Amazon lied about using seller data, lawmakers say, urging DOJ investigation

https://arstechnica.com/tech-policy/2022/03/us-lawmakers-seek-criminal-probe-of-amazon-for-lying-about-use-of-seller-data/

by ProAm • 4 years ago

343 100 4 years ago

arstechnica.com

xutopia• 4 years ago

And they'll get a small fine that's the cost of business for them.

mabbo2• 4 years ago

“Amazon lied through a senior executive’s sworn testimony that Amazon did not use any of the troves of data it had collected on its third-party sellers to compete with them,”

It's time to set an example. This sworn testimony was knowingly false. So charge this Senior executive with lying to Congress and lay down the likelihood of prison time. Watch them flip on their other execs.

jjoonathan3• 4 years ago

Agreed.

Everyone suspected they were lying, but suspicion isn't proof. If proof has emerged, it's imperative to go hard enough to make up for the many times where conservative standards of proof let obvious lies slip through.

mataug• 4 years ago

Agreed, amazon's executives are exteremly entitled, this is just one in series of examples where they think of themselves as untouchable. The executives need to be proved wrong about their untouchability.

besus• 4 years ago

A quick bit of browsing the Amazon Basics line of products would certainly lead one to assume they had totally knocked off the 3rd party products they thought they could without getting major brand pushback.

symlinkk• 4 years ago

I bought an Amazon basics monitor stand and it even had the branding of another company (Ergotron) printed on it.

shampto3• 4 years ago

I'm not sure about all Amazon Basics, but a few of the ones that I checked out were just third-party products that Amazon made deals with to slap their name on. Similar to how Costco's Kirkland brand is often the same as a popular brand but with a different label.

For example, the Amazon Basics guitar pedals are created by Nux pedals (the PCBs even have Nux on them).

So from what I can tell a lot of these are not ripoffs, just rebranded products. Amazon doesn't need to waste resources on manufacturing products that are already being sold on their site, but they can make deals with people that are already manufacturing those products.

comex• 4 years ago

Amazon never claimed it didn’t knock off other sellers’ products. What it claimed is that it didn’t use private data about how well other sellers’ products sold to decide what to knock off – a claim that was apparently false.

kodah• 4 years ago

Yet as today’s letter points out, subsequent investigations by The Wall Street Journal, Reuters, and The Markup revealed that not only did Amazon employees working on private-label items have access to third-party data, but they routinely used it, even discussing it openly in meetings. “Amazon employees regularly violated the policy—and senior officials knew it.”

That's pretty incredible. I'm curious what kind of data this is; knowing the nature of the data would help us understand how platform operators can abuse their position.

orev• 4 years ago

It’s data on what products are selling well, which they use to create clones and then sell under “Amazon Basics” and other brands.

It’s a problem because the small sellers take the financial risk trying to sell a new product, then when Amazon sees it’s doing well they make the clone and get the profits.

random3142• 4 years ago

I am wondering if Walmart and Costcos store brands are allowed to use seller data!

mabbo2• 4 years ago

Consider: you are on the Amazon Basics product development team. If you do well, you will be promoted, given bonuses, and greatly financially rewarded. If you do poorly, well, Amazon let's go of 6% of employees in every org every year[0].

There are policies in place saying that you definitely can't look at the data around which third party sellers are doing well, selling lots of stuff. But also there's no auditing in place to see if you check it or not. It's all a big data warehouse and you have access to it.

And hey, you've heard everyone else is looking at this data. You're just taking a quick look to get ideas do you don't get fired. What's the harm? You'll help the company do well and won't have to polish your resume.

[0] https://www.businessinsider.com/amazon-performance-review-6-...

MegaButts• 4 years ago

Consider: not working for an unethical company.

PMs at Amazon, even people who need visa sponsorships, have options (and probably better options). Don't defend their poor choices. Engineers at Amazon have even more options.

ethbr0• 4 years ago

They should have used the Google excuse for the middle step.

Construct an algorithm that tells you what you want, based on the data that you're not supposed to be using, and then throw your hands up when anybody asks and say "Nobody really knows how ML models work."

Or before machine learning was an option: management consultants.

lupire2• 4 years ago

And if you are caught, you are a rogue employee.

Imagine you could get out of a robbery charge by claiming it was perpetrated by a rogue glove.

jka• 4 years ago

It's been a long time since some of the congressional hearings about anti-competitive practices in the software industry, and I'm afraid I'm too tired to look up the details at the moment, but one of the items I remember from the discussion was that Amazon sales employees were allowed by company policy to look at aggregated figures (per-market, per-industry, etc) for merchants on their platform.

That's fine as-is -- nothing wrong with that in principle -- but what I seem to recall employees began doing (and I can totally imagine how this would become an underground "sneaky trick" that employees would begin to learn and share with each other) was to create so-called aggregate groups that only contained a very small number of merchant businesses.

