Is Amazon Rigging Its Own System?

Despite growing concerns in Congress over potential violations of federal antitrust law, internal documents unearthed by Reuters appear to indicate that Amazon may be manipulating its own search results in at least one foreign market.


The report, released earlier in October, accuses the eCommerce giant of creating competitive product knockoffs from marketplace sellers and manipulating its own A9 algorithm to rank for higher searches for their own product lines in India. The report comes less than two months after a coalition of 2,000 third-party sellers based in the country filed an antitrust suit against Amazon, claiming the retailer gives an unfair advantage to larger distributors whose price discounts effectively drive independent vendors out of business.


The documents allege that Amazon employees studied proprietary data on third-party brands on Amazon.in, including detailed information about customer returns, in order to identify key products for duplication. A similar charge was also levied against the retailer in 2020 after the Wall Street Journal published a report detailing Amazon’s use of US marketplace brand data to develop competitive products—a practice seemingly at odds with Amazon's official seller data protection policy.


Amazon had previously claimed to support over $10 Billion in investments to gain a foothold in India by 2025, including a $250 Million venture fund for startups announced in April 2021, but are currently one of two domestic entities under a regulatory investigation from the Competition Commission of India into alleged anti-competitive law violations.


According to the Reuters report, Amazon executives in India not only knew about but endorsed the strategy, which included partnering with select third-party manufacturers in order to review development processes to be duplicated in their own private line. “It is difficult to develop this expertise across products,” states an internal document cited in the report. “To ensure that we are able to fully match quality with our reference product, we decided to only partner with the manufacturers of our reference product.”


Amazon is not alone in co-opting top-selling products for duplication under their own private label. Competitive retailer Target has been accused of using similar tactics for their own private label line of some 45 different products; an accusation also levied against H&M, Zara, and Old Navy. Current US copyright law can be excessively vague when distinguishing between creative and intellectual property ownership and manufacturing clauses. But the Reuters report is one of the first times that a retailer has been accused of manipulating their own search engine results for proprietary gain.


According to a 2021 Amazon Seller Report from Jungle Scout, approximately 47 percent of third-party sellers use Amazon Marketplace as their primary source of income.


There are currently over 23,000 different products from 406 private-label brands on Marketplace owned by Amazon—a business line reportedly worth $25 Billion in sales. Yet according to a recent poll from YouGov, 33 percent of US customers were uncertain if the products found during a search result were part of Amazon’s line, while over half of the respondents assumed top-ranking results were the result of popularity and reviews.


As recently as 2019, Amazon had previously testified in Congress that it does not offer its private brand products at a regular price below the cost of competitive goods and that search results do not take into account Amazon’s proprietary ownership of a brand.


“We have a policy against using seller-specific data to aid our private label business,” former CEO Jeff Bezos stated at a House Judiciary Antitrust Subcommittee hearing in 2020 under questioning by Rep. Pramila Jayapal (D-WA). “But I can't guarantee you that that policy has never been violated.”


In response to the Reuters report, several members of the House Judiciary Antitrust Subcommittee have called on current Amazon CEO Andy Jassy to clarify and address the allegations, while Sen. Elizabeth Warren (D-MA) has publicly called for a breakup of Amazon, stating “[Amazon} is willing and able to rig its platform to benefit its bottom line while stiffing small businesses and entrepreneurs.”


Color More Lines provides white glove, global account management of Amazon, Walmart, and other ecommerce platforms so mission-driven companies can focus on new product development, branding and growth strategies. Find out more at Color More Lines.

6 views0 comments