What IBPA Members Should Know about Amazon CEO Jeff Bezos’s Testimony to Congress
Thursday, August 20, 2020
On July 29, 2020, Amazon’s Jeff Bezos, Apple’s Tim Cook, Facebook’s Mark Zuckerberg, and Google/Alphabet’s Sundar Pichai testified in front of the House Judiciary Committee as part of a long-running antitrust investigation being overseen by the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee.
Subcommittee Chair David Cicilline (D-RI) opened the hearing by acknowledging that “because these companies are so central to our modern life, their business practices and decisions have an outsized effect on our economy and our democracy.” He went on to say, “Any single action by any one of these companies can affect hundreds of millions of us in profound and lasting ways."
IBPA members will be interested in the full hearing, of course, but most particularly in the testimony provided by Amazon’s Jeff Bezos, the only CEO of the four who had never previously testified before Congress. To help unpack this testimony, here are a couple of the issues related to potential antitrust violations that Bezos was asked to address.
- Bezos was asked to address the April 23, 2020 Wall Street Journal article alleging that Amazon had mined third-party sellers’ data to develop and launch its own competing products. "Does Amazon ever access or use third-party seller data when making business decisions?" Rep. Pramila Jayapal (D-WA) asked Bezos directly.
- "I can’t answer that question yes or no,” Bezos’ responded. "What I can tell you is we have a policy against using seller-specific data to aid our private label business, but I can’t guarantee that policy has never been violated." He went on to confirm the Wall Street Journal report was still under investigation.
- Bezos was asked by Rep. Lucy McBath (D-GA) to address allegations from a bookseller who alleged Amazon blocked them from selling entire categories of books. "We were never given a reason," the bookseller told Congress. "Amazon didn’t even provide us with a notice of why we were being restricted.”
- Bezos said this wasn’t consistent with Amazon’s policies and said he’d like to get in touch with the bookseller personally. "I do not think [a pattern of boxing out and not listening to third-party seller concerns] is systematically what’s going on," he said. "Third-party sellers in aggregate are doing extremely well on Amazon."
The crux of concern related to Amazon’s policies (and illustrated in the examples above) was perhaps best articulated by Subcommittee Chair Cicilline when he at one point asked Bezos, "Isn’t it an inherent conflict of interest for Amazon to produce and sell products that compete directly with third- party sellers, particularly when you, Amazon, set the rules of the game?"
To which Bezos replied, "The consumer is the one making the decisions."
It’s no secret that Amazon’s rise to dominance has profoundly impacted the book industry. Today, Amazon sells more books than any other retail outlet. Specifically, analyst Benedict Evans reported in December 2019 that Amazon has "50% or more of the US print book market, and at least three quarters of publishers’ ebook sales (it also has its own ebook publishing business, for which it has never disclosed any data)."
For years, book industry experts have argued that Amazon’s share of the market for book distribution has resulted in a world where no publisher can afford to be absent from its online store. This point was made most recently in a joint letter from the Authors Guild, Association of American Publishers, and American Booksellers Association to Subcommittee Chair Cicilline dated August 17, 2020. In a single distillation of their argument, the three associations wrote: "We believe that Amazon acts anti-competitively in multiple ways, dictating the economic terms of its relationships with suppliers so that publishers, their authors, and the booksellers who sell on Amazon pay more each year for Amazon’s distribution and advertising services but receive less each year in return."
The next step for the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee is the publication of a report on the hearing that will include the Subcommittee’s conclusions and a description of further actions to be taken. "This hearing has made one fact clear to me," concluded Subcommittee Chair Cicilline: "These companies as they exist today have monopoly power. Some need to be broken up, all need to be properly regulated and held accountable," he said. "We need to ensure the antitrust laws first written more than a century ago work in the digital age."
IBPA will provide additional updates on the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee work as it unfolds.