Oct 14, 2021: According to a Reuters report, documents show Amazon’s private-brands team in India secretly exploited internal data from Amazon.in to copy products sold by other firms.
Amazon.com Inc has been repeatedly 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 has denied the accusations.
But documents reveal how Amazon’s team of private brands in India secretly exploited internal data from Amazon.in to copy products sold by other companies, and then present them on its platform. Employees also manipulated Amazon’s search results in a way, so that the company’s products would appear, as one 2016 strategy report for India put it, “in the first 2 or three … search results” when customers were shopping on Amazon.in.
The internal documents also show that Amazon employees studied proprietary data about other brands on Amazon.in, including detailed information about customer returns. The goal being to identify and target goods, described as “reference” or “benchmark” products and “replicate” them.
The 2016 document further shows that Amazon employees working on the company’s own products, known as private brands or private labels, planned to partner with the manufacturers of the products targeted for copying. That is because they learned that these manufacturers employ “unique processes which impact the end quality of the product”.
This is the second in a series of stories based on internal Amazon documents that provide a rare, unvarnished look, in the company’s own words, into business practices that it has denied for years.
In sworn testimony before the US Congress in 2020, Amazon founder Jeff Bezos explained that the e-commerce giant prohibits its employees from using the data on individual sellers to help its private-label business. 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.
But the internal documents seen by Reuters show 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 that executives knew about.
The company said the way it displays search results does not favour private-brand products.
Amazon also said it “strictly prohibits the use or sharing of non-public, seller-specific data for the benefit of any seller, including sellers of private brands”, and that it investigates reports of its employees violating that policy.
The unfiltered insight the documents offer into Amazon’s aggressive use of its market power could intensify the legal and regulatory pressure the company is facing in many countries.
Amazon is under investigation in the United States, Europe and India for alleged anti-competitive practices that harm other businesses. In India, the charges include illegally supporting his own branded goods. Amazon declined to comment on the investigation.
According to a Reuters report in February that Amazon had for years given preferential treatment to a few big sellers on its Indian platform, and used those sellers to circumvent regulations designed to protect the country’s small retailers.
Amazon entered India e-commerce market in 2013, and initially recorded millions of dollars in losses, one internal document shows. To make the business “sustainable in the long run”, in 2016 Amazon embarked on a strategy centred on introducing its existing private brands.
The goals was to offer Amazon’s own goods in 20 percent to 40 percent of all product categories on Amazon.in within two years.
The company predicted private-brand sales would reach nearly $600m by 2020 in India, according to a 2017 internal business strategy document.
Later that month, India’s commerce minister accused large e-commerce companies of flouting local laws and said he had observed “a little bit of arrogance”, particularly by American ones.
Controversy over the business practices of foreign e-commerce companies in India has heated up in recent months. In June, the government proposed draft regulations that threaten to impose further restrictions on Amazon and other e-commerce companies, including local players. The proposed rules could restrict Amazon and others from selling their own private-brand products in India.
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