The U.S. House of Representatives Judiciary Committee on Friday called on Amazon.com founder Jeff Bezos to testify to the panel about allegations that the online retailer uses data from its own third-party sellers to create competing products.
In a letter to Bezos signed by Democratic and Republican members of the panel, the lawmakers referred to an April 23 Wall Street Journal story about Amazon, saying, ‘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.’
A spokesman for Amazon said the company had no immediate comment.
Summons: Lawmakers from both parties have told Jeff Bezos to appear in front of Congress
Thousands of Amazon warehouse staff strike over coronavirus conditions
Amazon.com Inc has told staff whose job can be done from home that they can do so until at least October 2 while thousands who must continue reporting to work at warehouses stage a sick-out to protest unsanitary conditions.
‘Employees who work in a role that can effectively be done from home are welcome to do so until at least October 2,’ an Amazon spokesman said in an emailed statement on Friday, adding it was applicable to such roles globally.
The statement did not specify how much of the company’s overall workforce that covered and which roles.
Amazon employees at a fulfillment center in Staten Island, New York, are seen above during a protest on March 30. Thousands of warehouse staff are expected to take part in a work stoppage on Friday to protest conditions that they say put them in danger of getting sick
It said the company is investing funds in safety measures for employees who wish to come to the office ‘through physical distancing, deep cleaning, temperature checks, and the availability of face coverings and hand sanitizer.’
Essential workers will strike nationwide on May Day, which falls on Friday, to demand safer conditions during the coronavirus outbreak, while other groups plan rallies against tight stay-at-home orders they say are crippling the US economy.
Organizers say employees of Amazon, Whole Foods, Target, Fedex and other companies have become the unexpected frontline workers of the pandemic.
At least two Whole Foods employees have died of COVID-19 and some 263 workers have tested positive for coronavirus.
Whole Foods is owned by Amazon.
A social media page posted by workers at Target claims that employees from 100 of the company’s locations nationwide will participate in Friday’s work stoppage.
Employees will walk off the job or call out sick Friday on International Workers’ Day in cities across the United States to demand unpaid time off work, hazard pay, sick leave, protective gear and cleaning supplies.
They say flawed policies by employers caused some of their co-workers to contract COVID-19.
‘This is a matter of life or death,’ Christian Smalls, a former Amazon employee who was fired from his job at a Staten Island warehouse in March after he helped organize a demonstration, told The Washington Post.
‘The virus is killing some of our employees.’
Smalls, who is now helping to organize Friday’s walk-out, told the Post that he expects the work stoppage to spread to about 25 warehouses.
He told the Post he thinks thousands will participate.
Amazon employees will be joined by workers from other companies, including Instacart.
‘For these reasons, we are engaging in a mass sickout and exercising our right to refuse unsafe work conditions,’ according to a statement by Whole Foods workers.
Demonstrations are planned in New York, Washington, Los Angeles and other cities.
Protesters are asking consumers not to cross picket lines or use those companies’ services for the day in solidarity.
At issue are statements by Amazon’s associate general counsel, Nate Sutton, who denied under oath last July and in written testimony that Amazon used sensitive business information from independent sellers on its platform to develop products for Amazon to sell.
The Wall Street Journal reported last month that Amazon did indeed use the data. It cited 20 former employees of Amazon’s private label business.
The letter was signed by Representatives Jerrold Nadler, chair of the Judiciary Committee; David Cicilline, chair of the antitrust subcommittee, Joe Neguse and Pramila Jayapal, all of whom are Democrats.
It was also signed by Republican Representatives James Sensenbrenner, Ken Buck and Matt Gaetz.
In the letter, the lawmakers raised the possibility of a subpoena.
‘We expect you, as Chief Executive Officer of Amazon, to testify before the Committee,’ it said. ‘Although we expect that you will testify on a voluntary basis, we reserve the right to resort to compulsory process if necessary.’
The European Commission has also opened a probe into the practice of Amazon using data from its merchants to compete.
The committee also said in the letter that Amazon had balked at providing information about independent merchants.
Russell Dye, a spokesman for the top Republican on the committee, Representative Jim Jordan, took issue with the letter.
‘We wonder what Judiciary Democrats’ true motivations are. Earlier this year, they said companies like Amazon should not exist and should be broken up simply because they are large successful businesses,’ he said.
