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Lawmakers slam Amazon for how it treats competing merchants

Lawmakers slam Amazon for how it treats competing merchants
[Photo: Wikipedia]

Temperatures hit nearly 100 degrees in Washington, D.C. on Tuesday. But it seemed even hotter inside a House of Representatives Judiciary Committee hearing where lawmakers grilled Apple, Facebook, Google, and especially Amazon on whether they are in effect monopolies that stifle competition and hurt consumers. (Many of the questions echoed those suggested by conservative and liberal experts to Fast Company before the hearings.)

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The offensive on Amazon began with a line of attack from Democrat Pramila Jayapal, who represents Amazon’s hometown of Seattle. “When people sell products on your site, do you track what products are most successful, and do you sometimes create a product to compete with that product?” she asked the company’s associate general counsel Nate Sutton.

He claimed that Amazon doesn’t use that data when trying to decide what house brands to offer, but it’s understandable why Jayapal would be suspicious. Since staring its private-label program in 2007, Amazon has launched over 100 brands.

But it has not, so far, taken the retail sector by storm. In fact, Amazon’s house brands, like AmazonBasics, account for just a tiny portion of its sales, according to a study by Marketplace Pulse. (The fear, of course, is that Amazon is simply playing a long game to eventual dominance.)

Still the hammering continued. “You are selling your own products on a platform that you control, and they are competing with products in the marketplace from other sellers,” said David Cicilline (D-RI). He pushed Sutton on whether Amazon is using its data and even manipulating algorithms to favor its brands, adding, “I remind you sir, you are under oath.”

(Cicilline also referenced journalist Brad Stone’s 2013 book, The Everything Store, which quoted CEO Jeff Bezos as saying that Amazon should approach small publishers, “the way a cheetah would pursue a sickly gazelle.”)

Others pressed Amazon on the advertising it sells so that vendors appear more prominently on the site. Val Butler Demings (D-FL) quoted directly from a July 15 Bloomberg article, stating, “Amazon’s advertising is better understood as an additional tax the company imposes on the millions of businesses that sell through its vast digital mall.”

Sutton called advertising “an optional service that is not necessary,” and countered that most sellers don’t use ads.

And Lucy McBath (D-GA) asked Sutton if Amazon gives special treatment to vendors that prefer its order fulfillment services to other service providers. He said the company does not. (As an Amazon Prime member, I confess that whenever possible I pick a product delivered by Amazon, so I can get my free two-day delivery.)

Republicans were largely absent from this discussion–although some, like Kelly Armstrong (R-ND) pushed other companies, for instance, asking to what extent Facebook buys smaller firms to squelch competition.

Gregory Steube (R-FL) asked what percentage of total U.S. retail (online and in-store) sales Amazon accounts for. Four percent, said Sutton, saying that Walmart is “two to three times larger than we are.”

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