary Committee, David Cicilline, D-R.I.; chairman of the Judiciary antitrust subcommittee; and Jim Sensenbrenner, R-Wis., the antitrust panel’s ranking Republican.)
The probe follows an April 23 Wall Street Journal report that alleges Amazon employees — in violation of the company’s stated policies — used data from third-party merchants to develop competing product for its private labels.
The majority (58%) of sales on Amazon come through third-party sellers, but some have raised concerns regarding the amount of data the e-tailer can access. Common among department stores, big-box chains and supermarkets alike, in-house brands typically generate higher profit margins for retailers than wholesale goods. In recent years, Amazon has pushed to increase its private label offerings: as of 2019, the retailer had 140 private label brands — up from just 27 in 2017 — along with 511 exclusive brands, according to TJI Research.
Amazon did not immediately respond to FN’s request to comment for this story. However, the company has said on multiple occasions — including in testimony given under oath — that it does not use third-party sellers’ data to make decisions regarding private label offerings. For instance, in a July 2019 Congressional hearing, company lawyer Nate Sutton said: “[We] do not use any seller data to compete with them.”
These earlier statements could pose a problem for Amazon if the WSJ report is correct.
“If the reporting in The Wall Street Journal article is accurate, then statements Amazon made to the Committee about the company’s business practices appear to be misleading, and possibly criminally false or perjurious,” House members wrote to Bezos.
The House Judiciary Committee opened its antitrust investigation into big tech in June 2019, looking at whether the sector’s biggest companies are hindering competition and harming consumers. Although Amazon’s outside counsel has been in regular contact with Congress, members of the committee, in Friday’s letter, said that Amazon “has not made an adequate production” in response for documentation related to the company’s relationship with third-party sellers and its data collection.
Amazon is also being investigated by the European Union for potential antitrust violations. This summer, the EU announced that a formal investigation into Amazon to determine whether the retailer’s analysis and use of third-party seller data negatively impacts competition, as well as how the e-tail giant chooses products for its “Buy Box” feature, a button allowing consumers to add items to cart. If found guilty of antitrust violations in the EU, the maximum penalty the retailer could face is 10% of its annual revenue.