The leaders of Amazon, Apple, Facebook and Google recently faced a long-overdue grilling from Congress about their anticompetitive behavior. But the hearing failed to address several concerns that are specific to Amazon’s business, which is vastly different from that of its Big Tech counterparts and uniquely pervasive across the economy.
Lawmakers need to get to the bottom of these issues so that they can take appropriate actions to protect consumers and small businesses, so many of which are already struggling to stay afloat amid the pandemic. As a first step, they should call Bezos back for his own hearing.
First and foremost, lawmakers need to follow up on the dozens of non-answers Bezos gave to the questions he was asked. In response to a question about Amazon scraping data from third-party sellers to identify consumer trends and launch competing private-label products, for example, Bezos offered a striking admission, claiming that he “can’t guarantee” employees never scraped data from third-party sellers when developing competing products. He said that investigations into these charges are “not as easy to do as you would think.”
Meanwhile, when asked about whether Amazon was keeping its Alexa smart speaker devices at artificially low prices to keep competitors out of the market and cement demand for its own products, Bezos tried to muddy the waters on whether the company’s Echo products were listed below-cost or just steeply discounted — a game of semantics that seemed to be baked into his strategy for the hearing.
Further pressed on whether Amazon had intentionally trained its smart speaker devices to favor Amazon-branded products such as AmazonBasics batteries when users search by voice, Bezos could only muster that he “did not know if it has been trained in that way.”
Then there are the many issues that went unaddressed, perhaps because Bezos was given cover by leaders at companies who have been front and center in an equally important but largely distinct conversation about content moderation online. That’s all the more reason to put Bezos in his own hot seat.
For one, Amazon has been accused of forcing third-party sellers to use the company’s expensive logistics services. A 62-page complaint sent to federal lawmakers last year says the company had raised logistics fees by 20 percent “until they cost as much as 35 percent more than competing services.” The letter also states that Amazon pushed a merchant to continue using its logistics services or risk being suspended from selling on its platform or seeing their products marginalized on the site.
What’s more, other sellers report that Amazon controls prices on its website with an iron fist. Specifically, when Amazon discovers a product is cheaper on a competing website, it alerts the company selling the item and then makes the product harder to find and buy on its own marketplace – effectively penalizing the third-party seller.
According to one report, a typical pricing alert reads: “One or more of your offers is currently ineligible for being a featured offer on the product detail page because those items are priced higher on Amazon than at other retailers.”
Simply put, merchants lose the “buy now” button that simplifies the shopping process and encourages more sales. Many have warned that this concept of Buy Box suppression amounts to modern day price-fixing in the age of the digital marketplace.
Finally, Amazon has been suspected of leveraging its dominant market position to quash any fair negotiations with smaller companies at the bargaining table. Smaller brands have accused the company of white-knuckle tactics that amounted to bullying intended to create a power imbalance at a critically important moment in their growth, undermining the ability of these nascent businesses to grow freely in a fair and competitive environment. Crushing small business is never good, even more so amid a pandemic. It is the number one job creator in the American economy.
While the Big Tech hearing marked a step in the right direction toward ensuring greater accountability, it’s clear that more questions must be asked of Bezos and his company’s business practices. Only then can we begin to foster a more even playing field that protects the ability of small businesses, the heartbeat of our economy, to fairly compete.
John Burnett is the managing director and founder of 1 Empire Group, a consulting firm. He is a member of the adjunct faculty at NYU.