Everything We Learned About Amazon From Bezos' Testimony

Viewers had to wait 96 minutes to hear Amazon CEO Jeff Bezos field questions during his Congressional debut on Wednesday. Rep. Pramila Jayapal, D-Wash., finally did the honors in the second hour of the highly anticipated House Judiciary Committee hearing on online platforms and market power, revisiting a familiar topic: how Amazon uses internal seller data in the development of private label products. Over the next three-and-a-half hours, Bezos responded to additional queries about small businesses, ecommerce and counterfeit goods—and even whether he believes U.S. Housing and Urban Development Secretary Ben Carson is an extremist. It’s a rare opportunity to hear directly from Bezos, so we've rounded up the Top 20 takeaways from his testimony. Bezos can’t guarantee Amazon’s policy against using seller data has never been violated. A year ago, associate general counsel Nate Sutton told the House Judiciary Committee Amazon does not use individual data from its 2.2 million third-party sellers to develop competing private label products. In response to Jayapal, however, Bezos waffled. “I can't answer that question yes or no,” he said. “What I can tell you is we have a policy against using seller-specific data to aid our private label business. But I can't guarantee you that that policy has never been violated.” Amazon’s internal policy about seller data is (maybe) voluntary. “What I can tell you is that we do have certain safeguards in place,” Bezos said. “We … expect people to follow that policy the same way we would any other. It's a voluntary policy … and there's no actual enforcement.” (He later said he “may have misspoke” and, “We would treat that like any internal policy. And if we found that someone violated it, we would take action against them.”) Amazon is investigating allegations that it accesses aggregated seller data. The platform is continuing its investigation into a Wall Street Journal story that found Amazon accesses aggregated seller data. Bezos told Rep. David Cicilline, D-R.I., that the company is “looking at that very carefully,” but he did not “want to go beyond what I know right now.” [article_summary section="1"]Amazon’s policies permit the use of aggregate seller data. Bezos confirmed to Rep. Kelly Armstrong, R-N.D., that Amazon looks at aggregate data to inform its private label brands—even when there are just two or three sellers of a product on the platform. Bezos was asked about, but did not comment on, whether this is fair to small businesses on the platform. Amazon does not think it’s a conflict of interest to sell its own products on its own platform. “No, I don't believe it is [a conflict],” Bezos said to Cicilline. “We have the consumers, the ones ultimately making the decisions. They're making the decisions about what to buy, what price to buy it at [and] who to buy it from.” Amazon says it has plenty of competition in ecommerce. Rep. Lucy McBath, D-Ga., cited figures from eMarketer that show Amazon has nearly seven times the market share of its closest competitor in ecommerce. “When sellers told us that … ‘Amazon continues to be the only show in town—no matter how angry sellers get, they have nowhere else to go,’ … are you saying that these people aren't being truthful?” she asked. Bezos disagreed. "I believe that there are a lot of options," he said. Bezos does not think Amazon’s relationship with third-party sellers is contentious. "As part of this investigation," McBath continued, "we've interviewed many small businesses, and they use the words like 'bullying,' 'fear' and 'panic' to describe their relationship with Amazon." Bezos disagreed, saying the platform collaborates with sellers. “The evidence that I would suggest would be useful for you to consider … is that third-party sellers in aggregate are doing extremely well on Amazon,” he said, noting that 20 years ago, there were no independent businesses on the site, "and today, it's 60% of sales.” [article_summary section="2"]Amazon competes with sellers, but still thinks it’s the best option—and it is not “Amazon heroin.” “During this investigation, we've heard so many heartbreaking stories of small businesses who sunk significant time and resources into building a business and selling on Amazon, only to have Amazon poach their best-selling items and drive them out of business,” Cicilline said, calling the initial success sellers see "Amazon heroin." Bezos said he “couldn’t disagree with that characterization more,” as the platform shares valuable retail real estate with third-party sellers. Sellers pay more in fees because they increasingly avail themselves of Amazon’s services. Rep. Mary Gay Scanlon, D-Pa., noted Amazon’s revenue from seller fees has grown nearly twice as fast as overall sales since 2014. Bezos, however, insisted this does not suggest Amazon enjoys market power over those sellers. Instead, he said, “I think what you're seeing there when you see these fees going up, what's really happening is that sellers are choosing to use more of our services that we make available.” Amazon “maybe directly or indirectly” favors products shipped with Prime. Scanlon noted that Amazon previously told the committee that seller enrollment in its fulfillment program was not a factor in whether they’d be awarded the buy box, but evidence indicates the contrary. “I'm not sure if it's direct, but, indirectly, I think the buy box does favor products that can be shipped with Prime,” Bezos said, adding that the buy box is "trying to pick the offer that we predict the customer would most like that includes price, delivery speed and, if you're