Amazon India accused of copying merchant products and juicing search results to sell its own knockoffs

The Register - Wed Oct 13 22:59

When asked in July, 2020, by US Representative Pramila Jayapal (D-WA) whether Amazon ever mined data from its third-party vendors to launch competing products, founder and then CEO Jeff Bezos said he couldn't answer "yes" or "no," but insisted Amazon had rules disallowing the practice.

"What I can tell you is we have a policy against using seller-specific data to aid our private label business but I can’t guarantee that policy has never been violated," Bezos said.

According to documents obtained by Reuters, Amazon's employees in India flouted that policy by copying the products of Amazon marketplace sellers for its in-house brands and then manipulating search results on Amazon's website to place its knockoffs at the top of search results lists.

"The documents reveal how Amazon’s private-brands team in India secretly exploited internal data from Amazon.in to copy products sold by other companies, and then offered them on its platform," said Reuters reporters Aditya Kalra and Steve Stecklow in a report published on Wednesday.

"The employees also stoked sales of Amazon private-brand products by rigging Amazon’s search results so that the company’s products would appear, as one 2016 strategy report for India put it, 'in the first 2 or three … search results' when customers were shopping on Amazon.in."

Last year, the Wall Street Journal published similar allegations that the company used third-party merchant data to develop competing products, which prompted Rep. Jayapal's question to Bezos. Such claims are central to the ongoing antitrust investigations of Amazon being conducted in the US, Europe, and India.

"We must ensure that dual role platforms with market power, such as Amazon, do not distort competition," said Margrethe Vestager, EVP of the European Commission of Competition, in a statement last November. "Data on the activity of third party sellers should not be used to the benefit of Amazon when it acts as a competitor to these sellers."

The EC said it had found that a significant amount of non-public seller data is available to employees of Amazon's retail business and that Amazon analyzes that data to make business decisions that harm sellers using its online marketplace.

Amazon in 2019 launched a program called Project Zero to prevent third-party merchants from copying one another and selling their copies via Amazon's market. The anti-counterfeiting program, however, is externally focused.

Amazon responds

In a statement emailed to The Register, an Amazon spokesperson said the company has not seen the documents obtained by Reuters but believes they're wrong.

"As Reuters hasn't shared the documents or their provenance with us, we are unable to confirm the veracity or otherwise of the information and claims as stated," an Amazon spokesperson said.

"We believe these claims are factually incorrect and unsubstantiated. We continue to focus on delivering first-class service to consumers, and helping India’s small businesses reach customers around the world."

The company's statement goes on to insist that sellers in its marketplace determine their prices and that Amazon does not give preferential treatment to merchants.

The antitrust lawsuit brought by Washington DC Attorney General Karl Racine argues to the contrary, that Amazon's 'most favored nation' (MFN) agreements with sellers "prevent third-party sellers that offer products on Amazon.com from offering their products at lower prices or on better terms on any other online platform, including their own websites."

Insisting that it analyzes seller data in aggregate to provide sellers with information on "selection gaps based on customer preferences," Amazon's spokesperson reiterated Bezos's assertion that Amazon has a policy forbids using merchant data for internal usage.

"Amazon’s policy strictly prohibits the use or sharing of non-public, seller-specific data for the benefit of any seller, including sellers of private brands," the company spokesperson said. "This policy applies uniformly across our company to all employees – our internal teams receive regular trainings on its application and we thoroughly investigate any reports of employees acting contrary to this policy."

At this point, Amazon is not the only organization investigating these reports. ®