That way they could claim (and perhaps keep a straight face when saying) that they were only looking at aggregate group-level figures, but the statistical reality of the situation would have been that they were looking at information about a few -- or perhaps even only one -- business.

victor106• 4 years ago

Not by any means defending Amazon here, genuinely curious.

How does this differ from say Walmart/Target/CVS etc., launching their own private branded labels?

Even they have access to all the data on the best selling products.

dahfizz• 4 years ago

The most salient difference, in my opinion, is that Amazon stood in front of Congress and lied about it.

If they instead told Congress that this is a long established retail practice, I would be more sympathetic to that argument.

jeromegv• 4 years ago

Beside the fact that they lied to Congress about.. I guess there is an expectation.

If you put your products on Amazon marketplace, you are expected to join a marketplace. You don't necessarily expect for Amazon to also join the marketplace by using your data to compete against you.

Also you can use Amazon services and warehouses even for products that you do not wish to sell on Amazon website. Essentially using Amazon as a 3PL service. Again, you might not expect Amazon to use your data for their own products.

If you sell your products to Target, this isn't exactly a marketplace. This is a retail outlet. You know they can measure your sales, measure your competitor sales, etc. And you know they won't lie to you about doing it.

mjamesaustin• 4 years ago

The difference is that Target is a retail store, not a marketplace. Target has already bought your products from you when Target sells them to customers, and aggregates data about its own sales of your products.

Amazon is a marketplace, and pays nothing to buy your products when they're offered for sale on its virtual shelves. It purports to provide an open and equal common area for companies (including itself) to sell products, yet only Amazon has access to the treasure trove of data about the behavior of consumers on its site.

kornhole3• 4 years ago

If you still have an Amazon account, ask for your data download from Amazon.com. You will probably be astounded to see that they retain just about every interaction you have ever had on their platform and products. I was a light user and received 88 zip files containing many files within them containing IP addresses, devices, and the most minute details. Now imagine how much they collect about sellers and products. You can assume it is everything they can collect.

makeitdouble3• 4 years ago

TBF every company managing a web application should be doing the same.

You positively need to know what your users come to click on, where they bail, what features they never use, what browsers constantly drop out at this specific part of your website, what IP uses the bot that scrapes your most costly site wide search every millisecond etc.

Sure, any of these data could be derive from more focused, pinpoint check if you knew in advance what exactly you need to know. But let's be realistic, there's no way to anticipate every single use case and only collect the minimum data needed to fulfill it.

I don't see detailed usage data collection as a critical issue as long as it isn't sold/leaked/stored for decades/misused to harm. We can come up with so many cases where it has been effectively misused, but I'd argue it's like saying kitchen knives are misused again and again to kill people and we should stop their use. It's not realistic.

arrosenberg• 4 years ago

Yeah, the third-party sellers know that. That's what they've been screaming about for a decade while being squeezed out of the market. Now let's see if we're willing to prosecute white collar crime against regular people for once.

quxpar• 4 years ago

Why would this case be the exception?

f1refly• 4 years ago

Considering this is an indictment in america against a monopolistic company: Nothing will happen, amazon will continue printing money and the small guys can whine all they want.

Animats2• 4 years ago

When will Amazon executives be arrested?

The way to deal with this is to arrest a whole group of Amazon execs, and offer the usual deal - the first one to make a full confession and implicate others gets off, the others get prosecuted. This is official DOJ policy.[1]

[1] https://www.jdsupra.com/legalnews/sometimes-confession-is-go...

nathanyz• 4 years ago

Agreed, nothing sort of holding executives accountable with actual threat of prison time fixes this. Fines don’t matter once you are the winner in the market. Have to set an example and stop individuals from feeling safe when lying for companies.

nickff7• 4 years ago

Fines against individuals, with a prohibition on further compensation/employment by the company/organization would likely be sufficient to discourage this behavior. There is widespread disagreement as to whether prison should be used as a punitive tool, and it would serve no other purpose in a case like this.

Corporate fines seem ineffective and almost useless , especially because these sorts of actions will often benefit the individuals undertaking them (principal agent problem). I suspect the motivation behind corporate fines is that they can be large monetary amounts, and look good for the investigator/agent/attorney.

onion2k• 4 years ago

I can think of something that would work. If Amazon is found guilty of abusing it's the data it's trusted witb, for anything, the entire company should be banned from doing business with the government. No government purchases of goods, no services hosted on AWS, no logistics provided by Amazon's last mile services, etc. If Amazon are shown to be abusing data then they shouldn't be allowed to have any public data.

Maybe even extend that to all government suppliers...

