Shawn Vestal: House panel’s battle with Amazon tests ability of tech monopolies to evade accountability

On July 16, 2019, Rep. Pramila Jayapal, the Washington Democrat, asked one of Amazon’s top corporate lawyers an important question – and one for which Jayapal and others on the House Judiciary Committee have still not received a clear answer.

Jayapal was wondering, as part of an inquiry into competitive practices in the digital marketplace, if Amazon uses data about third-party sellers on its site to copy successful products and peddle its own knock-off versions.

“Do you track that and then do you create products that directly compete with those most popular brands that are out there?” she asked.

Nate Sutton, Amazon’s associate general counsel for competition, said no.

Two days later, a former company employee contradicted Sutton in a report in the Capitol Forum, saying the company “routinely” did so.

Nine months later, the Wall Street Journal reported that more than 20 former employees said that using seller data to develop products through the company’s private-label wing, AmazonBasics, was “standard operating procedure.”

A little more than a year later, 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.” The story was based on internal Amazon documents.

At that same hearing of the Judiciary Committee, in July 2019, Sutton was asked whether Amazon’s algorithm routinely preferenced its own products over others in search results. The lawyer again said no – only for journalists to again find evidence to the contrary.

Now, after months of efforts to attempt to get Amazon to explain these discrepancies – efforts that have been met, the committee says, with a barrage of wordsmithing, weasel-wording, aggressive lawyering, and outright lying – members of the committee want the Department of Justice to consider whether Amazon’s obfuscation has reached criminal levels.

“Amazon was caught in a lie after Mr. Sutton testified that Amazon did not use any third-party seller data to advantage its private-label business,” the committee wrote in its letter to Attorney General Merrick Garland, which was signed by three Democrats and two Republicans.

It added, “What Amazon does not appear to take seriously is its obligation to provide truthful and complete responses to Committee inquiries. Its testimony and written statements concerning its use of third-party seller data and its search algorithms appear to have been inaccurate and misleading, and it has withheld material information without valid justification.”

While it may seem like a dry, complicated conflict, the battle to drag Seattle-based Amazon toward accountability is actually a titanic clash – one that will tell us something about the relative power of the government, the Fourth Estate, and one of the biggest companies in the world.

What the Judiciary Committee describes in its 24-page referral is a company deploying the full range of weapons afforded it by its size and limitless resources to deflect, defer and dance around efforts to get accurate information.

At every step of the process, when the committee members have tried to ask questions about the claims made by former employees, they have been met with efforts to muddy and mislead – including testimony from Jeff Bezos himself – which have turned into something like stonewalling, the committee says in its letter.

“When multiple, credible reports offered specific evidence that Amazon employees regularly violated the Seller Data Protection Policy, and senior officials knew about this practice, Amazon offered little more than a declaration that it was ‘satisfied’ that Amazon takes its policy seriously,” the letter says.

Amazon has denied wrongdoing, and denies the committee’s claims about obfuscation. “There’s no factual basis for this, as demonstrated in the huge volume of information we’ve provided over several years of good faith cooperation with this investigation,” a spokeswoman said in a statement.

The House committee paints a wildly and persuasively different picture. It has been probing the ability of tech giants to manipulate online markets in their own favor following its massive report about antitrust concerns in big tech in 2020, which concluded that “companies that once were scrappy, underdog startups that challenged the status quo have become the kinds of monopolies we last saw in the era of oil barons and railroad tycoons.”

That report said that Amazon’s “control over and reach across its many business lines enable it to self-preference and disadvantage competitors in ways that undermine free and fair competition. … Amazon has engaged in extensive anticompetitive conduct in its treatment of third-party sellers. Publicly, Amazon describes third-party sellers as ‘partners.’ But internal documents show that, behind closed doors, the company refers to them as ‘internal competitors.’ ”

The barons and tycoons of the new gilded age will not hand over their advantage out of the goodness of their hearts. Amazon’s escalating battle with the federal government – and its conflict with the discoveries of the press corps – only reinforces this reality.