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Missouri Senator Wants DOJ to Open Criminal Probe of Amazon

By Donna Fuscaldo – Apr 28, 2020 at 6:29PM

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Senator Josh Hawley contends Amazon violated antitrust rules after a report surfaced saying that employees used independent sellers' data to develop private-label products.

Senator Josh Hawley, a Republican from Missouri and longtime critic of big tech, is asking the U.S. Department of Justice to open a criminal investigation into Amazon's (AMZN -1.57%) business practices. 

In a letter to Attorney General William Barr, Hawley pointed to a recent report in the Wall Street Journal that some Amazon employees have used data from independent sellers when developing its own private-label products. Employees reportedly used the information to determine pricing, which features to copy, and whether or not it's worthwhile to enter a product category. 

Blue text book with Competition Laws written on the over in yellow.

Image Source: Getty Images.

In response to the report, Amazon said it launched an internal investigation, and any employees using individual sellers' data to inform product development is doing so against the policies of the tech stock giant. Amazon had previously testified before Congress that it doesn't use data on individual third-party sellers, relying instead on aggregated data from several independent merchants. 

Nevertheless, Hawley called the practices "alarming" for small businesses, particularly amid the pandemic. He argued that while creating copycat products is always bad behavior, it's made worse as thousands of businesses had to close stores and rely on Amazon to get products in the hands of customers. "Amazon's reported data practices are an existential threat that may prevent these businesses from ever recovering," wrote the lawmaker.

Hawley wants the DOJ to investigate Amazon for violating antitrust laws and to impose criminal penalties on companies that try to maintain "monopoly" power. "Antitrust law imposes criminal penalties on companies that try to acquire or maintain monopoly power. Amazon's data practices, as reported by the Wall Street Journal, appear to meet that description," wrote Hawley.

The Republican senator is the latest politician to raise concerns about the WSJ report. Last week Rep. David Cicilline, the Rhode Island Democrat and chairman of the House Antitrust Subcommittee and Jerry Nadler, the New York Democrat and chairman of the House Judiciary Committee, expressed concerns about the reporting, with Cicilline going as far as to say Amazon "may have lied to Congress."  

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Donna Fuscaldo has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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