Amazon allegedly used sellers' data to make competing products

Even high-level executives might have had access.

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November 2, 2018 Sunnyvale / CA / USA - Amazon headquarters located in Silicon Valley, San Francisco bay area
Andrei Stanescu via Getty Images

Amazon’s policies forbid it from using sellers’ data to undermine their own products, but the practical reality might be very different. Wall Street Journal sources say Amazon employees have been using proprietary seller data to help design and price in-house products, including decisions to enter certain categories. To develop a car trunk organizer, as an example, the internet retailer reportedly studied a third-party’s sales, marketing spending and Amazon’s share of sales.

This also includes executives, according to the sources. While Amazon officially has measures to prevent its product higher-ups from accessing individual sellers’ data, those rules apparently haven’t been consistently enforced. Execs would use workarounds, such as having analysts create reports or obtaining supposedly aggregated data that was really collected from one seller.

In a statement, Amazon said it “strictly prohibit[s]” workers from using private seller info to determine its own-label product launches, and that it had launched an internal investigation into the practice.

Whether or not that investigation leads to reforms, Amazon may face serious legal repercussions. The company testified to Congress in July that it doesn’t use seller data to gain an unfair advantage — if the claims are accurate, that wasn’t a truthful statement even if leaders didn’t authorize it. That could lead to further scrutiny from US regulators concerned about Amazon’s dominance, not to mention EU investigators already worried the company might be abusing merchant data. If Amazon can’t show that data misuse was limited to a rogue batch of employes, it could face penalties and government-mandated reforms.

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