Amazon associate general counsel Nate Sutton testifies before the House Judiciary Committee. (YouTube Screenshot)

In a letter to the U.S. House Judiciary antitrust subcommittee, Amazon says its internal investigation into the details of a widely cited Wall Street Journal story found no violations of a company policy that forbids employees of its private-label division from using individual third-party seller data to gather competitive intelligence for launching its own products.

The subcommittee’s final report, made public on Tuesday afternoon, acknowledges the letter but says the results of Amazon’s “limited investigation” into two products cited in the article, a car trunk organizer and a car seat cushion, do not alter its staff’s view on Amazon’s use of third-party seller data to gain what the report describes as an unfair competitive advantage.

It’s a hot-button issue not only because of the antitrust implications but due to the assertion made by Amazon associate general counsel Nate Sutton in July 2019, under questioning from U.S. Rep. Pramila Jayapal, that Amazon doesn’t use individual seller data to inform its decisions on launching its own products.

The letter from Brian Huseman, Amazon’s vice president of public policy, was sent to the subcommittee on Sunday, Oct. 4, two days before the report was released.

In the letter (below), obtained by GeekWire, Amazon says its “records of past data queries related to the two products cited in the Wall Street Journal report show that a single former employee pulled and analyzed only aggregate data for both products in compliance with the Seller Data Protection Policy. And of course there is nothing novel about a retailer looking at its own store’s aggregate sales data for a product in this way; retailers have used aggregate sales data for products sold in their stores for decades.”

Amazon’s letter adds:

As an additional measure to protect the trust of our selling partners, Amazon’s policy does not permit private brands employees to look at the number of sales made by a single seller. The policy does generally permit employees to look at aggregate sales data for products sold in the Amazon store—that is, data on the number of sales of a product in the Amazon store where there is more than one seller of that product. It is confusion on this point that seems to have animated this year’s Wall Street Journal article, which appears to use the generic word “data” to mean both single-seller or aggregate data, resulting in the inaccurate implication that the use of any sort of Amazon sales data (even aggregate data) would violate the policy.

Amazon’s letter does not directly address one of the key points of the Wall Street Journal article: that aggregate sales data is effectively single-seller data when one seller is dominant. The company has said in the past that the aggregated report would not reveal to an employee how many sellers are included in the aggregation.

Addressing the examples cited in the article, the letter says that “the sellers of the car trunk organizer and car seat cushion alleged to have been harmed by Amazon accessing aggregate data related to their sales in the Wall Street Journal article continued to succeed in Amazon’s store.”

In the case of the car trunk organizer, for example, the letter says, “by the time Amazon launched its private label trunk organizer in October 2019, more than 800 other competing trunk organizers were available in Amazon’s store,” Amazon says in its letter. “In fact, though the customer review ranking for Amazon’s product is slightly higher than that of the third-party product featured in the article, Amazon’s organizer is ranked 24th in Amazon’s store in terms of sales, while the third-party seller is 5th.”

The Wall Street Journal report, published in April of this year, prompted Amazon to launch the internal investigation. Rep. Jayapal subsequently questioned Amazon CEO Jeff Bezos about the issue in a July antitrust hearing that also included the CEOs of Apple, Facebook and Google.

“I’m familiar with the Wall Street Journal article that you’re talking about, and we continue to look into that very carefully,” Bezos said at the time. “I’m not yet satisfied that we’ve gotten to the bottom of it, and we’re going to keep looking at it. It’s not as easy to do as you would think, because some of the sources in the article are anonymous, but we continue to look into it.”

Bezos added, “We train people on the policy. We expect people to follow that policy the same way we would any other. It’s a voluntary policy, as far as I’m aware, no other retailer limits their use of data at all.”

In its report this week, the House antitrust subcommittee said its own findings were “consistent with the public reporting about Amazon’s misuse of seller data,” based on interviews by its staff with former Amazon employees, in addition to current and former sellers.

The report quoted an anonymous former employee of the Amazon marketplace team who told the subcommittee’s staff that many of the employee’s former peers “were pulling private data on Amazon seller activity, so they could figure out market opportunity, etc. Totally not legitimate, but no one monitored or seemed to care.”

According to the report, the same former employee told the subcommittee’s staff, “It’s a candy shop, everyone can have access to anything they want … There’s a rule, but there’s nobody enforcing or spot-checking. They just say, don’t help yourself to the data … it was ‘wink wink,’ don’t access.”

Among other anecdotes, the report cites the experience of a former third-party seller, Jason Boyce, who told the subcommittee’s staff about several instances over his seventeen years as a seller when Amazon leveraged his work, undercut him on price, and eventually drove him out of business,” leading him to found his own consulting business for Amazon sellers.

The letter from Amazon’s Huseman notes that the company voluntarily adopted its Seller Data Protection Policy years ago, and that the policy goes beyond any legal requirements.

“We implemented this policy because we wanted to go the extra mile to protect the trust of third parties selling in our store,” Amazon’s letter says. “And, as with any other employee policy at Amazon, we take this policy seriously: we train on it extensively, leadership reinforces that training, we audit for compliance, we examine allegations of breaches of the policy, and we iterate and improve based on what we learn.”

This week’s 450-page report from the U.S. House antitrust subcommittee outlines what it calls a range of anticompetitive practices by Amazon, Google, Apple and Facebook. It proposes sweeping reforms  including “structural separations to prohibit platforms from operating in lines of business that depend on or interoperate with the platform.”

Updated with more details from the antitrust subcommittee’s report and Amazon’s letter.

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