How Amazon’s Treatment of Third-Party Sellers Became an Antitrust Target in California and Abroad

Monica Nickelsburg, GeekWire
Monica Nickelsburg is GeekWire’s Civic Editor, covering technology-driven solutions to urban challenges and the intersection of tech and politics. Before joining GeekWire, she worked for The Week, Forbes, and NBC. Monica holds a BA in journalism and history from New York University. Follow her @mnickelsburg and read her stories on GeekWire.
How Amazon’s Treatment of Third-Party Sellers Became an Antitrust Target in California and Abroad

Antitrust scrutiny of Amazon is intensifying as new details reveal how the company treats third-party sellers in its marketplace. Regulators in California, Washington state, and Europe are reportedly homing in on Amazon amid reports that the company uses its colossal size to compete directly with other retailers on Amazon.com.

The latest inquiries build on other investigations into Amazon's business practices, signaling that the company may have grown too powerful to escape regulatory oversight.


How did Amazon get here? By doing the same thing retailers have done for decades — with a big technology boost.

Amazon has been developing its own private label products for years, most visibly under the AmazonBasics name, and marketing them alongside products from third-party sellers. It's the same tactic deployed by big box stores and the reason you'll see Kroger-branded tissue sold for $1 less than the Kleenex brand on the shelf next to it.

The difference is the powerful technology that allows Amazon to supercharge insights about shoppers and sellers. Amazon captures 38.7% of online retail sales in the U.S., according to the latest data from eMarketer, and knows how often customers search for specific items and how well products are selling. Amazon also owns an increasingly large share of distribution for third-party retailers by offering logistics and delivery services.

Those advantages are drawing scrutiny from regulators in two states. California asked Amazon about whether it uses data on third-party sellers to inform its private label strategy, according to The Wall Street Journal.

Meanwhile, Amazon's home state, Washington, is looking into whether Amazon makes it difficult for retailers to sell their products on other websites, the New York Times reports. That question is the subject of several proposed class-action lawsuits over a now-defunct Amazon policy that kept third-party sellers from offering their products at a lower price than they did on Amazon.com.

The European Union is poised to bring charges against Amazon for anti-competitive behavior because of the company's private label strategy, according to the newspaper.

Amazon declined to comment on the latest developments but has defended its marketplace practices as industry standard in the past.

The Journal previously reported on Amazon employees using third-party seller data to develop in-house products that compete with those sellers. An Amazon lawyer told Congress last year, "We don't use individual seller data directly to compete with them." However, the newspaper's investigation revealed ways that even aggregated data could provide insights into top-selling third-party products in many instances.

Amazon is also under scrutiny by U.S. federal officials.The House antitrust subcommittee has been investigating Amazon's marketplace practices for months. After reports cast doubt on an Amazon attorney's testimony from last year, the subcommittee asked Jeff Bezos to testify. Amazon initially appeared reluctant but agreed to send Bezos "at a hearing with other CEOS this summer" in a letter to lawmakers reviewed by The New York Times.

The subcommittee is asking the CEOs of Amazon, Alphabet, Apple, and Facebook to testify this summer as part of a probe into big tech. The inquiry could result in a new approach to regulating competition in the U.S. The current regulatory framework has allowed the nation's largest technology companies to accumulate incredible wealth and power. That has progressive politicians and economists rethinking how the U.S. regulates competition.

This story first appeared on GeekWire.

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Office Hours: Apex Founder Ian Cinnamon on Why LA Is the Aerospace Capital of the World

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

​Ian Cinnamon
Ian Cinnamon

On this episode of Office Hours, Apex founder and CEO Ian Cinnamon discusses the importance of investing in space exploration and shares his thoughts on the evolving space ecosystem in Los Angeles.


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Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

Raises
Image by Joshua Letona

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Decerry Donato

Decerry Donato is a reporter at dot.LA. Prior to that, she was an editorial fellow at the company. Decerry received her bachelor's degree in literary journalism from the University of California, Irvine. She continues to write stories to inform the community about issues or events that take place in the L.A. area. On the weekends, she can be found hiking in the Angeles National forest or sifting through racks at your local thrift store.

McKinsey & Company Launches InLA Accelerator To Help Underrepresented Founders Tackle Startup Challenges
InLA

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“This effort is something that the firm has been really excited about for a long time,” Engagement Manager Elkhyn Rivas Rodriguez said. “There's obviously a meaningful and growing startup community out here and just from a diversity standpoint, LA is incredibly diverse and multi-ethnic and multicultural. So we think that there will be a really great pool of potential companies to partner with.”

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