Amazon's top watchdog in Congress says its witness 'may have lied'

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    Representative David Cicilline (D-RI) speaks at a Democratic press conference calling on the president to protect patients with existing coverage, lower drug prices and to expand healthcare coverage.

    Michael Brochstein | Echoes Wire | Barcroft Media via Getty Images

    Amazon‘s witness at a hearing last year “may have lied to Congress” about how the company uses data from its third-party sellers to come up with its private-label products, House Antitrust Subcommittee Chairman David Cicilline said Thursday.

    The assertion comes after a Wall Street Journal investigation found Amazon employees had used non-aggregated or easily identifiable data from sellers on its platform to inform its proprietary product strategy, according to interviews with more than 20 former employees and documents reviewed by the Journal.

    Those findings contradict testimony by Amazon’s associate general counsel Nate Sutton at a July hearing hosted by the subcommittee. At the time, and in written answers submitted later on, Sutton maintained that Amazon does not use the data of individual sellers to inform its strategy, though he said it does use aggregated data that could give it a sense of how a product category is performing.

    “We do not use any of that specific seller data in creating our own private brand products,” Sutton said at the hearing.

    The Journal’s investigation found that those aggregate reports could contain just two sellers or easily expose performance metrics of individual sellers through other means. An Amazon spokesperson told CNBC it doesn’t allow employees to use “non-public, seller-specific data to determine which private label products to launch” and said it had opened an internal investigation, though it doesn’t believe the allegations are true.

    “At best, Amazon’s witness appears to have misrepresented key aspects of Amazon’s business practices while omitting important details in response to pointed questioning,” Cicilline said in a statement on the report. “At worst, the witness Amazon sent to speak on its behalf may have lied to Congress.”

    Cicilline is leading an investigation into Amazon and its tech peers that will culminate in a report about the health of competition in digital markets.

    “It’s simply incorrect to suggest that Amazon was intentionally misleading in our testimony,” the Amazon spokesperson told CNBC.

    In a January interview with CNBC, Cicilline said it was evident the digital marketplace was “not functioning properly” and said he planned to create bipartisan regulatory proposals to address the issues after releasing the report. The report was initially expected by early April but has been delayed due to the pandemic.

    The subcommittee also heard from smaller businesses that compete with Amazon services or claim to have experienced “bullying” tactics to coerce sellers into lowering their prices on the platform. Amazon has argued it is incentivized to keep sellers on its site and that there are other options if they want to leave. Sellers that have spoken out say the available alternatives would provide only a fraction of the revenue they’re able to make on Amazon. 

    The chairman of the full Judiciary Committee, Jerrold Nadler, D-N.Y., said that if true, the Journal’s report “raises deep concerns about Amazon’s apparent lack of candor before the Committee regarding an issue that is central to our investigation.”

    “Amazon has had opportunities to correct the record on its business practices. It is deeply concerning that, beginning with the hearing last year, they may have misled Congress rather than be fully forthcoming on this matter, notwithstanding our repeated requests in this regard,” Nadler said, adding that the committee would “seek clarification from Amazon in short order.” 

    Amazon has been playing an integral role in getting Americans food and other goods while stuck in their homes during the coronavirus pandemic. But Nadler made clear in his statement that those efforts would not insulate it from antitrust scrutiny.

    “While we acknowledge and are appreciative of Amazon’s ongoing work to support Americans during the COVID-19 crisis, we still need to understand the business practices existing prior to the pandemic that resulted in Amazon becoming the primary provider of goods online to millions of Americans,” Nadler said.

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