Amazon in Hot Water over Antitrust Allegations: Data from third-party sales is being used to improve Amazon’s own sales
May 20, 2020
2 min read
What's going on here?
The US House Judiciary Committee is leading an investigation into the e-commerce giant Amazon for antitrust allegations that have previously been denied by company representatives. On 1 May 2020, the Committee stressed that they are within their rights to “resort to compulsory process” and subpoena Amazon’s CEO, Jeff Bezos, if he fails to testify on a voluntary basis. A subpoena is a written order to compel an individual to give testimony before a court.
What does this mean?
The Committee is investigating whether Amazon has been using data from third-party sellers to improve their own private label products which directly compete with third-party sellers’ products. The associate general counsel, Nate Sutton, denied these allegations during sworn testimony in 2019. Over 20 former Amazon employees have since stepped forward, stating that this was “standard operating practice” at the company and even openly discussed in meetings. Senator Elizabeth Warren compared Amazon to being both “the umpire and the player in the game”.
In light of these statements, the Committee has requested evidence of Amazon’s relationship with sellers and the company’s use of third-party sellers’ data in an open letter to Bezos. The letter states clearly that Amazon has abused its position as the largest online marketplace in the US and that previous testimony from the company has been contradictory. The testimony given is certainly misleading but may also be criminally false or perjurious. Perjury is the felony crime of knowingly making false statements under oath. If it is proven that Amazon representatives have committed perjury, the repercussions for the company will likely be disastrous, both financially and reputationally.
What's the big picture effect?
This antitrust investigation is but one battle in the war against Big Tech in the US and around the world. Other tech leaders such as Google and Facebook have faced similar allegations, spurring discussions about regulatory reform.
Whilst the US House Judiciary Committee is unable to impose enforcement actions, unlike the Federal Trade Commission and the Department of Justice, it nevertheless poses a significant threat to tech leaders. The findings of Committee antitrust investigations inform decisions on legislation to reign in the market power of Big Tech companies.
David Cicilline, House Antitrust Subcommittee Chairman, is an advocate for the passing of a new bill: The Anti-Monopoly and Competition Restoration Act. The draft legislation includes proposals to ban mergers if one party of the proposed merger generates a revenue of more than $40 bn in revenue per annum, as well as other restrictions on anti-competitive pricing.
However, as hundreds of bills are currently awaiting approval and passage in the Republican-controlled Senate, it is highly unlikely that the bill will be passed before the 2020 US elections. It seems that the war on Big Tech has reached a stalemate. Whilst US authorities are clearly exploring strategies to combat anti-competitive behaviour from Big Tech leaders like Amazon, such strategies are simply not being implemented fast enough to curb their rapidly growing market power.
Report written by Emily Noble
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