News, Culture & Society

California investigators launch probe into Amazon’s business practices

California investigators have launched a probe into Amazon’s business practices – one day after sources said the retail giant is facing charges from the European Union’s antitrust watchdog over its treatment of third-party sellers.

A state inquiry is now under way into the e-commerce firm including how Amazon treats sellers in its online marketplace, and its practices for selling its own products in competition with third-party sellers, sources told The Wall Street Journal. 

The tech giant is coming under increasing scrutiny as allegations mount that it has been using data from its third-party sellers to make its own similar, private-label products to compete against them.  

On Thursday, it was reported that the European Commission plans to file charges against Amazon as early as next week over these claims following a two-year probe and after an exposé by the Journal back in April found staff were using seller information to develop competing goods.  

Amazon is already facing antitrust probes by the Justice Department and the Federal Trade Commission, and the House Judiciary Committee is carrying out an antitrust investigation into it and several other tech firms.

Meanwhile the EU is also investigating whether Amazon broke competition laws.  

California investigators have launched a probe into Amazon’s business practices – one day after sources said the retail giant is facing charges from the European Union ‘s antitrust watchdog over its treatment of third-party sellers

The California investigation comes as part of a state inquiry into the tech giant, sources told the Journal.  

Neither Amazon nor the state have disclosed an antitrust investigation is ongoing – something that Silicon Valley peers Google and Apple have both publicly confirmed about their own investigations by US officials. 

A spokesperson for Amazon declined to comment on the reports when contacted by DailyMail.com but pointed out that the company’s private-label products make up only around 1 percent of its total retail sales.   

California Attorney General Xavier Becerra’s office told DailyMail.com they could not comment on any pending or potential investigation. 

Becerra has spoken publicly in the past about Amazon coming under scrutiny though he has stopped short of ever confirming an investigation into the tech giant.  

‘It would be hard to believe that you’re not going to look at a company like Amazon, given how pervasive it is,’ he said in December. 

‘Are they using all of this data in ways that allow them to essentially kill real competition?’  

News of the investigation marks yet another blow for Amazon founder Jeff Bezos and the company, as it faces a growing number of inquiries both on US soil and overseas.

Amazon boss Jeff Bezos. A state inquiry is now under way into the e-commerce firm including how Amazon treats sellers in its online marketplace, and its practices for selling its own products in competition with third-party sellers, sources told The Wall Street Journal

Amazon boss Jeff Bezos. A state inquiry is now under way into the e-commerce firm including how Amazon treats sellers in its online marketplace, and its practices for selling its own products in competition with third-party sellers, sources told The Wall Street Journal

Reports surfaced this week that the European Commission, the EU’s top antitrust regulator, plans to file charges against Amazon as early as next week or the following week related to allegations Amazon has been using information from its third-party sellers to make its own competing, private-label products.  

The EU charges, called a statement of objections, will focus on Amazon’s dual role as both a seller of its own products and an operator of the marketplace, sources told The Wall Street Journal.

One source told the Journal the case team has been drafting the charge sheet for a number of months. 

Amazon could be slapped with a fine of up to 10 percent of its annual revenue if it is found to have violated EU antitrust laws.  

The charges are a culmination of a two-year probe, after EU Competition Commissioner Margrethe Vestager launched an investigation into Amazon’s alleged mistreatment of sellers on its platform back in 2018.  

Vestager questioned third-party sellers on the platform to determine whether Amazon used data from the merchants to its own advantage.

Allegations resurfaced this April, when a Journal investigation found Amazon employees had taken seller information to inform the company’s own private-label product strategy.

California Attorney General Xavier Becerra's (pictured) office did not immediately respond to DailyMail.com's request for comment but he has spoken publicly in the past about Amazon coming under scrutiny

California Attorney General Xavier Becerra’s (pictured) office did not immediately respond to DailyMail.com’s request for comment but he has spoken publicly in the past about Amazon coming under scrutiny

On Thursday, it was reported that the European Commission plans to file charges against Amazon following a two-year probe, after EU Competition Commissioner Margrethe Vestager (pictured) launched an investigation into Amazon's alleged mistreatment of sellers on its platform back in 2018

On Thursday, it was reported that the European Commission plans to file charges against Amazon following a two-year probe, after EU Competition Commissioner Margrethe Vestager (pictured) launched an investigation into Amazon’s alleged mistreatment of sellers on its platform back in 2018

The investigation, which involved interviews with more than 20 former employees of its private-label business and access to internal documents, found that information was used to help Amazon decide how to price items, which features to copy, or whether to enter a product category at all.

In one case, staff said they accessed data about a popular car-trunk organizer from a third-party seller including total sales, marketing and shipping costs, and how much Amazon made on each sale, before introducing its own highly similar, competing product.  

Amazon has long insisted it does not use information from its third-party sellers when making its own products. 

It has denied accusations it abuses its power and said many retailers sell both their own-label goods and competitors’ goods. 

Following the Journal investigation, the US House of Representatives Judiciary Committee last month called on Bezos to testify to the panel about the allegations.

In a letter to Bezos signed by Democratic and Republican members of the panel, the lawmakers questioned whether Amazon committed perjury by denying using third-party sellers’ data to make its own products in sworn testimony to Congress last year.

Amazon employees used information gleaned from a top-selling third-party vendor's car-trunk organizer (pictured), including total sales and how much the seller paid Amazon for marketing and shipping costs on each sale

A similar product was later rolled out under an Amazon private label (pictured)

A Journal investigation in April found Amazon employees used information gleaned from a top-selling third-party vendor’s car-trunk organizer (left) to make its own competing version (right)

‘If the reporting in the Wall Street Journal article is accurate, then statements Amazon made to the committee about the company’s business practices appear to be misleading, and possibly criminally false or perjurious,’ the letter read. 

At issue are statements made by Amazon’s associate general counsel, Nate Sutton, who denied under oath in July and in written testimony that Amazon carried out such practice.

The lawmakers threatened to issue a subpoena to summon Bezos if he does not attend voluntarily. 

‘We expect you, as Chief Executive Officer of Amazon, to testify before the Committee,’ the letter said. 

‘Although we expect that you will testify on a voluntary basis, we reserve the right to resort to compulsory process if necessary.’

Amazon said it would ‘make the appropriate executive available’, but has not provided more details over when Bezos will testify. 

The company also said it was launching its own internal investigation and insisted any employees using seller information to make private-label decisions would be in violation of company policies.  

Amazon's associate general counsel, Nate Sutton, denied under oath in July and in written testimony that Amazon carried out such practice

Amazon’s associate general counsel, Nate Sutton, denied under oath in July and in written testimony that Amazon carried out such practice

An Amazon fulfillment center. Amazon could be slapped with a fine of up to 10 percent of its annual revenue if it is found to have violated EU antitrust law

An Amazon fulfillment center. Amazon could be slapped with a fine of up to 10 percent of its annual revenue if it is found to have violated EU antitrust law

Read more at DailyMail.co.uk



Find local lawyers and law firms at USAttorneys.com