Amazon is one of the world’s most powerful retailers. If you own a small business and want to scale up and offer your goods and services to the wider world, Amazon is the retail partner of choice. There’s only one problem: if you’re too successful, Amazon will use the data it’s collected about your business and launch its own version.
Amazon has said it has a policy against using information from its third party sellers to build its own business. In an antitrust hearing before the House Judiciary Committee on Wednesday, however, Amazon CEO Jeff Bezo admitted he couldn’t guarantee that policy had never been violated.
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“We’ve heard so many heartbreaking stories of small businesses who’ve sunk significant time and resources into building a business and selling on Amazon, only to have Amazon poach their best selling items and drive them out of business,” Rep. David Cicilline [D-RI] said.
In April, The Wall Street Journal reported that Amazon routinely uses data from its third party sellers when building its private label brands. “Such information can help Amazon decide how to price an item, which features to copy or whether to enter a product segment based on its earning potential, according to people familiar with the practice, including a current employee and some former employees who participated in it,” The Wall Street Journal said.
Rep. Pramila Jayapal [D-WA] grilled Bezos about the same practice, directly asking Bezos if Amazon had ever used the data of its partners when making business decisions.
“I can tell you we have a policy against using seller-specific data to aid our private label business but I can’t guarantee you that that policy has never been violated,” Bezos said.
Cicilline referenced this exchange and pressed Bezos further on it. “You said you can’t guarantee that the policy of not sharing third party sellers data with Amazon’s own line hasn’t been violated,” Cicilline said. “You couldn’t be certain. Can you please explain that to me? Can you list examples of when that policy has been violated? Shouldn’t third parties know for sure that data isn’t being shared with its competitors?”
“We’re investigating that. I don’t want to go beyond that,” Bezos said
According to Bezos, Amazon started selling third party products because “we were convinced it would be better for the consumer. I think we were right.”
“How is that possible when you compete directly with third party sellers with your own products that undercut the competition?” Cicilline pressed. “Isn’t it an inherent conflict of interest for Amazon to produce and sell products on its platform that compete directly with third party sellers particularly when you, Amazon, set the rules of the game?”
“I don’t believe it is,” Bezos said. “Consumers are the ones making the decisions.”
