Retail: New questions about Amazon’s power
Amazon is attracting new antitrust scrutiny in the midst of the pandemic, said Dana Mattioli and Ryan Tracy in The Wall Street Journal. Interviews with more than 20 former Amazon employees show that the company may be stealing “proprietary information collected from independent sellers to develop competing products” sold under Amazon’s private label. An Amazon lawyer told Congress last summer that the company has never “used seller data” to develop its own products. But despite “restrictions in place to keep its private-label executives from accessing data on specific sellers,” former employees working on products like car-trunk organizers and office-chair cushions have “found ways around them.” The revelations have infuriated congressional investigators, who now ask if they were intentionally misled.
Amazon will probably try to frame this as “the fault of a handful of rogue employees,” said Evan Niu in MotleyFool.com, but the real problem goes deeper than that. Much of Amazon’s revenue actually comes from “third-party” sellers who use Amazon to market and ship their products. Those merchants represent 58 percent of Amazon’s retail sales, yet when Amazon sees that they are successful, it starts up private-label brands to sell identical goods. This “represents a clear conflict of interest.” But Amazon’s “unforgiving algorithm” gives sellers no choice but to set aside any qualms and fall in line, said Renee Dudley in ProPublica.org. Running out of stock in Amazon’s warehouses means that merchants quickly get demoted in Amazon’s search results, with the potential for longlasting damage. The CEO of one popular protein-bar company says he “sends the e-commerce giant the ‘lion’s share’ of his inventory” to keep that from happening. That’s why products that have been selling well during the pandemic appear to be in stock at Amazon, and nowhere else.
While Democrats in Congress decry Amazon’s anti-competitive impulses, President Trump has his own “long-running vendetta against Amazon and its CEO,” said Aaron Mak in Slate.com. Enraged by reporting in the Jeff Bezos–owned Washington Post, Trump has missed no opportunity to punish Bezos and Amazon— most recently by trying to “force the U.S. Postal Service to raise prices on delivering packages.” The political pressure on Amazon comes on top of a pandemic that has turned its “usually reliable service into a frustrating and uncertain process,” said Jason Del Rey in Vox.com. Customers have faced “delayed shipping dates, limited supplies and services, and confusion” over just what items count as “essential” during the crisis. Yet membership in Amazon’s Prime program has grown. “Regardless of how I feel about them as a company,” says one loyal customer, “I rely too much on their service.”