Congress tells Amazon CEO Jeff Bezos to testify about private-label brands
Congress is demanding Amazon CEO Jeff Bezos testify about whether the company collects data on rival brands to inform its decisions when creating competitive private-label products.
On Friday, Rep. David Cicilline wrote a letter to Amazon requesting more information about its business practices, following a Wall Street Journal report that alleged the company leveraged competitors' sales information to gain an edge on other sellers. "[Amazon] exploited its role as the largest online marketplace in the U.S. to appropriate the sensitive commercial data," the letter said.
Lawmakers are looking into whether an Amazon official misled a House subcommittee in testimony last year. In July, Nate Sutton, Amazon's associate general counsel, told representatives that Amazon does not use proprietary seller data to compete with them.
However, this week, The Wall Street Journal reported that Amazon executives, in charge of standing up new product lines, accessed valuable data from rivals to guide their strategy. The report alleged that executives played fast and loose with the rules, deploying a tactic they called "going over the fence." That was a euphemism for a technical workaround of company policies to build reports on competing products.
Since Amazon controls its e-commerce platform, it gives the company clear visibility into sales statistics on potential rivals, which could factor into its plans for private-label production.
Amazon was not immediately available for comment about the letter from Congress.
For Amazon, lawmakers have been looking into the private-label tactics. Lawmakers are also concerned with how Amazon promotes private-label brands on its website, giving them higher visibility than rival brands. There have been instances where Amazon showed consumers links to its products while they were browsing competitors.
Amazon has defended its private-label strategy, saying these products account for only 1 percent of sales on its site.
The letter from Congress requested that Bezos testify on these issues before the antitrust subcommittee. Bezos could be compelled to testify, if he does not attend voluntarily, the letter said. Six other representatives signed the letter.