88840-8855• 4 years ago

I agree.

encryptluks2• 4 years ago

Isn't that considered illegal as well, to arrest people without enough evidence and then demand they admit guilt to be released? I can see how this would hurt a case more than it would help one. Imagine if there is a jury trial and it comes out that people were forced to make confessions under duress.

ruined2• 4 years ago

you only need evidence at trial. cops and prosecutors coerce people into pleading guilty without any evidence every day.

deutschew• 4 years ago

Not when there are political ramifications to the beneficiaries of Amazon's generous "donations"

chagaif2• 4 years ago

Aren't they more afraid of violence and threats from the other execs? I would think that some violent threats are not off the table when there's so much on the line (jail time) and so much money involved.

decebalus1• 4 years ago

Aren't they more afraid of violence and threats from the other execs?

Is Amazon Cosa Nostra nowadays? I find it hard to believe they'd be more scared of other execs than the government..

spaetzleesser2• 4 years ago

I think the DOJ and other agencies are way too addicted to getting fines. I don't think they want to interrupt that cashflow by actually going after people.

vmception• 4 years ago

That's probably happening too but the bigger perverse incentive is that they don't want to actually debilitate market leading companies to ensure the monopoly of the remaining companies.

It mostly just lacks inspiration.

markdown• 4 years ago

This is official DOJ policy.

* for poor people.

IncandescentGas• 4 years ago

he first one to make a full confession and implicate others gets off, the others get prosecuted.

This is how you get false confessions and wrongful convictions. Especially for conspiracy where burden of proof is he-said/she-said

vkou• 4 years ago

The burden of proof in cases like this is actually carried by the mountains of emails, product design documents, and all other forms of internal documentation. Only the e-mails get regularly purged.

This isn't a dope dealer growing weed in his car and having his buddies sell it for him. These sorts of operations produce a lot of paperwork. As an employee who is actually tasked with building/working with all of these systems/processess, you don't get inducted into the secret conspiracy with a nod, wink, handshake, and a secret decoder ring.

loeg• 4 years ago

Shareholders don't seem too worried about this.

nebula8804• 4 years ago

So I am a bit confused. How does this differ from in store brands like Bowl & Basket (Shoprite) or Good & Gather(Target)? Haven't those in-store brands been going on for years and years selling clones and commodities?

philistine• 4 years ago

The difference is Amazon knowingly lied to Congress. Shoprite and Target did not.

jcranberry• 4 years ago

That seems like it would be incredibly stupid and have little upside.

quequeque• 4 years ago

Do many large grocers in the US seem to be regionalized? This mention of "Shoprite" may have given me an idea of the location this poster is from (Eastern Mid-Atlantic region?)

colinmhayes• 4 years ago

Yea pretty much every region has its own grocery brand. There's always walmart/target and whole foods/trader joes in urban areas, but then there's a local brand too. We got Jewel in my area.

callalex• 4 years ago

My experience over the past few decades is that the grocery store companies have slowly consolidated from small chains, to regional companies, to national empires, but they keep the original name of the store from 30 years ago to appear “local”.

saberworks2• 4 years ago

Somewhat related: any time a business/person has access to data about a customer or their business, they're in a position of power and are able to use that data against the customer.

When you apply to rent a house, you're required to provide pay stubs and salary information. The landlord can (does?) use this to know how much they can jack up your rent next lease term (my landlord raised our rent $800/month in January).

Same with insurance salespeople, car salespeople, etc. Everyone who gets access to your financial data can use it against you.

There should be a 3rd party involved -- they take your documentation and then report to the landlord/salesperson/etc. a simple "is the person qualified?" Yes or No. And then permanently destroy said documentation.

spaetzleesser2• 4 years ago

That would be nice!

BTW: A $800/month increase is insane!

saberworks2• 4 years ago

Yeah tell me about it. I actually made a mistake, they raised it by $600. The landlord acted so surprised when we didn't renew our lease. When we left, the landlord listed it and rented it out for the original lease amount. I'm guessing those people can expect a big rent increase when their term is up as well.

solarkraft• 4 years ago

Everyone who gets access to your financial data can use it against you.

And it's a safe assumption that everybody who can also will. There's too much money involved to let the opportunity slide.

megaman821• 4 years ago

It seems more likely that Amazon would just purchase this data from Nielsen or IRI. The data would be nearly as good for the Amazon Brand teams, without the moral hazard of looking at private seller data. It may seem weird to purchase data on your own storefront, but it protects you from situations like this.

spydum• 4 years ago

this seems like it might make sense, but amazon is incredibly uncooperative on their sales data as you might guess. even for an IRI or Nielsen, its a challenge to obtain this data with a large enough sampling

yourapostasy• 4 years ago

I’m surprised I scrolled through the entire comment thread and have yet to find someone raise the following concern.

With this reputational and data exposure hit revealed, exactly how much are you going to believe the same organization when they say, “we’d never violate your trust placed in our AWS services!” Keep in mind this is the same organization that gleefully says, “your margin is my opportunity”.

Amazon lied about using seller data, lawmakers say, urging DOJ investigation

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