The web giant is already facing calls for a Justice Department probe from Missouri Republican senator Josh Hawley, who has accused the online retailer of building a monopoly using ‘predatory data practices’ on vendors using its platform.
Hawley, who has been critical of big tech platforms like Alphabet’s Google, expressed concern about a report in the Wall Street Journal that Amazon collects data about products sold by third parties on its site in order to create Amazon branded copies, saying it went far beyond what brick and mortar stores are able to do.
‘I write to ask you to open a criminal antitrust investigation of Amazon. Recent reports suggest that Amazon has engaged in predatory and exclusionary data practices to build and maintain a monopoly,’ Hawley wrote in a letter to Attorney General William Barr last month.
The big four tech platforms – Google, Apple, Amazon and Facebook – are under investigation by the House Judiciary Committee and Justice Department while the Federal Trade Commission is probing Facebook and Amazon.
Meanwhile, groups of state attorneys general are looking at Facebook and Google.
Hawley noted that the practice was ‘especially concerning’ given that many small retailers have been forced to temporarily shutter their stores and have become more reliant on online sales because of public health measures ordered to slow the spread of the new coronavirus.
Amazon said in a statement that it ‘strictly prohibit(s) employees from using non-public, seller-specific data to determine which private label products to launch’.
‘While we don’t believe these claims made by the Wall Street Journal are accurate, we take these allegations very seriously and have launched an internal investigation,’ an Amazon spokesperson said in an email statement.
A Justice Department spokesman said that it had received the letter and was reviewing it.
The Wall Street Journal report published last week was based on claims from former employees and internal documents.
The unauthorized practice of using third-party seller information to design and sell competing items goes against Amazon’s policies and even conflicts with what the company has told Congress.
‘We don’t use individual seller data directly to compete’ with businesses on the company’s platform, Nate Sutton, an Amazon associate general counsel told lawmakers in July.
An Amazon spokesperson denied the allegations in the WSJ report in a statement to DailyMail.com last week, saying: ‘We strictly prohibit employees from using non-public, seller-specific data to determine which private label products to launch.’
The spokesperson said that while the company does not believe the claims are accurate, ‘we take these allegations very seriously and have launched an internal investigation.’
They added that it is ‘incorrect to say that Amazon was intentionally misleading in our testimony,’ to Congress.
Republican Missouri Senator Josh Hawley (pictured) expressed concern over Amazon’s alleged improper use of third-party seller data in a letter to the Justice Department on Tuesday
The practice of using seller data goes against what the company has told Congress. ‘We don’t use individual seller data directly to compete’ with businesses on the company’s platform, Nate Sutton, an Amazon associate general counsel told lawmakers in July
Amazon’s private label business includes 45 brands that sell about 243,000 products, from AmazonBasics batteries to Stone & Beam furniture.
Those products, the company says, account for only 1 percent of its $158billion in annual retail sales.
That total doesn’t include Amazon devices such as the Echo personal assistant speaker, Kindle e-reader and Ring doorbell camera.
More than 20 former employees from Amazon’s private-label business have come forward accusing the retailer of using the third party data, which also was mentioned internal company documents, reports the Journal.
Such information can be used to help decide what features to copy off a rival’s product, or whether it is even worth entering the segment.
The data also may help in determining a house-brand product’s earning potential, say people who are familiar with the practice, including a current employee and former ones.
In one example, employees allegedly used information gleaned from a top-selling third-party vendor’s car-trunk organizer, 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.
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
‘Like other retailers, we look at sales and store data to provide our customers with the best possible experience,’ the company said in a written statement.
‘However, we strictly prohibit our employees from using nonpublic, seller-specific data to determine which private label products to launch.’
Amazon last year came under investigation by the European Union’s top antitrust enforcer, who said it was looking into the company’s dual role of selling house brand products and operating a third-party marketplace at the same time.
The investigation was specifically looking into whether Amazon was gaining a competitive advantage.
Congressional members, along with Justice Department and Federal Trade Commission officials, are also conducting antitrust investigations of Amazon and other large technology firms.
Amazon specifically is being looked at whether it is using its size and platform as an advantage over vendors on its site. The company has disputed the claim.
Amazon says it has rules restricting house-brand executives from tapping its independent seller data. But former employees and a current worker told the Journal that such rules aren’t uniformly enforced.
