U.S. Senator Calls for Criminal Investigation Into Amazon Over 'Predatory' Data Practices

Sen. Josh Hawley calls for a criminal investigation into Amazon.com.

A U.S. Senator on Tuesday called for a criminal investigation into Amazon.com  (AMZN) - Get Report over alleged "predatory and exclusionary data practices" related to the online retail giant's behavior towards its third-party sellers.

Sen. Josh Hawley, R-Mo, said in a letter to U.S. Attorney General William Barr that "recent reports suggest that Amazon has engaged in predatory and exclusionary data practices to build and maintain a monopoly."

"These practices are alarming for America’s small businesses even under ordinary circumstances," Hawley said "But at a time when most small retail businesses must rely on Amazon because of coronavirus-related shutdowns, predatory data practices threaten these businesses’ very existence."

Hawley cited a report last week by the Wall Street Journal that said Amazon employees used sales information about third-party sellers to launch competing products under their own label.

Former Amazon employees told the Journal that they had regularly accessed data about individual sellers, skirting the company’s policy, and used the information to launch competing products with similar features. 

“As we told the Wall Street Journal, we strictly prohibit employees from using non-public, seller-specific data to determine which private label products to launch," an Amazon spokesperson said in a statement. "While we don’t believe these claims made by the Wall Street Journal are accurate, we take these allegations very seriously and have launched an internal investigation.” 

David Cicilline, D-R.I., chairman of the House Antitrust Subcommittee and Jerrold Nadler, D-N.Y., chairman of the House Judiciary Committee also expressed concern about Amazon's practices after the Journal story broke.

Hawley said that "the kind of data Amazon can access poses a much greater threat to competition than the data accessible to ordinary retail stores."

"Brick-and-mortar stores collect data, such as how often third-party products are purchased, when they are purchased, and whether they are purchased in combination with other products," he said. "But online retailers like Amazon can collect so much more data."

Hawley said the European Union is investigating reports that Amazon uses data anticompetitively to target third-party sellers. 

"In the light of the enormous evidence already gathered, I ask that you look into this issue and open a criminal antitrust investigation of Amazon," Hawley said.

Shares were down 2.7% to $2,312.92.

The company recently started testing video calling to verify third-party sellers in an effort to reduce fraudulent accounts and listings on its platform.

Amazon is scheduled to report first-quarter earnings on Thursday after the close.

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