Amazon is one of the few companies that has been profiting – and in greater measure through the pandemic. But this is likely due in part to new evidence that the company has been reportedly scraping data from third-party sellers to improve its own private label products-a direct violation of its own stated policies. While the allegations against Amazon for abusing its marketplace position have been growing louder in recent years, they are even more troubling now considering the thousands of small businesses struggling – and going out of business in the wake of the coronavirus pandemic.
That is why Attorney General Josh Shapiro needs to urgently launch an investigation into just how Amazon treats third-party sellers and examine whether the e-commerce giant is unfairly using third-party seller data to help inform their decisions on its own product creation, promotion and pricing.
For small businesses in Pennsylvania, Amazon’s deceitful practices can be devastating. Pennsylvania is home to among the most Amazon third-party sellers nationwide, with more than 2 percent of US-based sellers, out of the estimated one million across the country. As the coronavirus pandemic continues to batter brick and-mortar small businesses, many may be looking to move even more of their operations online as a way to sustain business.
It is critical that leading platforms like Amazon are not able to abuse their market position and further hurt these struggling small businesses.
Sharing these same concerns, the California Attorney General Xavier Becerra recently launched an investigation into how Amazon treats third-party sellers on its online marketplace, examining how Amazon promotes and sells its own products. While the investigation is just in its beginning stages, the massive scope of the company shows just how important it is to ensure a fair playing field for all businesses.
This inquiry is a step in the right direction towards greater accountability. It ensures that Amazon cannot further solidify an unfair advantage over its competitors and helps foster a more even playing field. And Pennsylvania officials should stand up for businesses across the Keystone State and join in the investigation.
Third-party sellers have warned that Amazon engages in these unfair practices, as their brands are routinely pushed to the bottom of search results pages on the platform. For example, a recent investigation revealed that Amazon’s private-label products for common consumer goods often are placed in the most lucrative position on the platform — even if these private-label brands fail to hit enough sales that would justify a center stage appearance.
These monopolistic strategies have come to light as Amazon battles antitrust allegations both here in the United States and overseas. Amazon Chief Executive Jeff Bezos is scheduled to testify before the House Judiciary Committee later this month. Meanwhile, European Union officials are also preparing antitrust charges against the e-commerce giant on the grounds that it is using third party data to boost its own product offerings.
A formal inquiry launched at the state level is vital in ensuring that all third-party sellers from the Keystone State have a seat at the table and are not stifled by Amazon’s anti-competitive behavior. Given that Amazon’s decisions directly impact many Pennsylvania businesses, action is desperately needed.
Amazon’s dual role in maintaining an online store and selling its own goods means that it must not unfairly leverage data from small businesses to help them achieve a better position in its marketplace.
Attorney General Shapiro should investigate these dishonest practices and guarantee that Amazon is following the law — not merely playing by its own rules.
Robert B. Engel is the chief spokesperson for the Free & Fair Markets Initiative.