Amazon Antitrust Investigations Mount With Addition Of Two More State Probes

Amazon Fulfillment Center

Amazon’s scrutiny into its business practices regarding third-party marketplace sellers intensified over the last few days.

Officials in California have been probing Amazon about how it uses data from third-party marketplace sellers, the New York Times and Wall Street Journal report.

The reports claim California’s investigation focuses on Amazon’s use of internal sales data to make decisions on what products to launch under its private label brands.

In April, the Wall Street Journal published a story making a similar allegation, basing its report on 20 former Amazon staff members. In the WSJ story, Amazon said it was investigating the complaint internally as it violated company policy.

The New York Times report also claims the Washington state attorney general’s office is looking into allegations that Amazon makes it more difficult for sellers to sell on other marketplaces.

And Amazon is also part of an investigation by the House Judiciary Committee that is looking into the market power of major tech companies.

While this investigation has a broader focus, it’s likely the issue regarding how it treats small business sellers could come up as well.

Amazon CEO Jeff Bezos is now expected to appear before the committee after Amazon was trying to offer “appropriate executives” instead.

Bezos has never testified in front of Congress, and while Amazon never provided a reason why it wasn’t offering Bezos to testify, the spectacle of the richest man in the world being grilled on Amazon business operations has no upside.

Amazon Also Faces Antitrust Investigations In Europe

Antitrust investigations against Amazon’s treatment of sellers and seller data go beyond U.S. borders.

Last year, the European Union started an antitrust investigation into Amazon’s business practices that also focused on the use of internal sales data. The EU’s probe followed several other independent investigations by EU member countries in Amazon’s business practices.

In a separate story reported by the Wall Street Journal, the EU’s antitrust watchdog is expected to file charges against Amazon regarding its treatment of third-party sellers, citing sources familiar with the matter.

The WSJ claims charges could come as early as this week and would focus on the dual role the company has as both a marketplace and a seller.

Amazon’s Dual Role A Big Problem

As Amazon’s marketplace business continues to grow globally, and the company’s private-label business keeps expanding, the dual role of being a marketplace operator and a seller of products is raising antitrust implications.

While the company claims that using internal data by its private label division is against company policy, too many seller complaints and investigations are exposing areas of concern.

Over the last decade, Amazon has steamrolled passed other marketplaces, and for many small businesses wanting to sell online, it has become the primary ecommerce platform.

Often, small companies just accepted the fact that Amazon may end up competing against them because of the business opportunity Amazon’s marketplace provided.

But as Amazon’s private-label business grows, so does scrutiny in how it operates and treats third-party marketplace sellers essential to its sales growth.

With Walmart gaining momentum in online sales and now expanding its marketplace to offer fulfillment services to sellers, a new integration with Shopify shops, antitrust watchdogs are not the only issue facing Amazon.

The easy answer would be to drop the private label business, but there are no indications the company is considering such a decision unless regulators force its hands.

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