What we learned about the antitrust case against Amazon from Jeff Bezos’ time in the Congressional hot seat

Amazon CEO Jeff Bezos speaking at the Economic Club of Washington, D.C. (Economic Club of Washington, D.C. Photo / Gary Cameron)

A wide-ranging antitrust hearing Wednesday with top tech CEOs skewed more toward grandstanding than substance, but there were a few revealing exchanges with Amazon CEO Jeff Bezos.

Several members of the House antitrust subcommittee for the first time shed light on their year-long inquiry into Amazon and other tech giants — and those glimpses could resurface in other investigations. Lawmakers cited interviews with third-party sellers, Amazon employees, and competitors that were all within the scope of their inquiry.

Bezos testified alongside Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Google’s Sundar Pichai in a hearing that marks the end of the House’s investigation into the power these companies wield over the tech industry.

The first two hours were largely bogged down by questions about privacy, political bias, and other issues outside the scope of antitrust law. Not one question was directed at Bezos during that time.

But the tone changed when the Congresswoman from Bezos’ district in Washington state had her turn. Rep. Pramila Jayapal asked Bezos about a Wall Street Journal investigation from April that found Amazon uses detailed data on third-party sellers in its marketplace to inform the development of in-house products.

“The issue that we’re concerned with here is very simple,” she said. “You have access to data that far exceeds the sellers on your platform with whom you compete … you have access to the entirety of sellers’ pricing and inventory — information past, present, and future — and you dictate the participation of third-party sellers on your platform, so you can set the rules of the game for your competitors but not follow those rules yourself. Do you think that’s fair to the mom and pop businesses who can sell on your platform?”

It’s a thread that other lawmakers, including the subcommittee’s chair David Cicilline, would later pick up. The panel cited interviews with third-party sellers who claim Amazon abused its position as operator of the marketplace to compete with them, in some cases driving the sellers out of business.

Bezos said Amazon has a policy prohibiting such use of seller data but added, “I can’t guarantee you that that policy has never been violated.” Amazon is investigating claims that its employees use seller data to develop their own products, Bezos said.

Amazon’s treatment of third-party sellers was clearly at the center of the House’s inquiry and will almost certainly factor in a separate investigation that the Federal Trade Commission is conducting. The House does not have the authority to enforce antitrust law but the hearing does hint at the evidence that is being collected and shared with the FTC and other regulators.

Rep. Mary Gay Scanlon later raised a related issue with Bezos. She asked him about a controversial price war between Amazon and Diapers.com that ultimately ended in Amazon acquiring the competitor’s parent company and then shutting it down. Scanlon claimed Amazon lowered prices on diapers to drive the competitor out of business and then raised them when the competitive threat was eliminated.

“I don’t remember that at all,” Bezos said in response. “What I remember is that we matched competitor prices.”

Scanlon also revealed that Amazon’s behavior during the coronavirus crisis is within the scope of the inquiry. She asked about a period early-on in which Amazon had to prioritize essential items due to the volume of orders from customers sheltering at home.

“We’ve had several employees report that Amazon continued to ship non-essential items like hammocks, fish tanks, pool floaties, etcetera,” Scanlon said. “Mr. Bezos, were Amazon devices like Fire TV, Echo speakers, and Ring doorbells designated as essential during the pandemic?”

Scanlon suggested that Amazon prioritized its own non-essential products over essential items offered by third-party sellers. Bezos said he didn’t know the answer to the question.

“What I can tell you is there was no playbook for this,” he said. “We moved very quickly. Demand went through the roof. It was like having a holiday selling season but in March and we had to make decisions very rapidly.”

Rep. Joe Neguse suggested that the panel does not see Amazon’s behavior in its e-commerce marketplace as isolated. He asked Bezos whether Amazon Web Services, the company’s cloud arm, used information about its customers to develop competing services.

“The pattern emerges … we’re very concerned about this innovation kill zone,” Neguse said.

Bezos denied the accusation and said Amazon is capable of having customers who are also competitors.

“We have competitors using AWS and we work very hard to make them successful,” Bezos said. “Netflix is one example. Hulu is another.”

The subcommittee touched on other areas of concern at Amazon, like policing counterfeit and stolen goods. Bezos was not able to answer a question from Rep. Lucy Kay McBath about what credentials Amazon requires from third-party sellers.

Lawmakers didn’t manage to get Bezos to admit anything particularly incriminating, but his inability to confidently deny their claims about Amazon using its might to compete with third parties spoke volumes. And though Congress does not have the ability to enforce existing antitrust law, they can rewrite those laws if they find them inadequate for the digital age.

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