Tech

GOP Sen. Hawley asks DOJ to open a criminal investigation into Amazon

Key Points
  • Sen. Josh Hawley, R-Mo., is asking the Department of Justice to open a criminal investigation into Amazon in a letter sent Tuesday.
  • The request follows a report that said Amazon employees had used data from third-party sellers to create rival Amazon private-label products.
  • Two lawmakers in the House of Representatives called out Amazon for potentially misleading Congress about its use of seller data following the Journal's report on Friday.
Sen. Josh Hawley, R-Mo., talks with reporters after the Senate Republican Policy luncheon in Russell Building on Tuesday, March 17, 2020.
Tom Williams | CQ-Roll Call via Getty Images

Sen. Josh Hawley, R-Mo., is asking the Department of Justice to open a criminal investigation into Amazon, citing reports that he says suggest the company has used "predatory and exclusionary data practices to build and maintain a monopoly."

Hawley's request follows Friday's Wall Street Journal report that said Amazon employees had used data from third-party sellers to rival them with private label products under Amazon's own brands.

Amazon has previously testified to the House Antitrust Subcommittee that it only uses aggregated data from multiple third-party sellers to inform its product strategy, and did not look at sales data for individual products. But the Journal, after reviewing documents and interviewing more than 20 former employees, found that individual seller data could be easily deduced for some categories, making the distinction irrelevant in practice.

Amazon said that such practices would break its policies and that it does not believe the Journal's findings are accurate. It has launched an internal investigation nonetheless.

In his letter to Attorney General William Barr dated Tuesday, Hawley said the Journal's reporting appears to meet the definition of a punishable crime under antitrust law. 

"Amazon abuses its position as an online platform and collects detailed data about merchandise so Amazon can create copycat products under an Amazon brand," he wrote. 

Hawley is asking the Justice Department to investigate Amazon on the basis of Section 2 of the Sherman Antitrust Act. The statute, which was used to prosecute Microsoft in a landmark antitrust case at the turn of the century, prohibits unlawful monopolies, which are firms that rise to dominance or maintain it by suppressing competition. The European Commission has already opened an investigation into the ways Amazon uses data from its sellers.

Hawley said the data Amazon collects is much more valuable than that of a traditional retail store because it can include more detailed information about how customers are looking at products. Even if Amazon is using aggregate data, he said, it could still be used to further its alleged monopoly power.

"Using aggregate data just means that, when Amazon uses data to create copycat products, it harms multiple small businesses instead of just one," Hawley wrote.

Amazon's practices are especially concerning in light of the ongoing pandemic, according to Hawley, who has experience investigating another tech giant. Hawley opened an antitrust probe into Google while attorney general of Missouri. 

"Thousands of small businesses have been forced to suspend in-store retail and instead rely on Amazon because of shutdowns related to the coronavirus pandemic," he wrote. "Amazon's reported data practices are an existential threat that may prevent these businesses from ever recovering."

A spokesperson told CNBC on Tuesday Amazon "strictly prohibit[s] employees from using non-public, seller-specific data to determine which private label products to launch."

A DOJ spokesperson said the agency has received the letter and is reviewing it.

Hawley is the latest member of Congress to go after Amazon following the Journal's reporting. On Friday, Rep. David Cicilline, D-R.I., chairman of the House Antitrust Subcommittee and Jerrold Nadler, D-N.Y., chairman of the House Judiciary Committee, expressed concern over Amazon's allegedly misleading testimony about how it uses seller data. Cicilline, who is leading an investigation into Amazon and other tech giants, went as far as to say its representative "may have lied to Congress."

An Amazon spokesperson previously told CNBC in a statement, "It's simply incorrect to suggest that Amazon was intentionally misleading in our testimony."

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