- Amazon CEO will testify before a congressional antitrust committee for the first time on Wednesday, alongside Sundar Pichai, Tim Cook, and Mark Zuckerberg.
- While experts told Business Insider they expect the questioning to mostly pertain to matters of competition, Bezos will likely be grilled on everything from how Amazon treats third-party sellers to the company’s approach to acquisitions.
- The hearing may come at a challenging time for Bezos, who recently added $13 billion to his net worth in a single day as the coronavirus still surges in parts of the US, contributing to widespread job losses.
- Bezos will need to downplay Amazon’s size and power in favor of highlighting the benefit the company provides to small businesses and the communities it operates in.
- Visit Business Insider’s homepage for more stories.
He’s appeared in a Star Trek movie, built a $42 million, 10,000-year clock in the desert, and survived a helicopter crash. But on Wednesday, Jeff Bezos will do something he’s never done before: testify before Congress.
Amazon’s 56-year-old founder and CEO has been called to testify before the House Judiciary Committee’s antitrust subcommittee, which has spent the past year examining the business practices and market power of the nation’s largest tech firms.
Though Bezos will likely testify virtually, via videoconference, he will be flanked — in a manner of speaking — by his peers: Apple CEO Tim Cook, Google and Alphabet CEO Sundar Pichai, and Facebook CEO Mark Zuckerberg.
Bezos’ fellow CEOs have all previously appeared before Congress in some capacity. More than 25 years after founding Amazon however, Bezos has somehow avoided a congressional hearing — until now.
His debut appearance is sure to draw a wide range of questions from lawmakers eager to drill into the company’s vast business empire, explore its dominance of ecommerce, and to put a spotlight on Bezos’ power and influence.
Whether Bezos appears on Capitol Hill in person or on a video screen, the one thing that’s practically certain is that he will be on the hot seat.
Here are some of the main topics and issues to watch for when Bezos testifies, beginning at Noon Eastern Time on Wednesday July 29:
Questioning Amazon’s dominance
While members of the committee will likely ask questions that apply to all of the disparate businesses represented by the four CEOs, Bezos should expect Amazon to be singled out for some tough lines of questioning.
Avery Gardiner, general counsel and senior fellow for competition, data, and power at the Center for Democracy and Technology, a nonprofit that works to shape tech policy, told Business Insider she expects Bezos will, first and foremost, have to supply answers to inquiries relating to Amazon’s private-label business.
A Wall Street Journal report from April found that Amazon was using trend data gleaned from third-party sellers in order to develop its own private-label products. While offering private-label products in stores is nothing new, the committee is likely to explore whether Amazon wields more power as a digital marketplace than a brick-and-mortar store would.
By extension, Bezos will likely be asked who he sees as Amazon’s most robust competitors — in that case, Gardiner said, we’re likely to hear a lot about how Amazon competes with Walmart.
Gardiner said she also expects to see Bezos, Zuckerberg, Cook, and Pichai questioned about their companies’ acquisition strategies, given that CEOs are typically heavily involved in M&A activity. It’s a timely line of questioning given that the Wall Street Journal reported last week that Amazon has implemented a strategy of meeting with and investing in startups, only to later make products that directly compete with them.
“There has been concern that the tech giants are using acquisitions to take out small competitors, so that’s an area that the members of Congress could ask CEOs about that they will actually have the right, relevant people to give the answer,” Gardiner said.
Stacy Mitchell, co-director of the Institute for Local Self-Reliance and an outspoken critic of Amazon’s effect on small businesses, told Business Insider that she expects Bezos to face a tough cross-examination from the committee. Looking at the antitrust hearing last summer as an example, in which lawmakers grilled high-level executives from all four companies, Mitchell noted that they devoted a significant amount of questions and aggressive follow-ups to Amazon — she expects Bezos to receive the same treatment.
Amazon’s shipping business will be in the spotlight
Mitchell told Business Insider she predicts Bezos will be questioned about Amazon’s logistics and shipping business, pointing to Fulfillment by Amazon, a service where sellers ship their products to a fulfillment center to be packed and shipped, as a way that Amazon wields power over vendors. A March report from Recode’s Jason Del Rey found that Amazon was hiding products from sellers that offered faster shipping but didn’t use Amazon’s FBA service, which the company said was unintentional.
