Amazon's business practices under fire in California

Review focuses in part on how Amazon treats sellers

California investigators are examining Amazon.com Inc.’s AMZN -0.51% business practices as part of an inquiry into the tech giant, according to people familiar with the matter.

The state’s review focuses at least in part on how Amazon treats sellers in its online marketplace, these people said. That includes Amazon’s practices for selling its own products in competition with third-party sellers, one of the people said. Neither Amazon nor California has disclosed an antitrust investigation.

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The inquiries come as Amazon faces antitrust scrutiny from Washington, D.C., and abroad. The European Union is planning formal antitrust charges against the firm over its treatment of third-party sellers, The Wall Street Journal reported Thursday.

Amazon declined to comment. In the past the company has said it follows all laws and has emphasized that it accounts for 4% of the U.S. retail market.

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A spokesman for California Attorney General Xavier Becerra declined to comment. Asked in December about Amazon’s business practices, Mr. Becerra said the company warranted scrutiny, though he didn’t discuss any specific investigation.

“It would be hard to believe that you’re not going to look at a company like Amazon, given how pervasive it is,” he said in an interview, pointing to how much data the firm collects. “Are they using all of this data in ways that allow them to essentially kill real competition?”

In April, the Journal reported that Amazon employees used data about independent sellers on its platform to develop competing products. According to former workers, the company sometimes asked an Amazon business analyst to create reports featuring restricted information or using supposedly aggregated data that was derived exclusively or almost entirely from one seller.

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Following the story, lawmakers on the House Judiciary Committee called on Amazon Chairman and Chief Executive Jeff Bezos to testify on its private-label practices.

The House Judiciary Committee is also examining Amazon, its competitive practices and its impact on markets. Lawmakers have said Amazon hasn’t fully responded to requests for information about its relationship to sellers.

“Seven months after the original request—significant gaps remain,” said a letter sent from senior members of the House Judiciary Committee to Mr. Bezos in early May.

In a May 15 letter to the committee, the company said it is providing significant information to the committee and is “prepared to make the appropriate Amazon executive available,” without committing to Mr. Bezos making an appearance.

The formal charges in Europe would be the commission’s latest step in a nearly two-year probe into Amazon’s alleged mistreatment of sellers that use its platform.

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The charges—called a statement of objections—stem from Amazon’s dual role as a marketplace operator and a seller of its own products, the people said. In them, the EU accuses Amazon of scooping up data from third-party sellers and using that information to compete against them, for instance by launching similar products.

The U.S. state-level scrutiny adds to potential regulatory headaches for Amazon. Besides the House probe, the Justice Department and Federal Trade Commission, two federal agencies that enforce U.S. antitrust laws, last year separately met with other retailers about Amazon, people familiar with the matter have said.

While Alphabet Inc.’s Google and Facebook Inc. have disclosed being notified that they are the subjects of formal antitrust investigations in the U.S., Amazon hasn't.

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