Jeff Bezos faces subpoena as Congress probes whether Amazon committed PERJURY by denying using third-party sellers' data to make its own products
The U.S. House of Representatives Judiciary Committee on Friday called on Amazon.com founder Jeff Bezos to testify to the panel about allegations that the online retailer uses data from its own third-party sellers to create competing products.
In a letter to Bezos signed by Democratic and Republican members of the panel, the lawmakers referred to an April 23 Wall Street Journal story about Amazon, saying, '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.'
A spokesman for Amazon said the company had no immediate comment.
At issue are statements by Amazon's associate general counsel, Nate Sutton, who denied under oath last July and in written testimony that Amazon used sensitive business information from independent sellers on its platform to develop products for Amazon to sell.
The Wall Street Journal reported last month that Amazon did indeed use the data. It cited 20 former employees of Amazon's private label business.
The letter was signed by Representatives Jerrold Nadler, chair of the Judiciary Committee; David Cicilline, chair of the antitrust subcommittee, Joe Neguse and Pramila Jayapal, all of whom are Democrats.
Summons: Lawmakers from both parties have told Jeff Bezos to appear in front of Congress
It was also signed by Republican Representatives James Sensenbrenner, Ken Buck and Matt Gaetz.
In the letter, the lawmakers raised the possibility of a subpoena.
'We expect you, as Chief Executive Officer of Amazon, to testify before the Committee,' it said. 'Although we expect that you will testify on a voluntary basis, we reserve the right to resort to compulsory process if necessary.'
The European Commission has also opened a probe into the practice of Amazon using data from its merchants to compete.
The committee also said in the letter that Amazon had balked at providing information about independent merchants.
Russell Dye, a spokesman for the top Republican on the committee, Representative Jim Jordan, took issue with the letter.
'We wonder what Judiciary Democrats' true motivations are. Earlier this year, they said companies like Amazon should not exist and should be broken up simply because they are large successful businesses,' he said.
The web giant is already facing calls for a Justice Department probe from Missouri Republican senator Josh Hawley, who has accused the online retailer of building a monopoly using 'predatory data practices' on vendors using its platform.
Hawley, who has been critical of big tech platforms like Alphabet's Google, expressed concern about a report in the Wall Street Journal that Amazon collects data about products sold by third parties on its site in order to create Amazon branded copies, saying it went far beyond what brick and mortar stores are able to do.
'I write to ask you to open a criminal antitrust investigation of Amazon. Recent reports suggest that Amazon has engaged in predatory and exclusionary data practices to build and maintain a monopoly,' Hawley wrote in a letter to Attorney General William Barr last month.
The big four tech platforms - Google, Apple, Amazon and Facebook - are under investigation by the House Judiciary Committee and Justice Department while the Federal Trade Commission is probing Facebook and Amazon.
Meanwhile, groups of state attorneys general are looking at Facebook and Google.
Hawley noted that the practice was 'especially concerning' given that many small retailers have been forced to temporarily shutter their stores and have become more reliant on online sales because of public health measures ordered to slow the spread of the new coronavirus.
Amazon said in a statement that it 'strictly prohibit(s) employees from using non-public, seller-specific data to determine which private label products to launch'.
'While we don't believe these claims made by the Wall Street Journal are accurate, we take these allegations very seriously and have launched an internal investigation,' an Amazon spokesperson said in an email statement.
A Justice Department spokesman said that it had received the letter and was reviewing it.
The Wall Street Journal report published last week was based on claims from former employees and internal documents.
The unauthorized practice of using third-party seller information to design and sell competing items goes against Amazon's policies and even conflicts with what the company has told Congress.
'We don't use individual seller data directly to compete' with businesses on the company's platform, Nate Sutton, an Amazon associate general counsel told lawmakers in July.
An Amazon spokesperson denied the allegations in the WSJ report in a statement to DailyMail.com last week, saying: 'We strictly prohibit employees from using non-public, seller-specific data to determine which private label products to launch.'
The spokesperson said that while the company does not believe the claims are accurate, 'we take these allegations very seriously and have launched an internal investigation.'
They added that it is 'incorrect to say that Amazon was intentionally misleading in our testimony,' to Congress.
Republican Missouri Senator Josh Hawley (pictured) expressed concern over Amazon's alleged improper use of third-party seller data in a letter to the Justice Department on Tuesday
The practice of using seller data goes against what the company has told Congress. 'We don't use individual seller data directly to compete' with businesses on the company's platform, Nate Sutton, an Amazon associate general counsel told lawmakers in July
Amazon's private label business includes 45 brands that sell about 243,000 products, from AmazonBasics batteries to Stone & Beam furniture.
Those products, the company says, account for only 1 percent of its $158billion in annual retail sales.
That total doesn't include Amazon devices such as the Echo personal assistant speaker, Kindle e-reader and Ring doorbell camera.
More than 20 former employees from Amazon's private-label business have come forward accusing the retailer of using the third party data, which also was mentioned internal company documents, reports the Journal.
Such information can be used to help decide what features to copy off a rival's product, or whether it is even worth entering the segment.
The data also may help in determining a house-brand product's earning potential, say people who are familiar with the practice, including a current employee and former ones.
In one example, employees allegedly used information gleaned from a top-selling third-party vendor's car-trunk organizer, including total sales and how much the seller paid Amazon for marketing and shipping costs on each sale.
A similar product was later rolled out under an Amazon private label.
Amazon employees used information gleaned from a top-selling third-party vendor's car-trunk organizer (pictured), including total sales and how much the seller paid Amazon for marketing and shipping costs on each sale
'Like other retailers, we look at sales and store data to provide our customers with the best possible experience,' the company said in a written statement.
'However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.'
Amazon last year came under investigation by the European Union's top antitrust enforcer, who said it was looking into the company's dual role of selling house brand products and operating a third-party marketplace at the same time.
The investigation was specifically looking into whether Amazon was gaining a competitive advantage.
Congressional members, along with Justice Department and Federal Trade Commission officials, are also conducting antitrust investigations of Amazon and other large technology firms.
Amazon specifically is being looked at whether it is using its size and platform as an advantage over vendors on its site. The company has disputed the claim.
Amazon says it has rules restricting house-brand executives from tapping its independent seller data. But former employees and a current worker told the Journal that such rules aren't uniformly enforced.
The former employees said there were ways of getting around the rules, and that it was even common to discuss using the data at meetings they attended.
'We knew we shouldn't,' said a former staffer who had access to the data. 'But at the same time, we are making Amazon branded products, and we want them to sell.'
Some executives reportedly had access to data containing proprietary information that they used to research best-selling items they might want to compete against, including on individual sellers on Amazon's website.
If they were denied access, the executives could request a report with the information from the company's analysts, say the former workers.
Other times, aggregated data from an individual seller could be used, the former employees say. Aggregated data, according to Amazon, is derived from two or more sellers. Because of the scale of Amazon's marketplace, some products may have multiple vendors.
Amazon said employees can view data collected when a product has only one seller, and the retailer sells returned or damaged versions of the product on clearance.
Jeff Bezos faces subpoena as Congress probes whether Amazon committed PERJURY by denying using third-party sellers' data to make its own products
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