- On Monday, Senator Elizabeth Warren called out Amazon in a town hall speech, accusing the retail giant of using the data it collects from sellers and buyers to create its own rival private label products.
- Amazon fired back on Twitter debunking these claims, which led to Warren tweeting a series of news stories to support her argument.
- Warren has been doubling down on her bid to break up some of the largest US tech companies, including Facebook, Google, and Amazon. In March, she announced a regulatory plan to do so. In this, she proposed that Amazon Marketplace and Basics would be split apart.
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Sen. Elizabeth Warren is doubling down on her mission to break up big tech.
On Monday, Warren, who is running for president in the 2020 election, called out Amazon in a town hall speech, accusing the retail giant of using data that it collects from sellers and buyers to create its own private label products. The term private label refers to products sold under various brands belonging directly to Amazon. This practice would “knock out” the competition, Warren said.
“Giant tech companies have too much power,” Warren tweeted. “My plan to #BreakUpBigTech prevents corporations like Amazon from knocking out the rest of the competition. You can be an umpire, or you can be a player-but you can’t be both.”
Amazon made a rare public response to her comments on Twitter on Tuesday, saying that it does not use individual sellers’ data to launch its own private label products. A spokesperson reiterated this in a statement sent to Business Insider on Wednesday.
“Amazon does not use individual sellers’ data to determine which private label products to launch. Private label products are a common retail practice, and Amazon’s private label products are only about 1% of our total sales. This is far less than other retailers, many of whom have private label products that represent 25% or more of their sales. And independent sellers continue to see record sales on Amazon, growing to more than half of all sales on Amazon today,” he said.
We don’t use individual sellers’ data to launch private label products (which account for only about 1% of sales). And sellers aren’t being “knocked out” – they’re seeing record sales every year. Also, Walmart is much larger; Amazon is less than 4% of U.S. retail. https://t.co/5wXTfaAHuN
— Amazon News (@amazonnews) April 23, 2019
Warren responded again, writing on Twitter: “When Amazon can tilt the online marketplace in its own favour, small businesses see an immediate impact in their profits. That can be absolutely crushing, it’s not fair, and I’m fighting to end that.”
When Amazon can tilt the online marketplace in its own favor, small businesses see an immediate impact in their profits. That can be absolutely crushing, it's not fair, and I’m fighting to end that. https://t.co/eV2ZvHuzJT
— Elizabeth Warren (@ewarren) April 24, 2019
Amazon has come under scrutiny in the past for its role as both a direct seller and a platform for other merchants to sell to those same customers. Bloomberg reported in 2016 that Amazon had been using sellers’ data to create its own versions of best-selling items. It is under an initial probe by European regulators for its role as both direct seller and merchant platform as of December 2018, and may face a full investigation.
Warren has been hot on big tech for some time. In March, she announced her plan to break up some of the largest US tech companies, including Facebook, Google, and Amazon. In this proposal, she called out Amazon’s Marketplace for third-party sellers and said it would “be split apart” from its private label “Basics” offering.
Amazon has argued that external sellers perform better than its own brands. Amazon Marketplace has been outpacing Amazon’s direct sales for years, and this area of the business now accounts for more than half of Amazon’s total sales on its website.
“Third-party sellers are kicking our first party butt,” CEO Jeff Bezos wrote in the company’s annual letter to shareholders in April.
Amazon’s own private-label offering still accounts for a small part of its total business; roughly 1% of the company’s total retail sales, according to a company spokesperson. However, it is making moves to grow this and has significantly increased the number of private-label brands available in recent years.
According to estimates from investment company SunTrust Robinson Humphrey, Amazon’s private-label business could generate $US25 billion by 2022.
“Private label is one of the highly under-appreciated trends within Amazon, in our view, which over time should give the company a strong ‘unfair’ competitive advantage,” the company wrote in a note in June.
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