Congress Asks Amazon’s Bezos to Testify on Use of Third-Party Seller Data

“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.” – Letter to Jeff Bezos

https://depositphotos.com/40145553/stock-photo-amazon-app-icon.htmlOn May 1, Representative and House Judiciary Committee Chairman Jerrold Nadler (D-NY) and a bipartisan coalition of members of the Subcommittee on Antitrust, Commercial and Administrative Law signed a letter addressed to Amazon CEO Jeff Bezos. The letter focuses on antitrust issues posed by Amazon’s alleged use of third-party seller data to develop products competing with those sellers, allegations that directly contradict testimony offered by Amazon last year during a House Antitrust Subcommittee hearing. It also calls upon Bezos to testify before the House Judiciary Committee to clear up any discrepancies between the recent Wall Street Journal article and Amazon’s prior testimony to Congress on the subject of third-party seller data.

Reports of Anticompetitive Behavior Conflict with Amazon’s Testimony

The letter references an April 23 article published by The Wall Street Journal, which discusses ways that the e-commerce giant has leveraged sales data from independent sellers using its platform to directly compete with those sellers, activities which fly in the face of the company’s own policies. As the lawmakers’ letter points out, more than 20 Amazon employees were interviewed for the story, many of whom stated that it was “standard operating procedure” to collect data from third-party sellers for use in Amazon’s product development activities. Far from being the only instance of such concerning corporate conduct, Rep. Nadler and others cite to independent reporting and antitrust investigations conducted by the European Commission following similar claims of anti-competitive behavior.

The potential that Amazon has engaged in these activities is made a more pressing concern by the fact that Amazon expressly denied such allegations during testimony on Capitol Hill during a hearing in front of many of the same lawmakers now asking the company to account for the discrepancy. Last July, the House Antitrust Subcommittee held a hearing on online platforms and market power during which the subcommittee heard testimony from Nate Sutton, Amazon’s Associate General Counsel for Competition. Sutton’s written testimony clearly stated that the success of third-party sellers is crucial for Amazon’s own success, that such sellers improve the competitiveness of Amazon’s online platform by offering low-cost alternatives to consumers and that Amazon has expended a lot of resources to support and build infrastructure for those sellers.

The reason our marketplace model has worked so well, and why both Amazon and our selling partners have thrived since we introduced it, is that we are partners—we complement each other, and together we can create a better customer experience than either could create alone. This helps explain the wide proliferation of the marketplace model by retailers of all types and sizes around the world, further intensifying competition within retail.

During the hearing, however, Sutton was questioned multiple times on the topic of whether Amazon collects third-party sales data to develop competing products. At one point, Representative David Cicilline (D-RI), Chairman of the House Antitrust Subcommittee and a signatory to the letter addressed to Jeff Bezos, asked Sutton to clarify whether or not Amazon uses the massive amounts of third-party seller data it collects in order to promote Amazon products on its own platform, reminding Sutton that he was under oath prior to his answer. “We don’t use individual seller data to directly compete with them,” Sutton responded. Given the recent reports indicating that Amazon’s actual practices conflict with Sutton’s flat denial, there’s little wonder why the subcommittee’s membership is keen on getting a straight answer from the CEO of one of the world’s most valuable companies.

The letter from the House Antitrust Subcommittee membership also points out written responses submitted by Amazon to the subcommittee which conflict with the recent Wall Street Journal report. Soon after the hearing attended by Sutton, Amazon’s General Counsel David Zapolsky sent a letter to Rep. Cicilline following up on Amazon’s testimony which stated that the company “prohibit[s] in our private label strategy the use of data related specifically to individual sellers” and that any seller data collection was aggregated to analyze consumer behavior, a common retail practice. Last October, Amazon provided written responses to questions on the record from the July antitrust hearing in which the company reiterated that Amazon’s corporate policies prohibited the company from using data from individual sellers to make sourcing or product decisions.

[[Advertisement]]

Potential Criminal Liability for Misleading Statements to Congress

“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,” the letter to Bezos reads. The letter cites to a couple of statutes in U.S. federal criminal code supporting the legal liability that Amazon could face if it did offer false testimony. 18 U.S.C. § 1001 governs general statements and provides that anyone who knowingly makes a false statement or representation in any matter under federal-level jurisdiction, including those within the legislative branch and conducted pursuant to any legislative committee’s authority, can be punishable by a fine and a prison term of up to five years. 18 U.S.C. § 1621 governs perjury and it provides for similar punishment for those who commit perjury by stating material the individual doesn’t believe to be true after having taken an oath to testify truthfully. Sutton’s truth in testimony form shows that he signed the false statements certification establishing liability for any presentation of false information to the subcommittee.

The recent Wall Street Journal report on Amazon’s alleged use of third-party sales data has also prompted a response from the U.S. Senate. Senator Josh Hawley (R-MO), a member of the Senate Judiciary Committee, recently sent a letter addressed to Attorney General William Barr asking AG Barr to open up an antitrust investigation into Amazon to look into the alleged practices reported by The Wall Street Journal.

This isn’t the only time that Amazon has been accused of leveraging its e-commerce platform to steal market share from tech developers after releasing a competitor product. Back in May 2017, when Amazon released its Echo Show home intercom system, news reports indicated that the device shared several similarities to a voice-activated home device developed by Nucleus, a company which had previously received a multi-million dollar investment from Amazon’s Alexa Fund.

Image Source: Deposit Photos
Author: Mactrunk
Image ID: 40145553

The Author

Steve Brachmann

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments. Join the discussion.

  1. jacek May 8, 2020 2:00 pm

    Everybody knows but, the Congress.
    It seems to me that our congressional “leaders” are from an alternate reality.
    Wow. What a speed in action? Ten or more years when this universal truth becomes “obvious” in the U.S.

  2. Pro Say May 8, 2020 5:15 pm

    It’ll take a subpoena to get Jeff back in a Congressional seat.

    His attorney will (wisely) be by his side.

    Any bets on how many times Jeff will (also wisely) take the 5th?

  3. Jam May 12, 2020 12:47 pm

    There is a difference between products a third party sells through the amazon.com platform and through a custom platform hosted on Amazon Web Services (AWS). One would expect that Amazon tracks and uses all data on the amazon.com platform, but does not access data on platforms hosted by AWS. There is a possibility that the congress member(s) raising the issue do not understand the technology and are using word games to trap Amazon. There is also the likelihood that Amazon is using similar word games to avoid some form of liability. From another perspective, congress members may not understand what they are asking and Amazon may not understand what they are answering.

  4. jacek May 12, 2020 2:02 pm

    It is well known (Maybe not for Jam) that Amazon is commingling merchandise from different sources, and original manufacturer order may show up as fake at the buyer’s door. Amazon is also buying merchandise directly from the cheapest source. A not long time ago, I was reading an article about Amazon buying inexpensive fakes and completely disregarding the original manufacturer. Claiming a lack of knowledge, or word games is at least naïve. Member of Congress weaseling out of the straightforward question is something you should not miss unless you think they are merely stupid.

Post a Comment

Respectfully add to the discussion.

Name *
Email *
Website