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10/19/2021

Congress threatens Amazon with potential criminal investigation

Members of U.S. House Judiciary Committee delivered a letter to the desk of Andy Jassy, CEO of Amazon, questioning its private label tactics and testimony in last year’s hearing.
Dan Ochwat
Executive Editor
Dan Ochwat profile picture

In response to a recent Reuters report that questioned Amazon’s private label practices in India, the U.S. House Judiciary Committee has delivered a letter Andy Jassy’s way, implying the company misled Congress during last year’s hearing on Amazon’s private label practices.

During that hearing, then CEO and founder Jeff Bezos said that the company sticks to a policy against using third-party seller data to influence and promote gains of its private labels, but he couldn’t outright “guarantee” that Amazon hasn’t violated the policy. He said during the hearing that roughly 60% of its sales come from third-party sellers and it hosts more than 2.5 million third-party sellers in its online marketplace.

Amazon, likely not coincidentally, released numbers today from its 2021 Small Business Empowerment Report that showed a 15% increase in American third-party sellers, nearly all small- and medium-sized businesses, in earning more than $1 million in sales this year. The third-party sellers created an estimated 1.8 million U.S.-based jobs, per the report.

Between the months of September 2020 and August 2021, the report highlighted American-based third-party sellers, selling more than 3.8 billion products and averaged about $200,000 in sales, up from $170,000, year over year. Additionally, the report said more than 200,000 new third-party sellers began selling in the U.S. store, a 45% increase year-over-year, benefitting small businesses during COVID-19.

The Reuters report looked at behavior by Amazon in India, saying the online and physical retailer has been imitating third-party products and fudging search results to improve and enhance the status of its own brands portfolio in India. 

The overseas report is similar to alleged claims made stateside in a Wall Street Journal report, which also initially spurred the U.S. House Judiciary Committee to reach out to Amazon and request a hearing via a letter. The Oct. 18 letter to new CEO Jassy, however, goes a bit further and questions whether the issue needs to be taken up by the Department of Justice for a criminal investigation.

The letter states: “In light of the serious nature of this matter, we are providing you with a final opportunity to provide exculpatory evidence to corroborate the prior testimony and statements on behalf of Amazon to the Committee. We strongly encourage you to make use of this opportunity to correct the record and provide the Committee with sworn, truthful, and accurate responses to this request as we consider whether a referral of this matter to the Department of Justice for criminal investigation is appropriate.”

The letter continues: “Last Wednesday, Reuters reported that Amazon “ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company’s largest growth markets.’”