House committee threatens criminal probe of Amazon over competition practices

U.S. House lawmakers are threatening to seek a criminal investigation of Amazon, saying the tech giant has one "final chance" to correct previous testimony by executives on its competition practices.

They sent a letter Monday to Amazon President and CEO Andy Jassy, marking an escalation in a bipartisan battle against Amazon by the House Judiciary Committee panel that has investigated the market dominance of Big Tech. The lawmakers are giving Amazon until Nov. 1 to "correct the record" and provide new documents and evidence.

The letter said the antitrust subcommittee was considering referring the case to the Justice Department for criminal investigation, as it accused Amazon of at least misleading Congress and possibly outright lying. The letter cites recent media reports detailing Amazon's alleged practice of undercutting the businesses that sell on its platform by making "knock-offs," or very similar products, and boosting their presence on the site.

The reports directly contradict sworn testimony of Amazon executives and other statements to Congress, the letter says. It was signed by Judiciary Committee Chairman Jerrold Nadler, D-N.Y., and the Democratic and Republican leaders of the antitrust panel.

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FILE - Amazon warehouse in Mexico. (Stringer/picture alliance via Getty Images)

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"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 said.

Jassy took over the top position at Seattle-based Amazon from founder Jeff Bezos in July.

Amazon denied that its executives had misled the panel in their testimony.

"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," the company said in a statement. "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.'''

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Amazon said it investigates any allegations of violations of its policies and takes "appropriate action" when warranted. "In addition, we design our search experience to feature the items customers will want to purchase, regardless of whether they are offered by Amazon or one of our selling partners," the statement said.

Already in May 2020 in a letter to Bezos, the subcommittee held out the threat of a subpoena if Bezos didn't agree voluntarily to appear before the panel.

The Wall Street Journal reported then that Amazon used sensitive, confidential information about sellers on its marketplace, their products and transactions to develop its own competing products. An Amazon executive denied such a practice in statements at a subcommittee hearing in July 2019, saying the company has a formal policy against it.

The letter to Bezos said the statements by Amazon attorney Nate Sutton appeared to be misleading "and possibly criminally false" or constituting perjury.

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Bezos testified on the issue in an appearance at a July 2020 hearing on Big Tech's alleged monopolistic practices along with Facebook CEO Mark Zuckerberg, Apple CEO Tim Cook and Google CEO Sundar Pichai.

Addressing allegations that Amazon has used data generated by independent sellers on its platform to compete against them, Bezos at the time said it would be "unacceptable" if those claims were proven to be true.

The panel's new letter to Jassy also cites the testimony by Sutton, who denied that the company used sellers' data to compete with them or help create the company's own private-brand products. Sutton said the site's algorithms were "optimized to predict what customers want to buy regardless of the seller."

One of the media reports cited in the letter quotes a former Amazon employee as saying: "I used to pull sellers’ data to look at what the best products were when I was there."

The letter made clear that the committee believed the media reports and not the testimony of Amazon's representatives. "Each of these investigative reports are inconsistent with the sworn testimony and numerous statements made by Amazon’s executives," it said.