LDN - Business

Five U.S. lawmakers accuse Amazon of possibly lying to Congress following Reuters report

[October 18, 2021] By Steve Stecklow, Aditya Kalra and Jeffrey Dastin

LONDON (Reuters) - Five members of the U.S. House Judiciary committee wrote to Amazon.com Inc's chief executive Sunday, and accused the company's top executives, including founder Jeff Bezos, of either misleading Congress or possibly lying to it about Amazon's business practices.

The letter also states that the committee is considering "whether a referral of this matter to the Department of Justice for criminal investigation is appropriate."

Addressed to Amazon CEO Andy Jassy, the letter followed a Reuters investigation last week that showed that the company had conducted a systematic campaign of copying products and rigging search results in India to boost sales of its own brands - practices Amazon has denied engaging in. Jassy, a longtime Amazon executive, succeeded Bezos in July.

The letter states that "credible reporting" in the Reuters story and recent articles in several other news outlets "directly contradicts the sworn testimony and representations of Amazon's top executives – including former CEO Jeffrey Bezos."

"At best, this reporting confirms that Amazon's representatives misled the Committee. At worst, it demonstrates that they may have lied to Congress in possible violation of federal criminal law," the letter states. Reuters reviewed a copy of the letter.

In response, an Amazon spokesperson issued a statement that said: "Amazon and its executives did not mislead the committee, and we have denied and sought to correct the record on the inaccurate media articles in question."

It added: "As we have previously stated, we have an internal policy, which goes beyond that of any other retailer's policy that we're aware of, that prohibits the use of individual seller data to develop Amazon private label products. We investigate any allegations that this policy may have been violated and take appropriate action."

Since 2019, the House Judiciary Committee has been investigating competition in digital markets, including how Amazon uses proprietary seller data from its platform, and whether the company unfairly favors its own products.

In sworn testimony before the Judiciary Committee's antitrust subcommittee last year, Bezos said the company prohibits its employees from using data on individual sellers to benefit its own private-label product lines. In another hearing in 2019, Nate Sutton, Amazon's associate general counsel, testified that the company does not use such data to create its own branded products or alter its search results to benefit them.

Asked during the 2019 congressional hearing whether Amazon alters algorithms to direct consumers to its own goods, Sutton replied: "The algorithms are optimized to predict what customers want to buy regardless of the seller."

The lawmakers' letter gives Jassy "a final opportunity" to provide evidence to corroborate the company's prior testimony and statements. It also notes that "it is criminally illegal to knowingly and willfully make statements that are materially false, conceal a material fact, or otherwise provide false documentation in response to a congressional investigation."

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The Amazon logo is seen outside its JFK8 distribution center in Staten Island, New York, U.S. November 25, 2020. REUTERS/Brendan McDermid

It gives the CEO until Nov. 1 to provide a sworn response to clarify "how Amazon uses non-public individual seller data to develop and market its own line of products" and how Amazon's search rankings favor those products.

It also requests copies of all documents mentioned in the Oct. 13 Reuters investigation.

"We strongly encourage you to make use of this opportunity to correct the record and provide the Committee with sworn, truthful, and accurate responses to this request as we consider whether a referral of this matter to the Department of Justice for criminal investigation is appropriate," the letter states.

The Reuters probe was based on thousands of pages of internal Amazon documents – including emails, strategy papers and business plans. They showed that, at least in India, Amazon had a formal, clandestine policy of manipulating search results to favor Amazon's own products, as well as copying other sellers' goods – and that at least two senior company executives had reviewed it.

In response to the Reuters report, Amazon said, "We believe these claims are factually incorrect and unsubstantiated." The company did not elaborate. The company said the way it displays search results doesn't favor private-brand products.

The lawmakers' letter also cites other recent stories in the Markup, the Wall Street Journal and the Capitol Forum about Amazon's private-brand products and use of seller data.

The letter's sharp wording ratchets up the rhetoric between Washington and Big Tech. Companies including Amazon, Facebook Inc, Apple Inc and Alphabet Inc's Google have been under growing scrutiny in Washington, Europe and other parts of the world, fueled by concerns among regulators, lawmakers and consumer groups that the firms have too much power and are engaging in unfair practices that hurt other businesses.

The lawmakers' letter was signed by a bipartisan group, and included the judiciary committee's chairman, Democrat Jerrold Nadler, and four members of the antitrust subcommittee – its chair, Democrat David Cicilline, vice chair Pramila Jayapal and Republicans Ken Buck and Matt Gaetz.

On Wednesday, following publication of the Reuters investigation, U.S. Democratic Senator Elizabeth Warren, a prominent critic of Amazon, called for breaking up the company. In India, a group representing millions of brick-and-mortar retailers urged Prime Minister Narendra Modi's government to take action against Amazon.

(Reporting by Steve Stecklow in London, Aditya Kalra in New Delhi and Jeffrey Dastin in Palo Alto. Editing by Peter Hirschberg.)

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