a Prime member, includes whether the item is eligible for Prime.” [article_summary section="3"]Echo devices “may be” sold below cost. In fielding a question from Rep. Jamie Raskin, D-Md., about whether Amazon is “aggressively discounting Alexa-enabled speakers as a strategy to own the smart home,” Bezos said device list prices are not below cost, but “it's often on promotion, and sometimes when it's on promotion it may be below cost.” Alexa has an Amazon bias. Pointing to a 2018 New York Times story that found Alexa steers shoppers to Amazon’s own AmazonBasics brand, Raskin asked if Alexa has been trained to favor Amazon products in voice shopping. “I don't know if it's been trained in that way,” Bezos said. “I'm sure there are cases where we do promote our own products, which is, of course, a common practice in business … so it wouldn't surprise me if Alexa sometimes does." Amazon devices may have been classified as essential goods during the pandemic. Scanlon asked if Amazon designated its own devices, like Fire TV sticks, Echo speakers and Ring doorbells as essential after the platform said it was prioritizing household staples, medical supplies and other high-demand products in the U.S. during the pandemic. “I don't know the answer to that question,” Bezos said. “What I can tell you is that … there was no playbook for this. We moved very quickly. Demand went through the roof. It was like the holiday selling season but in March, and we had to make a lot of decisions very rapidly. Our goal was limited to essential supplies, but I'm sure we did not do that perfectly.” Amazon is working “very hard” on counterfeits. Rep. Hank Johnson, D-Ga., asked about why the platform isn’t more aggressive in ensuring counterfeit goods are not sold on Amazon. In response, Bezos said Amazon is working to keep counterfeits off the site with a team of more than 1,000 employees and investments of millions of dollars. “This is an incredibly important issue, and one that we work very hard on," Bezos said. "Counterfeits are a scourge." Amazon will investigate PopSockets’ allegation of having to buy advertising to stop the platform from diverting sales to listings for knockoffs. Johnson said multiple brands told him Amazon has “used knockoffs as leverage to pressure sellers to do what Amazon wants.” That includes mobile phone accessories brand PopSockets, whose CEO testified earlier this year that only after committing to spend $2 million in advertising did Amazon stop diverting sales. Bezos said the allegation, if true, was “unacceptable” and he would look into it, as well as encourage the platform’s new Counterfeit Crimes Unit to “pass stricter penalties for counterfeiters and to increase law enforcement resources to go after counterfeiters.” There have been stolen goods on Amazon. Bezos also told McBath that given the number of sellers on the platform, he was certain there were stolen goods as well. “With over a million sellers, I'm sure that it has happened,” he added. It’s still unclear how exactly Amazon verifies seller information. Bezos repeatedly said he did not know or he wasn’t sure when asked about the information required of sellers, including name, address and phone number. When McBath asked how Amazon verifies seller information is accurate, Bezos said he didn't know. [article_summary section="4"]Amazon denies using customer information stored on AWS for competitive intelligence. Rep. Joe Neguse, D-Co., asked if Amazon uses confidential information that companies share on AWS to build competing services, which he said is a concern for startups, and Bezos said "not that I'm aware of." Neguse also pointed to recent allegations by a former Amazon engineer, who said his team proactively identified growing businesses on AWS and then targeted products to those businesses' customers. “I think there may be categories … where we see this is an important product for customers, and we make our own product offering in that arena,” Bezos said. “But it doesn't mean we stop servicing the other companies that are also making those products. We have competitors using AWS. And we work very hard to make them successful." Amazon took a $200 million loss in diaper sales in a single month to beat—and then buy—Diapers.com parent Quidsi. This, Scanlon said, was the brainchild of a “top [Amazon] executive” who sought to undercut Diapers.com by temporarily lowering prices. She asked how much money Amazon was willing to lose to “undermine Diapers.com.” Bezos said he could not give a direct answer because of the timeframe. “But what I can tell you is that the idea of using diapers and products like that to attract new customers … who have new families is a very traditional idea,” he added. Scanlon also asked if Bezos approved a plan to raise prices again after Amazon eliminated its competition, but he said he could not remember specifics. Bezos does not recall the Gazelle Project. For years, reports have circulated about an internal effort known as the Gazelle Project, in which Amazon allegedly ran down book publishers like a cheetah pursuing a sickly gazelle. (The concept was featured in Frontline’s two-hour documentary on Bezos and his Amazon empire, which debuted earlier this year.) Scanlon asked about the Gazelle Project, but Bezos said he could not remember it. “What I can tell you," he said, "is that we are very, very, very focused on the customer."

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Everything We Learned About Amazon From Jeff Bezos' Antitrust Testimony

20 takeaways from the CEO's appearance before the House Judiciary Committee

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