Amazon Reportedly Used Third-Party Seller Data to Research and Launch Its Own Products
Amazon has long said that it doesn't use its advantage as the operator of a massive marketplace to compete with third-party sellers on that platform. But a new investigation by the Wall Street Journal found Amazon employees did use seller data when considering new private-label products.
Interviews with 20 former employees of Amazon's private-label team and internal documents revealed how the company used seller data to launch new products and inform pricing and other decisions. The report is inconsistent with statements that Amazon's attorney, Nate Sutton, made to Congress during an antitrust hearing last summer.
The findings: Employees responsible for getting new Amazon-branded products off the ground used seller information about pricing, popularity, and profits to inform their decisions, despite a policy forbidding the practice. In one instance, Amazon employees conducted a thorough report on a popular trunk organizer sold by a third-party vendor before launching a competing product in the same category.
What Amazon says: It's common practice for retailers to use information about which items are doing well in stores to launch private-label products. It's the reason you see Kroger-branded tissue next to the Kleenex. Amazon says its behavior is no different, though the company does have access to more vast and granular data than traditional retailers. Amazon told the Journal, "we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch," and said it is conducting an investigation.
Background: Amazon's role as a marketplace operator and seller in that marketplace has invited scrutiny from antitrust regulators in the U.S. and abroad. The subject came up during Sutton's testimony before Congress. At the time, Sutton said Amazon does not use proprietary data from individual sellers but does study aggregated data on products with more than one seller.
"We use data to serve our customers," Sutton said. "We don't use individual seller data directly to compete with them."
In context: The regulatory landscape for Big Tech has changed dramatically over the past few weeks because of the coronavirus crisis. Governments that once sought to bring down the hammer on big tech companies are now seeking their help in response to the pandemic. Though a variety of antitrust inquiries at the federal and state levels were underway before the outbreak, it isn't clear whether they will regain momentum going forward.