In July, in an antitrust hearing on Capitol Hill, Amazon “took punches on a range of political and policy issues,” along with fellow digital behemoths Apple, Google owner Alphabet, and Facebook, the Wall Street Journal stated at the time. The $1 trillion dollar e-commerce titan that is Amazon has, after all, been accused of using its mighty powerful platform to bolster its private-label business. More than that, though, the Jeff Bezos-founded giant has questioned about the extent of its use of third-party sellers’ data in furtherance of its quest to build-out its own label.
During that hearing in Washington, DC this summer, Amazon’s associate general counsel Nate Sutton told the House of Representatives Antitrust Subcommittee that Amazon “does not use individual seller data directly to compete” with businesses on the company’s platform. Now, that statement seems to be coming back to haunt Amazon, as the WSJ reported on Thursday that interviews with former employees and a current one employee revealed that Amazon “executives had access to data containing proprietary information that they used to research bestselling items they might want to compete against, including on individual sellers on Amazon’s website.”
“We knew we shouldn’t,” said one former employee who accessed the data and described a pattern of using it to launch and benefit Amazon products, told the WSJ. “But at the same time, we are making Amazon branded products, and we want them to sell.”
The WSJ’s investigation centers on “a bestselling car-trunk organizer sold by a third-party vendor,” which Amazon employees “accessed documents and data about,” including “total sales, how much the vendor paid Amazon for marketing and shipping, and how much Amazon made on each sale.” According to the Journal, “Amazon’s private-label arm later introduced its own car-trunk organizers.”
But presumably, such a pattern could span across the more than 45 brands that Amazon current boasts – from its Amazon Basics collection to the buzzy skincare brand Belei that it launched in 2019 – and some at the expense of merchants selling similar products on its site. This is part of the equation that that legal minds (including this site) have pointed to in recent years in regards to potential claims of antitrust involving Amazon, particularly as the giant has continued to build troves of data on third-party products and sales, which it can use to “hone its own competitive pricing strategy, gain information about consumers to make its own marketing more effective, and give its own goods an advantage.”
Amazon has largely downplayed the success of its private labels, telling the WSJ that sales tied to its in-house brands “account for 1 percent of its $158 billion in annual retail sales, not counting Amazon’s devices such as its Echo speakers, Kindle e-readers and Ring doorbell cameras.” This mirrors the sentiment of a sweeping 2019 study from Marketplace Pulse, which analyzed 23,142 products launched by Amazon under more than 406 different private label brands, and determined that “Amazon-owned private label brands are not nearly as successful as many paint them to be.”
The Seattle-based giant also notes that it is a common business strategy for grocery chains, drugstores and other retailers to make and sell their own products to compete with brand names. Virtually no other company has access to the amount of consumer data that Amazon does, though, given that a whopping 39% of all U.S. online shopping occurs on Amazon.
Nonetheless, its model has caught the eye of regulators in the U.S. and beyond. This past summer, right around the time that Amazon was making the trip to D.C., European Union authorities initiated a formal antitrust investigation into Amazon, with the European Commission – an EU institution tasked with proposing legislation, implementing decisions, upholding the EU treaties and managing the day-to-day business of the 28 member state bloc – probing the company to determine whether its use of sensitive data from independent sellers on its massive third-party marketplace runs afoul of the EU’s competition rules.
The European Commission’s probe – which will also look into the role of data in the selection of the companies included in Amazon’s so-called “Buy Box,” the prized button on each Amazon product page that enables customers to add a product, including non-Amazon-created products, to their cart or make an instant purchase – came on the heels of a larger discussion about what the New York Times described last year as Amazon’s practice of “optimizing word-search algorithms, analyzing competitors’ sales data, [and] using its customer-review networks to steer shoppers away from its competitors and toward its in-house brands.
More recently, it was revealed that various domestic agencies and lawmaker, including the Justice Department, Federal Trade Commission and Congress, also are investigating large technology companies, including Amazon, on antitrust matters.
In a written statement in response to the WSJ report, Amazon said, “Like other retailers, we look at sales and store data to provide our customers with the best possible experience. However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.”
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