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Elizabeth Warren Urges Amazon Breakup After Bombshell Report

A new Reuters report yet again indicates that India has become a problem area for Amazon—and now a former U.S. presidential candidate is calling for the tech titan’s breakup.

Already embroiled in antitrust investigations by the Indian government and under scrutiny after a flurry of accusations that it skirts e-commerce regulations in the country and gives preferential treatment to certain sellers, Amazon is now facing perhaps its biggest allegation yet. Citing thousands of internal Amazon documents, including emails, strategy papers and business plans, the e-commerce giant ran a systematic campaign leveraging third-party data to create its own private-label products and manipulate search results to boost its own products in India, according to the Reuters report.

In response to the scathing investigation, which reveals how Amazon’s private brands team in India secretly exploited internal data from Amazon.in to copy products sold by other companies, Sen. Elizabeth Warren (D.-Mass.) condemned the Seattle firm’s tactics.

Linking the Reuters report on her Twitter and Facebook accounts, Warren said, “These documents show what we feared about Amazon’s monopoly power—that the company is willing and able to rig its platform to benefit its bottom line while stiffing small businesses and entrepreneurs. This is one of the many reasons we need to break it up.”

The backlash, like much of the U.S. House of Representatives’ investigations into Amazon and other “Big Tech” companies including Apple, Google and Facebook, seems to be bipartisan.

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Congressman Ken Buck (R.-Col.), a member of the House’s antitrust subcommittee that introduced bills in June that could potentially force an Amazon split, also shared the Reuters report on social media.

“These documents prove Amazon engages in anticompetitive practices such as rigging search results and self-preferencing their own products over competitors,” Buck wrote. “More concerning, it contradicts what Jeff Bezos told Congress. Amazon and Bezos must be held accountable.”

In sworn testimony before the U.S. Congress last year, the Amazon founder said the e-commerce giant prohibits its employees from using the data on individual sellers to bolster its private-label business. And, in 2019, an Amazon associate general counsel testified that the company does not use such data to create its own private label products or alter its search results to favor them, a tactic that would likely be considered anti-competitive.

The troubling allegations from the Reuters report do not cover Amazon’s U.S. operations, but there is little doubt that the investigation, and previous others, will impact how lawmakers perceive the company and question its business decisions in future hearings.

Internal documents viewed by Reuters show that Amazon’s employees would rig the marketplace’s search results so that its private-label products got higher rankings and greater customer exposure. One India strategy report dated from 2016 specifically instructed teams to put a product “in the first 2 or three…search results” when customers were shopping on Amazon.

The Reuters documents also show that Amazon employees studied proprietary data about other brands on Amazon.in, including information about customer returns. With this data, the company could identify “benchmark” products in an effort to “replicate” them, Reuters said, referring to an internal Amazon report titled “India Private Brands Program” from 2016.

That report laid out Amazon’s strategy for its Solimo brand, specifically designed for the market. Included in the document was an overt directive to “use information from Amazon.in to develop products and then leverage the Amazon.in platform to market these products to our customers.”

Solimo-branded health and household products are now available on Amazon’s U.S. website, so the strategy did end up having international implications.

The “India Private Brands Program” document also outlined internal employees’ partnerships with manufacturers of brands they allegedly wanted to copy.

“It is difficult to develop this expertise across products and hence, to ensure that we are able to fully match quality with our reference product, we decided to only partner with the manufacturers of our reference product,” the document stated, referring to manufacturer expertise as “Tribal Knowledge.”

A Reuters report accuses Amazon of using seller data to create private label products in India—prompting Sen. Elizabeth Warren to respond.
An Indian employee works at the reception desk of Amazon’s newly inaugurated campus building in Hyderabad, India, Wednesday, Aug. 21, 2019. Built to support more than 15,000 employees, the new campus is Amazon’s first owned office building outside the US and the single largest building globally, according to an Amazon press release. AP Photo/Mahesh Kumar A.

At least in India, manipulating search results to favor Amazon’s own products, as well as copying other sellers’ goods, were part of a formal, clandestine strategy at Amazon, Reuters reported. To make matters worse, the report said that two executives reviewed the India strategy—senior vice presidents Diego Piacentini, who has since left the company, and Russell Grandinetti, who currently runs Amazon’s international consumer business.

One trade association, long in opposition to Amazon, called for the Indian government to expand its investigation into the business.

“Amazon is causing a great disadvantage to the small manufacturers. They are eating the cake that is not meant for them,” Praveen Khandelwal of the Confederation of All India Traders (CAIT) told Reuters.

Amazon responds to ‘unsubstantiated’ claims

In commentary provided to Sourcing Journal, Amazon denied any wrongdoing over what it called “factually incorrect and unsubstantiated” claims, saying that the company is unable to confirm the accuracy of the report given that Reuters hasn’t shared the documents. The defense is similar to the one Amazon made in February, when the publication first reported on the marketplace’s skirting of e-commerce regulations.

“Amazon operates a marketplace where sellers (not Amazon) offer a wide selection of products to consumers, and maintains a high bar for compliance with the applicable FDI policy,” an Amazon spokesperson told Sourcing Journal. “Sellers independently offer private brand products, largely manufactured in India, to provide customers with more choices and value. Sellers determine and control pricing for all their products and independently manage their own inventory—Amazon does not give preferential treatment to any seller on its marketplace.”

The $1.7 trillion company identifies “selection gaps” based on customer preferences at an aggregate level only and shares this information with all sellers, the spokesperson pointed out.

“Amazon’s policy strictly prohibits the use or sharing of non-public, seller-specific data for the benefit of any seller, including sellers of private brands,” the spokesperson said. “This policy applies uniformly across our company to all employees—our internal teams receive regular trainings on its application and we thoroughly investigate any reports of employees acting contrary to this policy.”

The tech titan said its approach to displaying search results doesn’t favor its own private-label products.

“Search on Amazon.in is initiated by the customer by entering key words into the search box and browsing through products on Amazon.in. We display search results based on relevance to the customer’s search query, irrespective of whether such products have private brands offered by sellers or not,” the spokesperson added.

The allegations levied by Reuters are the most detailed yet in relation to longtime criticisms from former sellers, employees and lawmakers alike, all accusing the company of wielding third-party data for its own enrichment. In a hearing last year, U.S. House antitrust subcommittee chairman Congressman David Cicilline (D.-R.I.), questioned Bezos about an apparel company that “woke up and found that Amazon had started listing the exact same product, causing their sales to go to zero overnight.”

Amazon is currently under investigation in the U.S., Europe and India for alleged anti-competitive practices. Washington, D.C. attorney general Karl A. Racine filed an antitrust lawsuit against the Seattle company in May for anti-competitive pricing agreements imposed on third-party sellers, and then expanded the suit to include similar agreements with first-party sellers.