The former employees said there were ways of getting around the rules, and that it was even common to discuss using the data at meetings they attended.
‘We knew we shouldn’t,’ said a former staffer who had access to the data. ‘But at the same time, we are making Amazon branded products, and we want them to sell.’
Some executives reportedly had access to data containing proprietary information that they used to research best-selling items they might want to compete against, including on individual sellers on Amazon’s website.
If they were denied access, the executives could request a report with the information from the company’s analysts, say the former workers.
Other times, aggregated data from an individual seller could be used, the former employees say. Aggregated data, according to Amazon, is derived from two or more sellers. Because of the scale of Amazon’s marketplace, some products may have multiple vendors.
Amazon said employees can view data collected when a product has only one seller, and the retailer sells returned or damaged versions of the product on clearance.
Jeff Bezos says Amazon could LOSE money this quarter as he commits to spending $4 billion on coronavirus-related costs and tells shareholders ‘you may want to take a seat’
Amazon on Thursday warned that it could post a loss in the second quarter as it tacked on about $4 billion in costs related to the coronavirus pandemic, sending its shares down 5 percent in after-hours trading.
For the quarter ended in March, Amazon’s revenue rose by 26 percent from last year, to $75.45 billion, as the retail giant recorded a surge in demand for online orders of essential goods during pandemic.
However, profits were down 30 percent from the same period last year amid higher spending, with earnings per share of $5.01 missing Wall Street expectations of $6.25 per share.
The e-commerce giant has been spending heavily to keep up with a surge in online orders. Amazon had earlier said it would hire about 175,000 workers and raise wages by $2 for hourly workers as well as overtime pay, which would increase expenses by nearly $700 million.
Two people wearing masks walk near an Amazon Go store on Thursday in Seattle. For the quarter ended in March, Amazon’s revenue rose by 26 percent from last year, to $75.45 billion, as the retail giant recorded a surge in demand for essential goods in the pandemic
‘If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,’ CEO Jeff Bezos said in a press release.
‘Under normal circumstances, in this coming Q2, we’d expect to make some $4 billion or more in operating profit,’ Bezos continued.
‘But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 billion, and perhaps a bit more, on COVID-related expenses getting products to customers and keeping employees safe.’
Amazon forecast operating income in the range of a loss of $1.5 billion and profit of $1.5 billion for the second quarter. Analysts were expecting operating income of $3.80 billion, according to research firm FactSet.
The company forecast net sales in the range of $75 billion to $81 billion for the second quarter. Analysts were expecting revenue of $77.99 billion, according to IBES data from Refinitiv.
Net sales rose to $75.45 billion from $59.70 billion in the first quarter ended March 31, as the retail giant recorded a surge in demand for online orders of essential goods during the COVID-19 pandemic.
Analysts had expected revenue of $73.61 billion, according to IBES data from Refinitiv.
If comes after a group of activists vandalized the road outside Bezos’s $23 million home in Washington DC on Wednesday, demanding better coronavirus protections for Amazon workers.
Protesters scrawled ‘Protect Amazon Workers’ in giant red, yellow and white paint in the middle of a street, with the hashtag ‘#ForUsNotAmazon’ alongside.
The huge graffiti, which stretched across the width of the road, depicted Amazon employees wearing protective face masks.
It took around an hour to create the mural on Wednesday that called for workers at the online retailer to receive more personal protective equipment (PPE).
Police were at the scene, but kept their distance from the group of nine demonstrators, said to be from the Shutdown DC climate movement and Virginia immigrant rights group La ColectiVA.
It is not known if Bezos, 56, or his fiancee Lauren Sanchez, 50, were at the residence at the time, but there was ‘no movement’ seen from his home.
A message painted by activists on the street outside of one of the personal residences of Amazon founder Jeff Bezos in Washington DC yesterday
Lauren Sanchez,50, and Amazon founder and CEO, Jeff Bezos, 56, at the Amazon Prime Video celebration in Mumbai, India, in January
On Tuesday it emerged workers at Amazon, Instacart, Whole Foods, Walmart, Target and FedEx are seeking better health and safety standards as well as hazard pay for working during the pandemic.
They are planning a joint walkout on May 1, International Workers Day, to protest against companies that they say have disregarded the health and safety of essential workers while earning record profits.