“The algorithm that controls who gets the ‘Buy Box,’ who is chosen as the default seller for a particular product, appears to include a couple of components that make it essential, really, to use Fulfillment by Amazon,” Mitchell said. “That is a way that it has effectively leveraged its monopoly power as an online marketplace to build a dominant business in a completely different industry.”
Mitchell also predicts Bezos will be grilled about counterfeit goods on Amazon’s site, the tactics it uses to encourage sellers to offer lower prices on Amazon over other platforms, and whether it’s using sponsored ads to squeeze more money out of vendors.
What we shouldn’t expect, however, is wild grandstanding from public officials. In past hearings, lawmakers have appeared to use the opportunity question CEOs like Zuckerberg or Pichai on issues unrelated to the matter at hand. But the antitrust hearing will be different, Mitchell believes, because it’s the culmination of a year-long investigation into these companies.
“What I’m assuming is on the committee’s mind is getting to the bottom of questions that Amazon has dodged answering so far,” Mitchell said. “I anticipate that the lawmakers are not going to be necessarily focusing on the most headline-y types of questions because they want to put Jeff Bezos under oath in order to compel him to actually answer a set of questions that they have as part of this investigation.”
‘It’s all interconnected’
Bezos’ testimony is coming at what could be a challenging moment for the CEO. Earlier this month, Bezos added $13 billion to his fortune in a single day, his highest-ever one-day increase. With a net worth nearing $190 billion, he remains on track to becoming the first trillionaire by 2026.
While Mitchell said it’s unlikely Bezos will face direct questioning about his wealth, it’s becoming more difficult to separate his wealth and Amazon’s power.
“He’s built basically a big toll booth, or several big toll booths across several streams of commerce. It’s a very remarkable and incredibly powerful place to be,” Mitchell said. “There is this relationship, I think, between Amazon’s gatekeeper power as core infrastructure for the economy and the company’s ability to levy those tolls, and thus, Bezos’ wealth. I think it’s all interconnected.”
The issue becomes thornier given the continuing financial impacts of the coronavirus crisis, which resulted in nearly 53 million unemployment claims filed over the past few months, more than during the Great Recession. While Amazon expanded hiring and increased pay early on in the pandemic, it has also fired workers after they spoke out about working conditions in the company’s facilities during the outbreak. And it’s not the first time Amazon has been criticized for worker treatment — warehouse workers and delivery drivers have long complained of the grueling cost of working for the company.
Bezos’ personal wealth may make him a target, but he could flip the script and cast himself as a small business savior
Though not necessarily issues of antitrust, it’s possible Bezos will be unable to avoid the juxtaposition of his wealth with the humans who power Amazon.
While Bezos will be in the hot seat, however, we can also expect him to come prepared to push back on some of the issues at question. In the past, Bezos hasn’t backed down from his goal to keep expanding Amazon’s business, and has touted the ability of big business to revolutionize products and industries in a way that benefits consumers. While he’s receptive to scrutiny of Amazon’s business, he’s said, Bezos has also argued that politicians and lawmakers shouldn’t “vilify” large companies either.
“All big institutions of any kind will be and should be scrutinized. It’s not personal. It’s kind of what we want to have as a society happen,” Bezos said during an interview at the Economic Club in Washington, D.C. in 2018. “There are certain things that only big companies can do. Nobody in their garage is going to build an all-fiber fuel-efficient Boeing 787.”
Gardiner predicted that Bezos will downplay Amazon’s size and power in favor of talking up the benefit the company provides to its vendors and the communities it operates in.
“I’m expecting that we’ll hear a lot about empowering small businesses to get a broader reach for their products,” Gardiner said. “I think we’ll hear about efforts around COVID to stop the pandemic and donations they’ve made in their local communities. I’m expecting we’ll hear a lot from Amazon about the benefits of free shipping and the ability to shop from home being important, particularly in a pandemic.”
And given the high-profile nature of the hearing and the current cultural moment, it’s likely that more people will be paying attention. Particularly given Bezos’ customer-obsessed mantra, it’s likely his answers won’t be just for the benefit of the congressmen and women present, but for Amazon’s customers too.
“They do have an opportunity here to stand up and say what they do that they think benefits Americans,” Gardiner said. “I think [he] will be very good at finding the opportunities to say all the things they do that they want Americans to hear about.”
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