Amazon CEO Jeff Bezos has been called to testify in Congress by the House Judiciary Committee after Democratic lawmakers said last week they suspected the online giant of lying to Congress about the use of customer data to launch competing brands and products. The committee has threatened to subpoena his testimony if the Amazon boss fails not comply.
Seven bipartisan members of the committee said in a letter to Bezos that a recent Wall Street Journal report on Amazon’s use of third-party seller data appears to show that Amazon may have misled Congress in previous statements.
The Journal investigation found Amazon employees used non-aggregated or easily identifiable data from third-party sellers to inform its own product strategy, which appears to contradict testimony by Amazon’s associate general counsel Nate Sutton at a July 19 hearing in front of the House Antitrust Subcommittee. At the hearing, Sutton said Amazon does not use individual seller data to launch private brands, a tactic that would likely be considered anti-competitive.
“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 committee wrote.
The company has faced relentless scrutiny over the past year as lawmakers and regulators assess issues of privacy and ill-gotten dominance among tech companies including Amazon, Apple, Google and Facebook. In addition to the House Antitrust Subcommittee investigation, Amazon also faces a probe by the Federal Trade Commission, according to Bloomberg. Advocates for strong antitrust enforcement, including Sen. Elizabeth Warren, D-Mass., have argued that companies should not be able to own a marketplace and compete on it, too, because doing so could encourage unfair practices.
The call to Congress comes at a busy time for Amazon, which generated $75.5 billion in net sales for the first quarter amid a surge in essential spending driven by the COVID-19 pandemic. But the company, known for spending as nearly as much as it takes in, made bigger headlines when Bezos said shareholders “may want to take a seat” amid the announcement that it would spend $4 billion in expected second-quarter operating profits to address COVID-19.
In an earnings call, chief financial officer Brian Olsavsky revealed that $300 million of the $4 billion in COVID-19-related spending will be on new employee testing capabilities, if efforts are successful.
“I think everyone is trying to get testing,” Olsavsky said. “It’s not readily available on the scale that we need it for―to test our scale of employees. So we are working to do that ourselves and to build protocols and to―and again we’ll see how we do that differently and I don’t know, again, about future business opportunities. Our main concern is getting testing in the hands of our employees and then potentially as we have excess capacity, perhaps we can help in other areas.”
Amazon first announced in an April 9 blog post that it was developing an in-house laboratory for COVID-19 and has begun a pilot to test front-line employees.
Already distributing face masks to warehouse staff and checking their temperatures before their shifts start, Amazon sends workers home for three days if they register temperatures of 100.4 degrees Fahrenheit or higher. The company has purchased more than 31,000 thermometers and more than 1,000 thermal cameras. In total, Amazon has more than 175 fulfillment centers worldwide, including more than 110 facilities in the U.S. More than 130 Amazon warehouses have confirmed coronavirus cases, according to the worker advocacy groups Athena and United for Respect.
Workers across Amazon, Target and others prepare walkout
The focus on safety and health comes at an interesting time, as Amazon and Whole Foods workers have organized a strike Friday with Target and Instacart employees. The strike is designed to protest what the workers allege are unsafe working conditions amid the coronavirus pandemic, all while supporting International Workers’ Day on May 1.
The coalition of employees and gig workers plans to call in sick or walk off their jobs during their lunch breaks in at least half a dozen states. This is the second such major strike from Amazon, Whole Foods and Instacart workers in a five-week span, and the first for Target employees.
Amazon has been under serious scrutiny in the wake of the termination of management assistant Chris Smalls, who organized a walkout on March 30 at the company’s Staten Island distribution center, dubbed JFK8, due to concerns about workplace safety.
In the first walkout, a number of employees walked off the job to protest the company’s perceived lack of action after the first COVID-19 case was confirmed at the location. Amazon reportedly declined to shut down the facility for a deep cleaning and remained up and running since the employee’s coronavirus diagnosis.
On the same day, a contingent of Instacart employees and gig workers also stayed off the job, voicing demands for higher pay and better access to paid leave and disinfectant. A day later, some Whole Foods employees across the country staged a work stoppage, which involved employees calling in sick as their demands included improved workplace safety and benefits. including hazard pay and sick pay for employees who may be sick but hadn’t yet been tested for COVID-19.
The size of both the Instacart walkout and the Whole Foods “sickout” were unclear, though Instacart organizers believe that approximately 10,000 of the company’s 200,000 workers refused to report to work.
Amazon is now also facing multiple inquiries from the National Labor Relations Board about whether it unlawfully retaliated against workers who spoke out, as well as an investigation brought by New York City’s human rights commissioner concerning the same issue. Earlier this week, New York’s attorney general said Amazon may have violated the state’s whistleblower law by firing Smalls after he went on strike.
There was no mention of the impending strikes in the Amazon earnings call, but Olsavsky reiterated Bezos’ commentary on first-quarter results.
“We established rigorous safety and cleaning protocols including maintaining six-foot social distancing, procuring 100 million masks, tens of millions of gloves and wipes and other cleaning supplies, we began requiring temperature checks across our operations network, in our Whole Foods stores we added plexiglass barriers between cashiers and customers and reserved special hours for senior customers to shop,” Olsavsky said. “We temporarily raised wages and overtime premiums, we funded a new Amazon Relief Fund and we allowed employees to take unpaid time off at their discretion.”
Amazon Air: is opportunity knocking?
Although Amazon is halting Amazon Shipping third-party delivery in June due to the need to handle the surge in COVID-19-related customer offers, the online giant could have more of an investment opportunity in its cargo fleet of airlines versus the service designed to compete directly with UPS and FedEx.
The company’s Amazon Air fleet, which is set to grow to 70 aircraft by 2021, includes small Boeing 737s and midsize 767s. But the damage COVID-19 has done to the airline industry has caused many carriers to get rid of their older planes. According to international advisory firm Ishka, lease rates are down: Renting a Boeing 747-8 freighter is 13 percent cheaper than in January, while the market value of five-year-old 777s and Airbus 330s is down nearly 10 percent this year.
With cash holdings totaling $27 billion at the end of March, Amazon could quite possibly make a serious play at expanding its own fleet at a significantly discounted price.