House lawmakers investigating Amazon for antitrust violations demanded on Friday that Jeff Bezos, the company’s chief executive, agree to testify at an upcoming hearing or face a potential subpoena that would force him to appear.
The dramatic escalation between members of Congress and the e-commerce giant follows reports that Amazon employees tapped data from third-party sellers in its marketplace to make decisions about launching its own competing products, despite initially telling Democrats and Republicans it did not engage in such practices.
Lawmakers on the House’s top competition-focused panel specifically pointed to statements that Amazon made starting last July, when officials explicitly told Congress that “we do not use any seller data to compete with them.” Lawmakers raised the potential that Amazon might have committed perjury during its earlier testimony on Capitol Hill.
“In light of our ongoing investigation, recent public reporting, and Amazon’s prior testimony before the Committee, we expect you, as chief executive officer of Amazon, to testify before the committee,” said Rep. David Cicilline, D-R.I., the chairman of the antitrust subcommittee. He was joined by Reps. Jerrold Nadler, D-N.Y., the House Judiciary Committee’s Democratic chairman, and F. James Sensenbrenner Jr., R-Wis., the second most senior member of the House, indicating the early, wide support such a hearing has garnered in Congress.
“Although we expect that you will testify on a voluntary basis,” lawmakers continued, “we reserve the right to resort to compulsory process if necessary.”
In a tweet, Cicilline later added he is “considering whether a perjury referral is warranted,” citing federal law that makes it illegal to knowingly falsify evidence to Congress. “Powerful companies are not above the law,” he said.
Amazon did not respond immediately to a request for comment. Bezos owns The Washington Post.
The bipartisan nature of the ultimatum Friday only amplifies the political pressure on Bezos, whose appearance on Capitol Hill could evolve into a wide-ranging review of Amazon’s vast operation – from its interactions with rivals to the way it treats its workers. Similar congressional scrutiny has greeted Facebook chief executive Mark Zuckerberg and Google leader Sundar Pichai, whose inaugural appearances before Congress emboldened some lawmakers and regulators in their attempts to rein in the tech industry.
Members of Congress have been scrutinizing Amazon as part of a wide-ranging probe announced last year that has also explored whether Apple, Facebook and Google and other massive tech companies have become too big and powerful. The panel has issued wide-ranging requests for company records, including communications between Bezos and other Amazon executives. On Friday, though, House investigators said the company has not made “an adequate production in response to this request, and – seven months after the original request – significant gaps remain.”
Many shoppers think of Amazon as a store like most others, where it acquires and sells products on its own. But Amazon also has emerged as one of the world’s most powerful marketplaces, running an online bazaar of more than 2.5 million third-party sellers who hawk their products on its platform.
Those sellers sometimes compete with Amazon’s more than 100 private-label brands. The company’s private-label goods include everything from batteries to vitamin supplements and diapers to nicotine gum. To develop its products, Amazon has acknowledged drawing generally on sales data from goods on its site to help determine which markets to target.
Last month, though, the Wall Street Journal reported that Amazon used data from specific product sales from third-party sellers. That was something an Amazon lawyer testified to Congress that it specifically did not do. In subsequent statements, Amazon said it does not use sellers’ “individual data when we’re making decisions to launch private brand.”
Amazon doesn’t break out the sales of its third-party business in financial documents, but Bezos offered insight in his letter to shareholders in last year. In 2018, he wrote, third-party sellers accounted for $160 billion in merchandise sales on the site worldwide, or 58% of all physical merchandise sold. Bezos used the data to make the point that third-party sellers can effectively compete against Amazon in the company’s own marketplace.
“Third-party sellers are kicking our first party butt. Badly,” Bezos wrote.
There’s no doubt that Amazon’s massive marketplace has created opportunities for millions of small and midsize retailers globally. But that size has also given Amazon enormous clout because third-party sellers can’t reach the same size audience on rival platforms such as eBay and Etsy.
Some sellers have complained to Cicilline’s committee and to regulators that there have little alternative but to list their items on Amazon if they hope reach enough online shoppers to have a viable business. That provides Amazon the opportunity to undercut them on price, critics contend, or introduce a similar product based on the copious amount of data it collects.
(c) 2020, The Washington Post · Tony Romm, Jay Greene