Moneycontrol PRO
Access insightful & curated financial content with Moneycontrol PRO at just Re. 1/- per day. Use code PRO365.
you are here: HomeNewsBusiness

Amazon India's 'malpractices' induce calls of probe and US antitrust bill

Indian retailers say foreign e-commerce businesses like Amazon and Walmart Inc's Flipkart indulge in unfair business practices that hurt smaller firms, allegations the companies deny.

October 16, 2021 / 11:26 AM IST
The Amazon documents reviewed by Reuters showed how the company's private-brands team in India secretly exploited internal data from its India unit to copy products sold by other companies, then offered them on its platform.

The Amazon documents reviewed by Reuters showed how the company's private-brands team in India secretly exploited internal data from its India unit to copy products sold by other companies, then offered them on its platform.


Amazon Inc has once again been accused of knocking off products it sells on its website and of exploiting its vast trove of internal data to promote its own merchandise at the expense of other sellers, the company, however, denies the allegations.

But thousands of pages of internal Amazon documents examined by Reuters – including emails, strategy papers, and business plans – show the company ran a systematic campaign of creating knockoffs and manipulating search results to boost its own product lines in India, one of the company’s largest growth markets.

Probe Demand

A group representing millions of India's brick-and-mortar retailers said on Thursday the country's government must launch an investigation into Amazon.

"Amazon is causing a great disadvantage to the small manufacturers. They are eating the cake that is not meant for them," Praveen Khandelwal of the Confederation of All India Traders told Reuters. The group says it represents 80 million retail stores in the country.

Close

Indian retailers say foreign e-commerce businesses like Amazon and Walmart Inc's Flipkart indulge in unfair business practices that hurt smaller firms, allegations the companies deny.

Amazon did not respond to Reuter's request for comment on reactions to the report.

In response to questions for Wednesday's report, Amazon said, "We believe these claims are factually incorrect and unsubstantiated". The company did not elaborate. It added that Amazon displays "search results based on relevance to the customer's search query, irrespective of whether such products have private brands offered by sellers or not."

U.S. Senator Elizabeth Warren, a prominent Democrat, advocated the breakup of Amazon and other tech giants in 2019 when she was running for president. Since then, as a senator from Massachusetts, she has continued to apply pressure on companies like Amazon.

Warren called for breaking up Amazon.com Inc and Indian retailers demanded a government probe of the company after a Reuters investigation showed the e-commerce giant had copied products and rigged search results in India.

The report showed for the first time that, at least in India, manipulating search results to favour Amazon's own products, as well as copying other sellers' goods, were part of a formal strategy at Amazon and that at least two senior executives had reviewed it.

"These documents show what we feared about Amazon's monopoly power that the company is willing and able to rig its platform to benefit its bottom line while stiffing small businesses and entrepreneurs,"

"This is one of the many reasons we need to break it up," she said.

In sworn testimony before Congress last year, Amazon founder Jeff Bezos said the company prohibits its employees from using data on individual sellers to help its private-label business. And, in 2019, another Amazon executive testified that the company does not use such data to create its own private-label products or alter its search results to favour them.

The Amazon documents reviewed by Reuters showed how the company's private-brands team in India secretly exploited internal data from its India unit to copy products sold by other companies, then offered them on its platform.

The company promoted sales of its private brands like AmazonBasics by rigging search results on its platform in India so that its products would appear, as one 2016 strategy report put it, 'in the first 2 or three search results.'

The Alliance of Digital India Foundation, a non-profit representing some of India's biggest startups, said the practices detailed in the Reuters report were "highly deplorable", calling into question "the credibility of Amazon as a good faith operator in the Indian startup ecosystem".

In a blog post, the group urged the Indian government to take action against Amazon's predatory playbook of copying, rigging and killing Indian brands.

A top official in the economic wing of the Rashtriya Swayamsevak Sangh, the ideological parent of Indian Prime Minister Narendra Modi's ruling party, urged consumers to shun the company on Thursday.

"I call upon people of this country to #boycottAmazon, Ashwani Mahajan, co-convenor of Swadeshi Jagran Manch, said on Twitter

US Antitrust Bill

A bipartisan group of lawmakers, headed by Senators Amy Klobuchar, a Democrat, and Republican Chuck Grassley, plan to introduce a bill that would bar Big Tech platforms, like Amazon and Alphabet's Google, from favoring their products and services.

The latest bill is one of a slew introduced in this Congress aimed at reining in tech firms, including industry leaders Facebook and Apple. Thus far none have become law although one, a broader measure to increase resources for antitrust enforcers, has passed the Senate.

This bill, which Klobuchar's office said would be introduced early next week, would be a companion to a measure that has passed the House Judiciary Committee. It must pass both houses of Congress to become law.

Klobuchar and Grassley's bill would specifically prohibit platforms from requiring companies operating on their sites to purchase the platform's goods or services and ban them from biasing search results to favor the platform.

"As dominant digital platforms — some of the biggest companies our world has ever seen — increasingly give preference to their own products and services, we must put policies in place to ensure small businesses and entrepreneurs still have the opportunity to succeed in the digital marketplace," Klobuchar said in a statement.

Klobuchar is chair of the Senate Judiciary Committee's antitrust subcommittee while Grassley is the top Republican on the full committee. Co-sponsors include Democrats like Senator Dick Durbin, chair of the full Judiciary Committee, Richard Blumenthal, Cory Booker, Mazie Hirono and Mark Warner as well as Republicans Lindsey Graham, John Kennedy, Cynthia Lummis and Josh Hawley.

Antitrust advocate Sarah Miller, executive director of the American Economic Liberties Project, praised the planned bill as an effort "to turn the page on a failed era of antitrust enforcement."

[Input from Reuters]
Moneycontrol News
first published: Oct 16, 2021 11:26 am

stay updated

Get Daily News on your Browser
Sections
ISO 27001 - BSI Assurance Mark