Amazon Continues to Probe Employee Use of Third-Party Vendor Data, Jeff Bezos Says
|07/29/2020 | 05:16pm|
By Dana Mattioli
Amazon.com Inc. Chief Executive Jeff Bezos said the company continues to investigate the allegations behind a Wall Street Journal article in April that detailed how Amazon employees used individual third-party seller data to develop Amazon-branded products.
Testifying before the House Antitrust Subcommittee in his first appearance before Congress, Mr. Bezos faced repeated questions from lawmakers in both parties about the story's findings. He noted that Amazon has a policy prohibiting employees from using data on specific sellers to inform decisions about launching or developing its own products.
"I can't guarantee you that that policy has never been violated," Mr. Bezos said, noting that the company was working to better understand some of the anecdotes in the Journal's coverage. Mr. Bezos emphasized that Amazon wants third-party sellers to succeed.
Amazon has acknowledged that its employees can use and review "aggregate" seller data, when there are multiple sellers of the same product. The Journal investigation detailed examples of supposedly aggregated data being derived exclusively or almost entirely from one seller, according to former Amazon employees and documents reviewed in the investigation.
In one example, an Amazon third-party seller called Fortem accounted for 99.95% of the total sales on Amazon for its trunk organizer over the course of a year. The product was sold through its Amazon account and an Amazon clearance account selling Fortem's returns. One other seller sold 17 units of the organizer in that period, and Amazon private-label employees were able to access data on Fortem for the purposes of creating an Amazon private-label version.
Mr. Bezos faced detailed questions about how it defines aggregate data. "Aggregate data would be more than one seller," said Mr. Bezos. When asked if Amazon allows the use of aggregate data to inform private-label Amazon brands when there are only three sellers for a product, Mr. Bezos responded: "Yes, sir." Rep. Kelly Armstrong (R, N.D.) then asked if Amazon looks at aggregate data when there are only two sellers for a product. Mr. Bezos confirmed that it does.
On a few occasions, Mr. Bezos was unable to answer questions about how Amazon's site operates, including one instance when he wasn't sure whether a phone number is required to open a seller account.
Mr. Bezos broadly defended Amazon's business practices and noted the company's customer focus. He said the company has a team of more than 1,000 employees that monitor potential counterfeit products.
"The retail market we participate in is extraordinarily large and competitive," he said, addressing broader concerns about Amazon's power. "There is room in retail for multiple winners."
A number of lawmakers also asked specifically about a Wall Street Journal article last week detailing how Amazon's venture-capital fund had invested in startups and met with founders and entrepreneurs and appeared to use the investment and deal-making process to help develop competing products.
In some cases, Amazon's decision to launch a competing product devastated the business in which it invested. In other cases, it met with startups about potential takeovers, sought to understand how their technology works, then declined to invest and later introduced similar Amazon-branded products, according to some of the entrepreneurs and investors.
Rep. Ken Buck (R., Colo.) called the Journal's stories about Amazon's private-label practices and venture-capital arm troubling. He said one allegation in the Journal's reporting "sticks out in particular" and cited an example in the story about a startup called Vocalife.
"These allegations are serious especially because the size and scope of these practices couldn't happen without Amazon's monopolistic control of the marketplace," said Mr. Buck.
Answering questions from another lawmaker, Mr. Bezos said he was unfamiliar with the specifics about the lead example in the story, which dealt with a company called DefinedCrowd. He promised to provide more information to the committee.
"We are very concerned about this innovation kill zone that seems to be emerging," said Rep. Joe Neguse (D, Colo.), after asking Mr. Bezos about the story on Amazon's deal-making process.
Ryan Tracy contributed to this article.
Write to Dana Mattioli at firstname.lastname@example.org