Amazon grilled about use of seller data, promotion of own products

Lawmakers grilled the e-commerce firm over allegations of it using third-party seller data to develop its own competing products.  

Amazon founder and CEO Jeff Bezos testified before the US Congress for the first time on Wednesday, July 29, to respond to different claims against the e-commerce firm. 

One such claim involves Amazon’s use of sales data from independent sellers on its platform to develop competing products under the firm’s private-label division. This was  raised by US lawmaker Pramila Jayapal during the hearing, citing a report from The Wall Street Journal. 

David Cicilline and Ken Buck similarly questioned Amazon over this concern, with the latter citing additional evidence that alleged that the firm uses investment meetings with startups to help create its own products. 

Buck cited an example in Vocalife, a startup that’s accusing Amazon of stealing its technology after a meeting with its founder. 

“These allegations are serious especially because the size and scope of these practices couldn’t happen without Amazon’s monopolistic control of the marketplace,” Buck said. 

Bezos responded by emphasizing his firm’s policy of banning such practice. However, he also said, “I can’t guarantee you that that policy has never been violated,” adding that he’ll be investigating the allegations. 

In line with this, Bezos revealed that while Amazon is barred from using the data of individual sellers, it’s not against policy for it to use aggregate data compiled from multiple sellers. 

When lawmaker Kelly Armstrong pressed on this concern, Bezos conceded that aggregate data could be made up of just two sellers. This seemingly implies that it’s possible for Amazon to guess whose data was whose, and use the information to give its products an advantage. 

Another concern that was raised by lawmaker Jamie Raskin was that Amazon enjoys market dominance in the smart home and smart assistant market, with the firm sometimes pricing its Echo devices below cost. This makes it hard for other companies to compete with its pricing. 

What’s more is that these devices are likely to promote Amazon’s own products. Raskin said that when people, for example, ask Alexa to buy batteries, it then asks if they want AmazonBasics Batteries.   

“It wouldn’t surprise me if Alexa sometimes promotes our own products,” Bezos admitted. 

The CEO also answered a series of questions about the sale of counterfeit goods on the platform. 

Lawmaker Hank Johnson said that a number of companies have accused Amazon of using knock-off products as leverage into forcing sellers to do what it wants. He cited electronics accessory brand PopSockets as an example, which reported that Amazon only stopped diverting sales to knockoffs when it invested over $2 million in ads. 

Bezos said that he’s invested hundreds of millions of dollars into systems that fight the sale of fake products on Amazon. The firm reportedly also has a team of more than 1,000 people to address the issue. 

Bezos also promised to investigate the issue further, saying that he’d rather “lose a sale than lose a customer.” – Rappler.com