- A new 450-page report on tech companies from the House of Representatives' subcommittee on antitrust accuses Amazon of wielding monopoly power in online retail to the detriment of third-party sellers that use its site as well as competitors and other stakeholders.
- The committee — which also investigated Facebook, Google and Apple — recommended structural separation as well as rules that could limit discrimination and favoritism by tech platforms, among other remedies.
- In a blog post, Amazon responded that it controls a relatively small share of the overall retail market and dismissed the committee's allegations around its dominance of sellers on its site as "flawed regulatory ideas" that "rely on the false narrative that Amazon's interests are not aligned" with its third-party sellers.
The massive report on tech giants is more than a year in the making, the end product of an in-depth investigation that drew from more than 1 million company documents as well as witness testimony — including from Amazon CEO Jeff Bezos — and interviews with more than 240 market players.
Of Amazon, the committee wrote that the company's "market power is at its height in its dealings with third-party sellers" on its marketplace platform. According to a JungleScout survey, cited in the House report, more than a third of Amazon's 2.3 million third-party sellers say they rely on Amazon as their only source of income.
In Amazon's view, that means it is a vital channel and venue for small and medium-sized businesses. In its post, the company said inviting sellers onto its main site, where they can compete with Amazon's own retail operations, has lowered prices and been "a win for customers, sellers, and Amazon." The company also points to the revenue it makes from those third-party sales as a positive common interest. "Amazon and third-party sellers have a mutually beneficial relationship, and our interests are well aligned."
The House subcommittee found that internally Amazon refers to sellers as "internal competitors" and wrote that its dual role as online retailer and marketplace operator "creates an inherent conflict of interest" that "incentivizes Amazon to exploit its access to competing sellers' data and information, among other anticompetitive conduct." The report also cites rising expenses set by Amazon for sellers and details numerous ways that it allegedly dominates the relationship.
Earlier this year, the Wall Street Journal reported, based on internal documents and former employee accounts, that Amazon staff made a practice of using data from individual third-party sales to develop and price Amazon's own competing private label products. In response to that story, Amazon told the Journal that it bans the practice and would launch an internal investigation.
The House isn't alone in its investigation into Amazon's practices. The Federal Trade Commission is also reportedly investigating the company over similar issues, as are some state attorneys general and the European Union's competition watchdog.
What will come of the investigations is far from clear. Federal antitrust enforcers, tasked with reigning in abusive monopolies and maintaining competition, haven't broken up a company in decades.
Some analysts and observers look at markets such as retail and see plenty of competition, and view Amazon's role in the industry as being roundly beneficial to consumers. On the other hand, critics of modern antitrust enforcement, some of whom staffed the House's investigation, say the feds have become lax, prioritizing low prices and economic efficiency over healthy markets and anti-monopoly principles meant to keep corporate power in check. (Amazon, in its blog post, derided these sentiments as "fringe notions.")
As the legal and academic debate goes on, Amazon's revenue and lines of business keep on growing — now even faster amid a pandemic that is driving more customers than ever online to shop.